The European Union is approaching complex issues arising in this region at three inter-locking levels – the decade-long EuroMed process, the European Neighbourhood Policy and the recently concluded Strategic Partnership for the Mediterranean and the Middle East, Prime Minister Lawrence Gonzi told diplomats yesterday.

During the exchange of greetings for the new year at Castille, Dr Gonzi said that by virtue of its history and its geography Malta feels particularly involved in these three processes.

At the same time Malta also underlines the need for differentiation among the three processes, based upon different historical precedents and local circumstances. “Our thinking is rooted in the awareness that reforms can succeed only if they are generated from within the affected societies. They cannot be imposed from outside,” Dr Gonzi said.

Over the years Malta has worked strenuously and consistently to generate and sustain various initiatives for dialogue and co-operation among the Mediterranean states.

One of the initiatives in which we have long been involved concerns the establishment of a Parliamentary Assembly for the Mediterranean, under the aegis of the Inter Parliamentary Union.

This initiative should come to fruition in the coming months. “We hope that our Mediterranean friends will agree to support Malta’s offer to host the permanent administrative secretariat of this assembly.”

In recent months some major positive developments have characterised Mediterranean political life, Dr Gonzi said, making particular reference to Libya.

“Libya’s decision to renounce its programme on weapons of mass destruction has been welcomed by all. We look forward to the increased opportunities it now creates for Libya to play a significant role in the process of Euro Mediterranean security and co-operation,” Dr Gonzi said.

At their summit last month, EU leaders agreed to open accession negotiations with Turkey and Croatia. “Malta welcomes this bold and remarkable decision. Among its many positive elements will be the reinforcement of the Mediterranean dimension of the Union,” he added.

Two days ago the Palestinian people elected a new leader, in an impressive demonstration of political maturity both by the Israeli as well as the Palestinian people themselves.

“We are all conscious of the brief and fragile window of opportunity that now exists for peace to take root in the long-troubled land of Palestine. The prospect of a solution based on two states, Israel and Palestine, living side by side in peace and security is now beckoning,” he said.

The experience of a successful election process in Palestine and earlier in Afghanistan, may unfortunately not be so easily repeated in Iraq later this month, he said. “Violence and terrorism remain serious destabilising elements in that country. We are still hopeful that ways will be found to permit the United Nations to play a more meaningful and direct role in Iraq than it has been able to do so far.”

Together with its partners in the European Union, Malta continues to endeavour to combat the two modern scourges of terrorism and of under-development. These two scourges pose a continuing threat to global stability and well-being.

“Terrorism can be seen in part as a nefarious symptom of more fundamental underlying causes. Like any such symptom it needs to be countered forcefully and relentlessly. Yet, in order to eradicate it completely, we must also identify better, and seek to resolve, its underlying causes,” Dr Gonzi added.

Under-development is an indictment on our times of unheard of plenty and technological advancement. Collectively the global community today possesses both the means and the resources to seriously relieve the suffering caused by disease and malnutrition.

In reference to the tsunami disaster in south-east Asia, Dr Gonzi said the response to the events in the region has indeed been unprecedented. A tremendous effort is under way to alleviate the material damage that has occurred. The suffering arising from the human and psychological damage is, sadly, much more difficult to deal with.

“Together with others Malta is playing its part in the relief effort. I am proud and gratified at the generous way the Maltese people have responded in material, financial and human terms. We mourn the vast loss of life, we commiserate with the desperation of the bereaved, we sympathise with the suffering of the destitute. We stand ready to assist in all possible ways.”

Dr Gonzi said that Malta will, this year, host the Commonwealth Heads of Government Meeting (CHOGM) in November. The main theme promoted by Malta is entitled Networking the Commonwealth for Development.

Malta has constantly propounded the firm belief that one needs to find the means to cross the “digital divide” between developed and developing countries in an effort to improve living conditions and promote prosperity in the world.

Since May last year, Malta has been operating in the international arena as a member of the European Union. “As we had anticipated this major development in Malta’s modern history has added an important and new dimension to the role Malta can play at both the regional and global levels,” the Prime Minister added.

At the national level, the key social and economic developments over the last 12 months have been largely affected by the impact of Malta’s accession to the European Union. The basic issues which Malta needs to deal with remain of course unchanged.

