The European Commission needs to find systematic approaches and solutions on state aid and competition rules on transport, agriculture and manufacturing for smaller island economies within the European Union to make up for the disadvantages caused by insularity problems affecting these island states and other islands connected to the European mainland. Maltese MEP Alfred Sant told a Conference on the specific needs of EU islands in EU Policy at the European Parliament in Brussels.
Dr Sant said cohesion and structural funds should be classified in a different and better way for small island states and island economies. “The EU’s State Aid policy has been inhibiting certain islands, including Malta, from moving forward. “We need to look at state aid from a different perspective of being an island. Under regionial, cohesion funds and structural funds, our agriculture, small as it is, has been going down hill ... about 50% reduction over the past ten years. The same thing is applied for manufacturing. ...and to be quite clear, our output is so small that it is not going to effect the single market, one way or the other.”
Malta is performing very well in economic terms. “But if you analise from where that is coming from, its very biased towards financial services and gaming services plus tourism. Now why is that a problem? Its a problem because as soon as the EU starts changing its rules on taxation - which is what the EU is going to do - this financial services sector , which has grown so much, might not be in a position to satisfy the changes because of the harmonisation that will be going on in tax policies over the Union.
“Joining the EU meant that Malta had to take on EU policies on manufacturing, industries and competiton. Over the last ten years we have seen the manufacturing sector going down by about 30%. So the problem also is that in a small island context, when you move forward you have an unbalancing effect in the sense that you have a concentration in a specific sector which is dangerous.”
Dr Sant said Gozo has a problem of double insularity. This cannot be tackled in terms of having more or less cohesion or structural funds. Gozo needs a competitive situation to move forward. “Gozitan University students agree that the island is doing relatively well. ‘But we can’t stay in this place they told me.’ There is no future for them as young people to plan a career and have a good life style. So although economically they seem to be doing well ...the phenomenon of the population seems to be proceeding. How can you tackle that? Now I agree that with the process of digitalisation some of the effects of insularity can be contained. But we still have to develop a model about that. Beyond trying to get criteria for cohesion or structural funds – extra allocations to what we can get under normal rules - I think we have to widen that and we have to consider how competition rules effect our situation and whether they can be implemented in a different way.”
Dr Sant said the European Commission is resisting these arguments. “They would not like to discuss this concept because they claim that cohesion and structural funds should be enough to compensate for our disparities. Like for instance on taxation policies ... why is it not possible to have specific taxation policies that are different for island regions and states on a differentiated basis?” asked the Maltese MEP.
Other MEPS from Croatia, Sardinia, Sicily and the Greek islands and Ireland also highlighted the effects of insularity on sustainable development in their respective islands.