With enlargement there will be more countries outside the
eurozone than inside. However all accession countries including
Malta are committed to closer economic integration with the
European Union by joining the single currency.
On the one hand the Euro is an opportunity to facilitate trade
across Europe and boost competitiveness. On the other hand
new member states will lose control of setting their interest
rates and they will have to take painful measures to reduce
their deficits,raising taxes, cutting public spending and
implementing pension reforms.
The accession treaty binds new member states to join the single
currency without the possibility to opt-out as negotiated
by the UK and Denmark. However in order to join they must
fulfil strict economic criterias relating to their deficits,
inflation and exchange rate.
European Union legislation on Economic and Monetary Union
(EMU) has specific rules to ensure the independence of central
banks in all member States. These are meant to prohibit indirect
financing of the state by the central bank as well as privileged
access of the public sector to financial institutions. The
transposition of these rules into the national legislation
was necessary although Malta will not adopt the euro as a
currency for the time being.
The value of the Maltese lira against the Euro over the last
years has remained generally stable while interest rates have
converged to comparable Euro zone rates.
The policy for economic and monetary union is strict about
the co-ordination of exchange rate and economic policies,
adherence to the stability and growth pact and the statutes
of the European System of Central Banks.
The European Central Bank (ECB) has warned that joining the
euro is dangerous if a country falls behind in its economic
performance. Malta faces risks mostly due to the lack of an
effective economic strategy to meet the required criterias
and to stimulate growth. This could have serious consequences
particularly on the job market in Malta. The leadership ability
and the competence of the Maltese government is being questioned
even by officials of the European Institutions at various
levels. A lot of work needs to be done to catch up with the
rest of the EU.
Robert Micallef MBA, MA, DSS(OXON) was employed as an economist
with the European Commission and worked for the EU Delegation
to Malta. He is an MLP candidate for the European Parliament
Elections.
The contrasts between the old member states and the new EU
members did not dissolve with the stroke of midnight on 1st
May 2004. Most of the old EU member states remain uneasy on
several counts such as the tax variations across the European
Union.
The biggest dilemma facing the expanded European Union is
that related to Europe’s decision-making processes which
are largely based on consensus. Achieving consensus among
the 15 member states was already a challenge. With the additional
10, many of which are countries that have evolved through
different cultural, social and political circumstances and
systems, it is expected to be even more difficult. Recently,
just prior to his resignation, the Spanish ex- Prime Ministry
Jose Maria Aznar, in an interview with the French paper Le
Monde admitted that it has been some time since any major
decisions were taken at EU ministerial meetings.
“ New coalitions will be formed. New EU member countries
will have to learn to explore the art of compromise which
prevails in the European Union institutions ”
The content and length of EU meetings may significantly change
with the accession of the new member states. With the participation
of 25 ministers, supported by their advisors and administrators,
and the presence of the European Commission representatives
at EU meetings, the meetings will no longer have a close-knit
character. This may have an impact on the quality of decisions
that are made.
No doubt that in the coming months all government and institutional
representatives will be undergoing their own learning processes.
New member states officials will have to face the challenge
of putting aside individual national interest or integrating
them with those of others. New coalitions will be formed.
New EU member countries will have to learn to explore the
art of compromise which prevails in the European Union institutions.
However, it should be a feasible compromise that does not
infringe on the needs of particular states especially in the
case of Malta, the smallest economy in Europe.
Moreover the European Union does not only face new internal
challenges, but it is now also faced with new external policy
challenges. As EU External Relations Commissioner Chris Patten
underlined, the EU’s greatest foreign policy success
has been the current enlargement. However, with the admission
of ten new member states much will depend on whether the stability
that this enlargement aspired for will be met.
The new EU will have its foreign policy decision-making tested
at the upcoming December summit. The main diplomatic issue
for discussion is Turkey’s potential accession into
the EU. Another issue that will be put to test is the decision
on the financial budget for the years 2007-2013.
Robert Micallef MBA, MA, DSS(OXON) was employed as an economist
with the European Commission and worked for the EU Delegation
to Malta. He is an MLP candidate for the European Parliament
Elections.
“Europe’s new Constitution should be an opportunity
for Malta to ensure that Europe of the future will be one
that corresponds to the values and principles that are enshrined
in our Constitution”
The roots of the European Convention date back to 1984. At
that time, Altiero Spinelli put forward the concept of a form
of a European Agreement. Ten years later, Fernand Herman,
a member of the European Parliament, once again presented
the concept for a European Union accord.
The Convention for the future of Europe was a special structure
set up for the specific purpose of formulating a comprehensive
EU Constitution. Such a consultative and open system had already
been tested when the Charter of Fundamental Rights was prepared.
For 17 months from the 28th February 2002, the European Convention
worked at various levels to produce the Draft Constitution
for Europe.
The European Convention was made up of the 15 EU Governments,
one representative from each of the then acceding member states,
30 parliamentarian representatives from national parliaments,
16 members of the European Parliament and six commissioners.