“Yet, we have set ourselves three main areas of priority in focusing the government’s activity for the next five years: a stronger and more productive economy with the consolidation of Malta’s finances, a revitalised education sector through all ages, a complete overhaul and major investment in our environment. We believe that these three areas of priority will render Malta more competitive in all that we do, in the services we provide, in the products we manufacture, in the solidarity network of benefits and services we pride ourselves in.”

In the economic field Malta’s main challenges are to seriously enhance its productive potential, to consolidate the national finances on a sound footing and to sharpen the competitive edge of the economy.

The underlying conditions which will ensure that our goals are achieved are already in place. The regulatory and infrastructural reforms which have been implemented in Malta over the last few years provide a solid basis upon which we will continue to build in the coming years.

“Although it is too early to take stock of the full benefits of the several reforms that have taken place, over the past months we have started to witness positive signs of the successful restructuring of the shipyards, the Gozo ferry service, public broadcasting services and the national carrier, Air Malta.

These reforms have been carried out in such manner that these entities will, over the coming years, remain operationally and financially viable in the long-term. Other reforms are taking place in the ports’ sector and in the public transport sector,” Dr Gonzi said.

A number of remaining entities, namely, Sea Malta Co. Limited and EneMalta Corporation will be primary targets of restructuring in the coming months. During this year, the government will oversee the implementation of the report on the restructuring of the Malta Tourism Authority.

In the social field “we are still working to produce a consensus among the social partners on medium as well as long term priorities and the manner in which the burden for engaging in the necessary reforms required by a fast changing society will be equitably shared”.

The government is committed to the process of social dialogue. The government has, over the past six months, participated actively at the Malta Council for Economic and Social Development, in intensive discussions on the drawing up of Malta’s first Social Pact or National Economic Pact for Malta’s Competitiveness.

“Although a national agreement has not been reached, we remain committed to the process and will continue to invest our time and effort in achieving the highest level of consensus possible on all those sectors that concern the social partners,” Dr Gonzi said.

In the quest to achieve these aims, the government is committed to succeed in a number of reforms aimed at substantial improvements over the long term in the three targeted areas of pensions, health and education. Respective working groups were appointed to look into the various proposals on pension and health reform resulting from the wide ranging consultations held with the social partners through the Malta Council for Economic and Social Development.

“Our hope is that it will not be long before we are able to have the desired reforms which will strengthen these sectors while at the same time ensuring financial sustainability and effective utilisation. We have now published the White Paper on Pensions Reform and will this year be pursuing its first phases of implementation together with reforms intended to make our already excellent health services sustainable over the next generation of developments,” he said.

Reforms carried out in the education sector aim towards achieving and maintaining the country’s competitiveness through one of its most prized assets: a highly skilled and trained workforce. It is also for this reason that the government has drawn up a national plan for research and technological development as well as a national strategy on communication and information technology.

Furthermore, the government has also presented a National Action Plan for Employment backed by appropriate funding which has been approved by the House of Representatives. “We are now looking at how to restructure the delivery of public education services and the financing of higher education to ensure the best outcomes for our children and our future generations,” Dr Gonzi said.

Over the past months, “we have laid new emphasis on the investment required to address some major problems in our environment, including the management of the waste we generate, the pollution of our seas and the quality of the air we breathe”.

The privatisation process is proceeding in spite of the complexities involved. Over the next three years, the government plans to sell off shares in Interprint, Malta Dairy Products, Malta International Airport and Air Malta hotels. Plans are under way to find strategic partners for Air Malta subsidiary companies as well as for entities involved in oil storage, gas production and distribution. These are in addition to the privatisation processes already under way for Maltacom and the Bank of Valletta.

“Our economic growth for 2004 was 2.1 per cent in nominal terms. During this year we will continue to build upon and strengthen our revived economic performance. We are also expecting that there will be continued growth in investment led by an already good performance in the financial services sector. For 2005, the Maltese economy is expected to grow by 1.5 per cent in real terms and by 4.7 per cent in nominal terms,” Dr Gonzi said.

The generally unfavourable international economic environment and the growing effects of globalisation have left their mark on the Maltese economy, as both the inflation rate and the unemployment rate remain relatively high at 2.9 per cent and 5.8 per cent. In both cases the Maltese Government is determined to remain well within the mainstream of European performance.

“In the framework of our broad policy objective to join the European single currency as early as possible, we have drawn up a convergence plan that sets our fiscal goals over a four-year period up to 2007, by which time we plan to have reduced the deficit ratio by 8.2 percentage points, to reach the level of 1.4 per cent of GNP in 2007,” Dr Gonzi concluded