Gozo’s special regional status mixed blessing for Malta

By Mario Schembri Wismayer

Gozo being regarded as a region in its own right is very well, but it does come with certain ramifications that we have to examine closely to fully understand the implications.

Edward Demicoli of the Malta – EU Information Centre, said that Gozo’s GDP is around seventy percent that of Malta and this showed how Gozo needed special status. "Gozo is an island off an island. This often means that costs for the industries and businesses are higher than for those operating from Malta. Take, for example, the cost of importing or exporting from Gozo; the shipping costs are obviously heavier on the Gozitan concerns, because they have to ship everything over to and from Malta."

Mr Demicoli went on to say that "Gozo, in spite of having its own ministry is centrally administered from Malta, and has its own extenuating circumstances which call for special treatment. Right now the political entity we call Malta, in other words the Maltese archipelago, is classified as Objective One under the EU regional scheme. However, if Malta’s GDP had to spurt forward, it might not remain eligible to benefit under Objective One, but might be moved down to Objective Two. In that case, because Gozo is to be treated as a separate region, it would remain under objective one, as long as it still continued to qualify to stay there. Countries which are benefiting from being included in Objective One, automatically reap the benefits of also being in Objective Two as well. However Objective Three countries are those that need help only because specific areas in their territories need to be upgraded."

Objective One regions are those which suffer from relatively poor infrastructure, a labour force with low skills and institutional deficiencies. Usually these regions have the lowest levels of GDP. The final appropriation of funds to come through the Structural Funds and the Cohesive funds still have to be agreed upon.

But the implications of Gozo being classified as a separate region go deeper than special recognition for the sister island’s particular circumstances.

Since the GDP of Malta and Gozo will be computed separately, two things will happen; Gozo which is the poorer island will continue to benefit under Objective One funding for a longer period, while Malta’s GDP average, with Gozo’s ‘dragging’ effect removed, will go up and accelerate our GDP average towards the 75 per cent EU average threshold which will stop us being net receivers and turn us into net contributors. But that’s not all. In all probability when the poorer eastern European states join the EU, the 75 per cent average might very well go down, catapulting us faster to the point where we would stop being net receivers.