Closing the deal: Malta can overcome the final hurdles in home straight

Date: 12/09/02

Will Malta make it into the Union with the first wave of entrants in 2004? Despite dragging its heels over closing chapters and mediocre domestic support for EU entry, the obstacles are not insurmountable, writes Dick Leonard.

OPTIMISM is soaring within the European Commission over the prospects for completing the enlargement negotiations with ten candidate states by the time of the Copenhagen summit on 12-13 December. The new - unofficial - target is, indeed, to clear all the non-financial issues before the end of September - leaving only the core elements of the agriculture, regional policy and budget chapters to be resolved over the following two months.

Already several of the ten countries have provisionally closed 28 of the 30 negotiating chapters, and the others are not far behind, with the exception of Malta, which so far has closed only 24. Bulgaria (21) and Romania (13) are further adrift, and it is accepted that they will not qualify for the first wave of entrants, who are pencilled in for 2004.

The EU negotiators are not unduly concerned that Malta has fallen behind. Although there are a number of sticky points to be resolved, these should not prove insurmountable obstacles.

There are four chapters with serious problems still at issue. On competition policy, the problem is state aid to shipbuilding and other sectors. Malta has a big shipyard, a legacy of the days when it harboured a major British naval base, which operates only with the help of large state subsidies. The Maltese have asked for a seven-year transition period to phase them out, but will probably have to settle for something less.

In agriculture, large sums of money are not at stake, but the country's small farms, mostly producing vegetables and milk products, are currently protected by import levies which will have to be scrapped. Maltese farmers will have to adapt to CAP rules which were designed for different types of countries and farms. The EU negotiators believe that a satisfactory solution can be found under the umbrella of the Union's rural development programme.

The environment chapter is near to being closed, although Malta's current standards are low and not widely respected, particularly concerning water and air purity and waste management. The most difficult issue has been nature protection, where there has been a considerable battle to tighten controls over the shooting of migratory birds by Malta's large and influential body of hunters.

Last week Victor Camilleri, the Maltese ambassador to the EU, declared that a satisfactory package had been negotiated on hunting, and that he expected the chapter to be closed by the end of the month. Perhaps the most difficult chapter may prove to be taxation, where Malta is standing out for the right to be able to continue a wide range of zero ratings, principally for food and medicines, of VAT.

The Maltese negotiators have seized on the derogation won by Britain to keep its existing zero ratings when agreement was reached on VAT harmonisation in 1992. The EU position has been that all the new entrants must conform to the rules which apply to the other member states, i.e. that the reduced rate for 'essential' items must be no lower than 5. The Cyprus government, which had been in the same position of Malta, has accepted a transitional period of five years in which to phase out its zero ratings, and the Maltese are being pressed to follow suit.

Much more worrying than the actual membership terms is the absence in Malta of a consensus among the population, and the political parties, that membership of the European Union would be in the nation's interest. This was highlighted by a Eurobarometer poll in April, carried out in the 12 negotiating countries plus Turkey (see box). This showed that in all 13 countries more people were willing to vote in favour of joining the Union than against, but the margin in Malta was desperately narrow - a mere 4.

Even more disquieting is the political party division. Alone among the candidate states, one of Malta's main political parties - the Labour Party - is firmly against membership, and has been so over a long period. The Maltese application was made as long ago as July 1990, when it was tabled by a Nationalist Party government led by Eddie Fenech Adami.

When his government was defeated by Labour in the 1996 election, the application was promptly put on ice by the new prime minister, Alfred Sant.

Sant's government was forced into an early election by internal dissension (unrelated to the European issue), led by veteran former premier Dom Mintoff, and by 1998 the Nationalist Party was back in power and reactivated the application. The Labour Party has maintained its opposition, and the population remains dangerously polarised on the issue.

The next election is not due until 2004, but the government is planning to hold a referendum on EU membership in the summer of 2003. Ominously, the Labour Party - still led by Sant - has not committed itself to accept the verdict of the referendum.

So even if the negotiations with Malta are concluded satisfactorily on time, there is still a risk that things could go wrong at the end of the day. It would not be an enormous surprise if only nine new countries were to join the Union in 2004.

My hunch, however, is that Malta's Prime Minister Fenech Adami - who visits Brussels this month in a late bid to improve the membership terms - will just succeed in his efforts to persuade his country that its destiny lies in Europe rather than as an isolated island group off the North African coast.