Malta’s hardline negotiating team set for breakthrough

As negotiations for the endorsement of a financial package for the 10 countries set for enlargement rage on, it is clear that Malta and Poland are still holding out for a better deal.

Brussels sources strongly indicate that Malta and Poland have stood their ground on the financial package, with Germany having criticised the generosity of the EU’s Danish Presidency and candidate countries saying that the package was insufficient.

Strong signals are pointing to further victories by the Maltese negotiating team, especially with the possibility of a transition period of more than five years on zero VAT rating for food and medicines. As Britain and Ireland remain the only two EU members who have retained zero VAT rating on food and medicines, it is certain that the Maltese negotiators are not backing down on their stand for zero VAT.

The deal will be finally approved this week at the Copenhagen summit. Cyprus and Slovakia have agreed to the Danish terms, and diplomats said Hungary, Slovenia were also close.

Other issues remaining on the negotiating table and certain to take up much of the Copenhagen summit’s time include the level of direct payments paid to farmers in the new member states.

EU governments have already agreed these should start at 25% of the level paid to existing member states, rising to 100% over 10 years. A Danish proposal however, to allow new members to top up these payments to 40% from day one has yet to be finally agreed.

The other issue is the size of compensation payments to the new members to ensure that they are not worse off after they join, and start paying membership dues. Denmark has proposed a one-off lump sum of one billion euros in 2004 to cover budgetary imbalances.

But foreign news sources have quoted ‘hardliners’ Poland and Malta as the tougher negotiators, having got support yesterday from the President of the European Commission, Romano Prodi, who pointed out that the EU had originally budgeted to spend two billion euros more.

Brussels sources indicate greater increments on Malta’s original financial package, with a possible Lm30 million a year for 2004 till 2006 finding their way into the Maltese coffers.

Romano Prodi’s support for Poland’s and Malta’s strong stands have been met by a disgruntled response from Danish Prime Minister Anders Fogh Rasmussen, who has bluntly said that "there is no more money."