In order to coordinate the discussions and debates a Convention
Presidium was created.
Looking for a transparent approach for these discussions and
debates, the European Union sought the consultation of all
members of the society through interactive means. These included
Internet discussions through the Futurum site; through civil
society contact groups, and working groups.
The outcome of the above, the Draft Constitution for Europe,
was presented by Mr. Giscard d’ Estaing at the Thessalonoki
European Council in June 2003. It is now up to the Intergovernmental
Conference to take final decisions on the Draft Constitution.
The European Parliament is playing an influential role in
this process too. Should the Draft Constitution be accepted
it would come into force in 2009.
In general the European Constitution states the values and
objectives of the EU. It outlines the fundamental freedoms
and rights, largely covered in the Charter of Fundamental
Rights. It defines European citizenship. Balancing this are
details on the division and the execution of power within
the European Union institutions. As well as defining the rights
and obligations of EU citizens, the Constitution defines the
same for the member states.
The European Convention and the Draft Constitution have unravelled
two main challenges facing the EU. The European Union of today
is no longer the economic giant it was a decade ago. Global
economic trends attest to the fact that the EU is lagging
in many respects behind other economic blocks. On the political
level, the EU still needs to achieve its prominent and balancing
role in international relations.
Additionally a reading of the Draft Constitution reflects
the duplication of some of the text. For instance the rights
of EU citizens is included in the Charter of Fundamental Rights,
in the first section of the Constitution and also in the section
defining the dynamics of individual European politicians.
Duplications in primary source of legitimacy for the European
Union, is a potential source of misinterpretations that may
impact on ratification processes.
The intense discussions in Malta about EU membership have
prevented us from focusing on the important issue of Europe’s
Constitutional Development . Malta cannot afford to continue
to neglect these fundamental questions. Europe’s new
Constitution should be an opportunity for Malta to ensure
that Europe of the future will be one that corresponds to
the values and principles that are enshrined in our Constitution.
Robert Micallef MBA, MA, DSS(OXON) was employed as an economist
with the European Commission and worked for the EU Delegation
to Malta. He is an MLP candidate for the European Parliament
Elections.
The Party of European Socialists (PES) this weekend adopted
its election manifesto for the 25 countries of the enlarged
European Union setting out key commitments for the next five
years and urging voters to turn out on election day in the
second week of June. Stimulating growth in Europe is a central
theme of the manifesto and job creation is one of the key
commitments.
The manifesto indicates that it is essential that the EU and
Member States give more priority to social standards, in particular,
the objectives of more and better jobs, full employment, social
inclusion, as well as environmental protection and sustainable
development. It stresses that the convergence of financial
performance must be matched by convergence of social standards
to ensure that social dumping does not undermine fair competition.
The PES will continue to strive for a European Union that
is based on the principles of the social market economy and
mutual cooperation for the benefit of all.The PES work programme,
Momentum for recovery in Europe promoting public and private
investments, proposes a strategy to create more new high-quality
jobs by promoting greater investment in research and technology,
supporting new growth sectors and reinforcing modern education,
training and lifelong learning.This programme is meant to
reinforce the first EU action plan for economic and social
reform adopted in the Lisbon Strategy that should help make
the EU a dynamic knowledge-based economy capable of sustaining
economic growth with more jobs and greater social cohesion
by 2010.
European Socialists are also committed to working towards
a more efficient and effective use of the EU budget. The manifesto
states that finances should be raised in a fair way between
EU countries on the principle of solidarity between richer
and poorer regions. European funds must be sufficient to support
the EU's objectives and to ensure enlargement is successful.
The PES is in favour of reforming the stability and growth
pact to promote higher growth and employment. Stability should
be pursued as a vital condition for growth, not as an alternative
to growth.
The Party of European Socialists offers a programme for a
progressive European Union that puts first the concerns of
people. A vote for the Malta Labour Party is a vote for a
Europe that combines social justice within countries and solidarity
between countries. It is a vote for a strong, social Europe
that provides economic success, a better environment, employment
opportunities and security for its people.
Robert Micallef MBA, MA, DSS(OXON) was formerly employed as
an economist with the European Commission and worked for the
EU Delegation to Malta. He is an MLP candidate for the European
Parliament Elections.
This year the European Union faces the challenge of the largest
enlargement ever. Malta, Cyprus and eight countries in Central
and Eastern Europe will join the EU in less than two weeks.
It is not easy to assess the impact of EU enlargement on the
European economy. The economic weight of the new Member States,
despite having a population of 75 million, will be low. Their
total GDP represents around 5% of that of today’s European
Union.
It will not be easy for new member states to advance real
convergence and to keep inflation at low levels. Many doubt
their ability to preserve the soundness of the financial sector
and to make determined efforts towards fiscal consolidation
although progress is being made in some of the accession countries.
New opportunities for trade and investment flows should become
visible because of the high degree of economic integration
already reached between the present European Union and most
of the acceding countries.
