As European leaders prepare to descend en masse to Brussels for a ‘crucial’ EU summit, with hopes of shoring up the eurozone and finally tying up a deal with Greece, the European Central Bank has provided €530 billion of low interest loans for Europe’s banks.

This comes against a backdrop of Greece and the European Union’s hopes to tie up a deal which would release €130 billion in a second deal. Just a few weeks ago, EU leaders had insisted that Greece implement more austerity cuts, and at the same time set up a new transparent ‘fund’ to show that it is actually paying off its debts.

The stringent requirements at first brought procrastination from the Greeks, but reason prevailed and we are hopefully now at the final furlong. Time and time again, we have seen Europe try to come up with solutions for Greece, and while the long-term stability of the country is a long, long way off, there does at least seem to be a new impetus to try and revive its financial fortunes. If the agreement does not go through, then Greece will go bankrupt. The country has bond repayments on 20 March and simply does not have the cash to make good for them. In this event, with all the consequences which would follow, Greece would have to exit the eurozone.

European leaders are trying to put up one united front in the face of the crisis, amidst fears that contagion could spread and that Italy and Spain would be dragged into the mire with Greece. This would be catastrophic.

It is the markets which decide who is worth what and if there is agreement to trigger Greece’s bailout, then commercial borrowing costs should drop as a degree of confidence is restored. 

Of course, the announcement by the European Central Bank is planned. If borrowing costs do decrease, then commercial banks will have the opportunity to tap into the ECB loans to then re-invest and hopefully turn over profits.

But, as we have seen time and time again, it will all go down to the eleventh hour and there will be hurdles and obstacles along the way. Malta will be involved in the discussions. At the last EU summit, Prime Minister Lawrence Gonzi had said that austerity alone will not do, economic growth must also be stimulated. But in countries such as Greece and Spain where cuts are becoming terribly painful, one wonders just what more can be done. Catastrophic unemployment rates are forcing young graduates to emigrate and seek employment elsewhere. This, of course, is an experience Malta remembers well. 

The road to recovery will not be easy and it is becoming clearer that the European model is once again evolving and changing through necessity. But Malta must also remain firm. Our finances are not exactly in the best state of health, but when one looks across at others, we have fared well.

Employment is strong, banks are relatively strong and economic outlook is not as grim as what it is elsewhere. This country has worked hard to stay out of the mire, we should make that clear around the table and we should be considered to be a strong performer at a time when others are lagging very far behind.