16 July 2003

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Toon this week: If the shoe fits, wear it

Flexibility is nice, but…

Jacques Chirac’s plea to the EU to be more flexible with the so-called Stability and Growth Pact does not auger well for the EU, or for Malta.
One of the main reasons why the Maltese voted to join the EU was to achieve a sense of discipline in fiscal and other matters.
Chirac is pushing for greater flexibility in the EU’s strict budget rules, and he is not the first one to do so. The pact, which underpins the regulations guarding adherence to the European Monetary Union, demand budget deficits be no more than three per cent of the GDP.
Commission president Romano Prodi had called the regulations ‘stupid’, but quickly retracted his accusations.
If Chirac gets his way, and certain countries may be tempted to back him, the EU could see itself moving towards the type of wooliness that would defeat the raison d’être of many of the reasons for membership.
Germany, like France, is likely to find itself in trouble controlling its budget deficit, and Minister Hans Eichel has indicated his country will be giving more importance to economic growth at this stage, rather that stability.
Malta too needs to think about growth, and while both Germany and France have ambitious plans to cut spending and stimulate economic activity, our government politicians for the moment seem too busy celebrating EU accession to be do anything about it.
Certain unpopular decisions will have to be taken in the coming years and we had better get used to the idea soon. Malta needs to explore innovative ways of stimulating entrepreneurship, without compromising the viability of our natural assets.
Maltese politicians have enjoyed the unsupervised power over our land for a long time, and the last thing we need is an EU that will allow too much flexibility.
Deficit control has been on the agenda in Malta for years and despite much talk, successive governments have not managed to push government debts below the three per cent GDP threshold. We have, in fact, been rather off the mark. Malta is not yet an EU member, but it is hoped that politicians will be responsible enough, once we join to ensure that the EU retains its stringent rules applied to all countries equally; and not merely in the budgetary sector.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Business Times, Newsworks Ltd, 2 Cali House, Vjal ir-Rihan, San Gwann SGN 02, Malta
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