Lower trade costs and an increase in competition should have
a positive impact on growth in the European economy as a whole
but the effects of the enlargement of the single market may
not be distributed equally around all regions within the Union.
An increased demand for products from particular accession
countries could result in some economic sectors gaining more
than others.
Besides integration in the Single Market, the EU Structural
and Cohesion Funds are meant to help countries in their catching-up
process. However, Structural Funds can only exert a positive
impact if countries have a stable macroeconomic environment
as well as institutional and microeconomic structures that
are conducive to growth.
The European economy will gain via the lowering of trade barriers
and the liberalisation of capital flows in accession countries.
The prospects for FDI flows after enlargement are positive
but mostly when viewed from the perspective of Central and
Eastern European states. Malta’s strategy for attracting
FDI continues to be slow in achieving results.
A reduction in price pressures and the enhancement of productivity
could contribute to an increase in the sustainable rate of
growth in the accession countries and in the present EU but
only if the desired structural reforms in new member states
are properly managed and implemented.
The other accession countries are putting a lot of resources
in planning and leading this process of change. Malta risks
falling behind the other countries. Ineffective management
of the economy will in Malta’s case be amplified due
to the size and nature of our economy.
Robert Micallef MBA, MA, DSS(OXON) was formerly employed as
an economist with the European Commission and worked for the
EU Delegation to Malta. He is an MLP candidate for the European
Parliament Elections.
Giving power to the regions means providing a system whereby
all regions are cushioned under fair and equal opportunities.
Due to natural, economical and social disparities, regions
within the European Union are not all on the same footing.
To quantify these disparities the EU through EUROSTAT has
established a statistical Nomenclature of Territorial Units.
Of these geographical areas, only those with a per capita
gross domestic product (GDP) lower than 75% of the Community
average are eligible for the highest funding.
The amount of support that regions receive through the EU
regional policy is regulated under the Structural Funds system.
The regions with a GDP per capita less than the 75% of the
Community average are regarded to fall under objective 1 status.
Objective one also covers specific categories of regions such
as the seven “most remote regions” from mainland
Europe. These regions are the Canary Islands, Guadeloupe,
Martinique, Reunion, French Guiana, the Azores and Madeira.
Apart from their insularity, these regions lag behind the
rest of the EU in economic and social development. It is important
to point out that apart from the fact that these regions have
a low GDP per capita when compared to the average 75% of the
community these regions also suffer from difficult topography
and climate conditions, economic dependence on certain products
and restricted and dispersed local markets that in turn effect
their economic and social circumstances. It was the Treaty
of Amsterdam which had introduced under article 299 (2), the
specific framework to be applied by the Community to these
regions.
One may think that Malta being an island like the regions
above may qualify for the same benefits. This is not the case.
Malta is not a region of a state like the above regions. It
is not as remote from mainland Europe and its GDP per capita
according to the 3rd report on Economic and Social Cohesion
which was issued recently by DG Regio, has exceeded the 75%
average of the Community.
Taking in consideration the EU with 25 member states the report
states: ‘For 18 regions including Malta with GDP per
head at present below 75% of the EU15 average with population
totaling around 19 million this will mean that their income
per head is no longer below the 75% threshold. Since the regions
concerned have exactly the same structural weakness after
enlargement as before, there is a compelling case for maintaining
support’.
Whether such support will be implemented or not is difficult
to guarantee at this point in time. For the period 2000-2006,
the EU has allocated 213 billions Euros in structural assistance.
Out of 213 billion, 195 billion have been allocated to structural
funds with Objective one regions enjoying 70% of the sum.
Funds contributing to Objective one status include the European
Rural Development Fund, European Social Fund, European Guidance
and Guarantee Fund (Guidance Section) and the Financial Instruments
for Fisheries Guidance.
A further 18 billion Euros were allocated to the cohesion
fund to finance transport and environmental infrastructure
in member states with a GDP per capita less than 90% of the
Union average.
Out of the above funds Malta should benefit from community
co-financing of 63,2 million Euros for the period 2004-2006.
Projects submitted for co-financing have to be in line with
the Acquis and can cover areas such as regional policy, environmental
protection, public procurement and financial management and
control. Parallel to the above structural funds another 22
million Euros will be granted to Malta on the basis of co-financing
as part of the Cohesion Fund. These funds have to be utilized
in the environment and transport sector.
The efficiency of the Maltese Authorities in administering
these funds will have a bearing on Malta’s future requests
for more funds. In the European Union Council meeting towards
the end of this year Malta will be participating in negotiations
on the EU budget for the period 2007-2013. A lot of diplomatic
efforts will be required over the coming months to ensure
that Malta receives a fair share of the EU budget. Diplomacy,
however, will need to be complemented by a track record of
successful administration and implementation of projects in
the various sectors.
Robert Micallef MBA, MA, DSS(OXON) was employed as an economist
with the European Commission and worked for the EU Delegation
to Malta. He is an MLP candidate for the European Parliament
Elections.
