Diametrically opposed views on EU financial package

By Matthew Vella

A Foreign Affairs source insisted yesterday with The Malta Financial and Business Times that Foreign Minister Joe Borg had confirmed Malta would be a net beneficiary between the years 2004 and 2006.

And this was stated even though an EU report has outlined what could be Malta’s real financial stake upon accession. The report shows Malta could become a net contributor to the EU budget in its first year of membership in 2004.

The news contradicts EU Commission President Romano Prodi’s statement that Malta would not be a net contributor upon accession.

The report offers a picture of what Malta’s real financial package will consist of upon accession – certainly a far cry from the Lm100 million gifts.

Sister paper MaltaToday had revealed in February that Malta would only be benefiting from a net average income of Lm4.3 million annually.

The Secretary General of the European Greens, Arnold Cassola, has said the money awarded to candidate countries in terms of the 2004-2006 budget would average between Lm40 and Lm73 per capita annually.

With a population of 380,000, annual net income was calculated as being between Lm15.2 million and Lm27.7 million - an approximate average of Lm21.3 million.

It was also reported that Malta would be paying contributions to the EU budget to the tune of approximately Lm17 million, calculated as a percentage of VAT, annual GDP and a portion of customs duties of the individual member states.

Therefore Malta’s net beneficiary from the allocation of Lm21.3 million in funds would only be Lm4.3 million after having paid the membership fee of Lm17 million

The EU report has now outlined official calculations relating to the cost of the enlargement, listing Malta, Cyprus, Slovenia, Hungary, the Czech Republic and Slovakia as potential net contributors. Along with Lithuania, Latvia and Poland, net funds received would be EUR6.1 billion in 2004, EUR8 billion in 2005 and EUR10.1 billion in 2006 between all countries.

Concurrently, a total of EUR15.4 billion between all countries would have to be paid in the three-year period. This would mean EUR5 billion in 2004, EUR5.1 billion in 2005 and EUR5.3 billion in 2006.

Shadow Minister for Foreign Affairs Dr George Vella, told The Malta Financial and Business Times news of the EU report comes as no surprise.

"This report and these latest figures confirm what the MLP has been saying all along, that no large hordes of cash will be forthcoming upon accession. I had said this at a meeting in Hal-Qormi when I contradicted Guido de Marco exactly 24 hours after he said that Malta would be receiving Lm100 million in EU funds. As we can see everything has turned out as quite the opposite of what was promised.”

And we don’t even know yet what will happen with the 2007-2013 budget. Up till now we can say that Malta is not going to be receiving the huge amounts of cash promised by the pro-Europe camp. We will have to pay millions in contributions to the EU budget, between Lm12-18 million.

"Moreover we have to take into consideration the possibility that Malta could definitely be a net contributor in the future. At the moment our GDP is at 53% of the EU average. With the accession of the new candidate countries, especially those former Communist states, the EU’s GDP average will be lower. In such case our GDP could stand to rise up to 75% of the EU average.

"This will affect our eligibility for structural funds, although we may still qualify for cohesion funds.

"It is clear that whatever funds Malta will receive will not be tremendous. There’s no pouring rain of millions. If Malta will be a net beneficiary, it certainly won’t last long. Who still says that accession funds are the reason for which Malta should enter the EU has just been proved wrong".

Dr Joe Borg, Foreign Minister says Government still has to negotiate the final package in talks which will take place at the end of the year.

"It’s still too early to calculate Malta's budgetary position after accession. At this stage Malta's net budgetary position after accession is still being discussed.

"The EU has made some preliminary calculations about the 2004-2006 period but discussions are still underway and are not expected to conclude before November or December.

"Government has stated that it expects Malta to be a net beneficiary of EU funds from the date of accession. The EU has made it clear that as a minimum no country will be a net contributor to the EU upon accession.

"After 2006, for the new budgetary period, Malta will be on the same footing as all the other Member States and on the basis of its relative GDP per capita is sure to benefit from a considerable flow of financial assistance from the EU."

Carmel Attard from the Malta-EU Information Centre has confirmed that all details relating to Malta’s real financial package will only be known at the end of negotiations and that Malta will still be eligible for funds after accession.

"The Commission’s working document has presented preliminary calculations showing Malta as a net contributor. However, the document itself, as well Foreign Minister Dr Joe Borg, EU Commissioner Verheugen and Commission President Romano Prodi (during his visit to Malta) have all declared that Malta will not be a net contributor to the EU budget.

"Malta’s financial package will be known at the end of the current negotiations.

"Malta will still receive funds from the EU after accession. The Maltese electorate will know exactly how much Malta will receive after accession at the end of negotiations and before the referendum.

"The exact amount Malta will contribute to the EU budget will be known at the end of negotiations. A member state's contribution will include mainly 75c per Lm100 of income that the Government gets from VAT and all the customs duties paid on goods from non-EU countries. If the contribution of a member state exceeds a threshold, then that member state would be given a refund."