Prime Minister in favour of multi-speed approach for the EU
Prime Minister Joseph Muscat yesterday declared himself in favour of a multi-speed approach within the EU.
“I believe there should be the opportunity for countries that need to move forward in certain policy areas to do so.” He gave the Eurozone as an example of a multispeed Europe, where not all 28 member states are taking part.
The Prime Minister delivered the closing address at a business breakfast organised by the Malta Institute of Management on the 10th anniversary of Malta joining the Eurozone.
He mentioned the EU debate regarding defence. “We opted to stay out for now, but why should we prevent France, Italy and others from moving ahead in defence cooperation just because we have a neutrality clause? We should not. We should make out priorities heard, but not stop others from working together.”“
He said that there are other areas Malta would like to be a part of, such as more social acquis.
Turning to the economy, he said that the key word is innovation.
“That is the key to the game and will help us continue to have growth and spread our wings.”
The idea of something along the lines of an EU version of the IMF will be one of the major debates over the next few months he said.
He highlighted the need for such a mechanism, mentioning that during the economic crisis, it was humiliating for Europe to rely on a troika of three institutions, two of which are not European.
“The debate will be whether this mechanism is governed by the commission, or whether it should be where governments, elected persons have some kind of control, he said, mentioning that government is looking into what suits Malta’s interests best.”
Adrian Delia
Opposition Leader Adrian Delia said that the EU project’s purpose was to ensure peace in a war-torn continent through economic integration.
“The experiment launched in aftermath 2nd world war was a success. It is not a perfect union without blemishes, but economic, political and social union brought social economic and environmental progress to continent.”
He said that the euro is the most tangible representation. “It is a daily reminder of what countries gained and lost in pursuit of the European Union, and that is what integration is about. Giving up things in the hopes of the return being higher. Malta’s path to the euro was an uphill struggle, and was opposed by the then opposition. The PL managed to make Malta take a pit stop in 1996, a two-year hiatus that could have been disastrous. Malta became EU member in 2004, and joined Eurozone in 2008. Landmark dates in our political history.
“Benefits for membership are more evident than those of the euro, but we should never underestimate the benefits of the euro. It fought against micro and macro uncertainty brought by fluctuating currencies in the EU. It was tested in 2009, a year after we joined euro,” he said.
He said that Malta like other countries pitched in to help others struggling with debt. Malta survived a difficult economic period thanks to sound economic policies and fiscal discipline of previous administrations, he said.
“Is the euro mechanism heavily skewed in favour of large economies? Are we giving up fiscal independence? Questions with no simple yes or no answers.
“If we want Europe to succeed, then we must be prepared to give up some independence. This does not mean giving up all fiscal and monitory powers, and both parties agree. We have red lines we must insist on.”
Alfred Sant
PL MEP Alfred Sant said that when Malta joined the euro, he would have preferred if Malta waited until “the full consequences of EU succession had been absorbed by the island before euro entry was accepted… However, once the then government was determined to join the Eurozone, it did not make much sense to contest this decision and create new tensions when the economy was already needing to digest the full application of EU regulations.”
He said that the EU Commission was bullish to increase the membership of the Eurozone as fast as possible.
Adoption of the Eurozone came hot on the heels of joining the EU, meaning that it was difficult to separate the effects that occurred as a result of the EU membership, and as a result of adopting the euro.
He added that the argument has been made that, “Malta avoided being negatively affected by the 2008 crisis because we belonged to the Eurozone. Frankly, I find this argument to be at best specious. Most government borrowing in Malta is funded by the country itself. The banks which have overrising significance for the Maltese economy have most of their exposures in Malta.
“The main danger for Malta in the Eurozone arose from the risk that the Eurozone itself would collapse. This gave us a vested interest to see that rescue packages were launched successfully.
“Within the Eurozone, Malta can only be a policy taker, certainly not a policy maker. I believe that we are not much better than when we were an integral part of the sterling zone up until some years after independence. This does not mean that we are paralysed as we face the choices that will be coming up. It means that our future economic success will depend on how well we are able to interpret arising situations and how correctly we succeed in predicting outcomes within the eurozone decision making structures.”
Regarding the decisions that will come up in the medium and short term, he said that Malta needs an opinion as to whether it is in the country’s interest that the European Stability Mechanism be turned into a kind of IMF for Europe, whether this new IMF-like structure be used for an initial period, to backstop the authority which watches over the resolution of EU banks, and whether there should be a Eurozone finance minister, among other things.
Chris Cardona
Economy Minister Chris Cardona, during his intervention, said that EU deficits are falling, and that Eur area countries’ unemployment is declining.
“The EU and euro area in particular is a unique construct, but underperformed in recent years. EU policy makers deserve much credit for the recent upswing.”
He mentioned the economic crisis and the questions it created.
“The ECB accommodating policies and creation of firewalls and banking union etc have been key to recovery. Looking forward, let me make my main point clear, The Euro is the most visible symbol of EU unification and its greatest promoter. It is a stable currency and becoming a global reserve currency. It brought convergence of prices and eliminated exchange rate risks.”
He mentioned that the advantages of the single market can be exploited better by a common currency.