European Union enlargement: Smallness pays

Date: 28/02/04

How the rich and tiny manage to win the most privileges

MOST of the ten countries joining the European Union on May 1st have been grumbling about plans by the current members to restrict free movement of workers or, as Britain has just proposed, to tighten eligibility for welfare benefits. But Malta has been conspicuously silent - and no wonder. For workers from tiny Malta (and not-much-bigger Cyprus) will be allowed into existing EU countries without any restrictions, since they are deemed unlikely to disrupt labour markets. Yet Malta will keep the right to shut out migrant workers from other EU member states if it fears overcrowding.

This deal is one of more than 70 exemptions that Malta won when it negotiated its entry to the EU. The next-most-demanding negotiator, Poland, came away with 43 exemptions, followed by Latvia with 32. Such “transitional arrangements” are meant to give new members time to adjust to EU rules that are too expensive or too unpopular to implement immediately. Countries may, for instance, need more time to raise taxes on cigarettes to EU levels, to phase out subsidies to heavy industries, or to improve veterinary standards.

In a few cases transitional arrangements have been forced on new members by existing EU countries that fear sudden competition. Restrictions on the free movement of labour come under this heading. Similarly, farmers in central Europe will for a time get lower subsidies from the common agricultural policy. But most transitional arrangements are, in effect, special privileges. Which invites a question: why should Malta, one of the richest accession countries, burdened with neither a communist past nor problems of civil order, have been granted more than any other acceding country?

One answer, suggests Roderick Pace of the University of Malta, is that Malta has used its small size to advantage in negotiating. Seen from Brussels, an exemption affecting a mere 400,000 Maltese seems a trivial affair, easier to concede than one affecting 40m Poles. Malta also argued that it is, by some measures, the most densely populated country in the world. Partly on this ground it has won the right to bar foreign labour for up to seven years, and also the right to block non-residents indefinitely from buying second homes on the Maltese islands - the only permanent derogation granted to any accession country.

Malta's winning streak is likely to continue. Once in the EU it will have the over-generous representation and voting rights that EU bodies give tiny countries as a matter of course. Big members like Estonia and Slovenia must look on enviously.

Malta has used its small size to advantage in negotiating to join the EU.