No rubber stamp

Expect pressure from EU sources for agreement on two issues cooked by Chancellor Merkel and President Sarkozy (Merkozy) who are making it a tasteless habit of making separate agreements which they then expect other EU members simply to rubber stamp.

Comm. Olli Rehn
Economic and Monetary Affairs

Comm. Michel Barnier
 Internal Market and Services

They will 'invite' us to agree the introduction of a financial transaction tax (Tobin Tax) and will 'suggest' that Europe, the EU and the Euro cannot survive without the introduction of a common fiscal policy possibly including a central treasury as the twin head for the existent common monetary policy for Euro members.

Malta should stand firm on both counts.  Agreement to these two measures would be tantamount to giving up some of the strategic advantages we have built for ourselves in the financial sector.

It is in our interest for the EU to strengthen its policies and institutions but this must not mean that the big countries simply impose their model on smaller countries with very different economic realities.

There is nothing intrinsically bad about the idea of a Tobin Tax.   But if this not introduced on a global basis there is a grave risk that we lose our competitive edge to other financial centres that do not introduce it.

Co-ordination of fiscal policies within a monetary union makes sense and after all this was the scope of the Stability and Growth Pact enshrined in the Maastricht Treaty which the Germans and the French were the first to break with impunity setting a bad example for the rest.     But a common fiscal policy or a common treasury would take away competitive advantages that a small peripheral country like Malta needs to survive and prosper.

We should insist on EU and Euro countries retaining their autonomy regarding fiscal policy but agree to more discipline on borrowing.  Countries should retain their autonomy to adopt their tax and spend policies.   Borrowings should however be subject to more rigorous scrutiny.   This is only fair as borrowing implicitly tends to become a shared responsibility as the experience of Greece, Ireland Portugal has already shown.

This would be in the same spirit enshrined in the Maastricht Treaty and tighter rules on borrowing, including prior approval and scrutiny of national budgets, would require no laborious treaty changes.

We should send a clear signal to the EU that our parliament is no rubber stamp and that financial matters are by tradition passed through parliament by unanimous approval so government needs the opposition on board to agree to material changes.