ADDRESS BY THE HON. EDWARD FENECH ADAMI, PRIME MINISTER DURING THE EXCHANGE OF NEW YEAR GREETINGS WITH THE DIPLOMATIC CORPS – AUBERGE DE CASTILLE, VALLETTA – 11 JANUARY 2002

Once again I have the opportunity to greet you at the start of a new year. I wish to extend to you and to your families seasonal best wishes. Through you, I also wish to extend the greetings of the Government and people of Malta to the Governments and peoples of your respective countries.

One set of events dominates our reflections on the outgoing year. The attacks of the 11th September are no doubt indelibly etched in our collective visual memory. The international community will for some time continue to recoil from the economic impact of these attacks. However, perhaps their most far-reaching consequence is the manner in which they are bound to mould perceptions and influence action, regarding the presumed strengths and vulnerabilities of the ever-evolving global community.

The emergence of a virtual global alliance against terrorism is the immediate and positive response to the attacks of 11th September. What is even more encouraging is that the elimination of the visible manifestations of terrorism is only the beginning of the task. This must be accompanied by a sustained and determined endeavour to eliminate the root causes which nourish the resentment, fanaticism and prejudice upon which terrorism thrives. As recent and less recent events teach us, these are the real enemies of civilised society - all the more redoubtable because, however undesirable and dangerous in themselves, they arise from deep rooted elements in human nature.

Here in Malta we share the economic and political impact of the events of 11th September, and are actively playing our role in the global alliance. None of our citizens were direct victims of the tragedy. However, our thoughts are with those who have been less fortunate, and, through those among you who represent them, I take this opportunity to reiterate to their families our expression of sympathy and solidarity.

A broader look at events over the past year presents the usual mix of positive and less positive developments. From Malta’s point of view, one of our most serious concerns over the past year has been the deteriorating situation in the Middle East. There have been sporadic hints of some improvement. However, the persistent seriousness of the situation must not be ignored. One has only to look back a few years, and compare the present situation with that which prevailed in the mid-nineties, to appreciate this fact.

Malta welcomes and encourages the renewed energy with which the United States is pursuing the cause of peace between Israel and the Palestinians. We equally welcome and encourage the continuing search by the European Union for a more direct and assertive role in the region. We are shocked and saddened at the festering human tragedy for both Israelis and Palestinians. But we do not subscribe to the notion that there is any justifiable direct linkage between developments in the Middle East, and events elsewhere. In particular, we wish to resist the notion that all efforts towards regional co-operation in the Mediterranean must be subordinated to the situation in the Middle East.

At the same time, however, we cannot ignore the negative repercussions, which the continuing situation in the Middle East is having on the process of Euro-Mediterranean co-operation. We have consistently expressed our concern at the potential instability and insecurity of the Mediterranean area. This arises from underlying political, economic and social factors which are innate to the region and which need to be urgently tackled in the framework of regional consultations and co-operation. The Barcelona Process is the prime motor for this co-operation. There are other initiatives, such as that of the Mediterranean Forum, which are also useful in this regard, and in which Malta is an active promoter and participant. We remain deeply committed to maintaining and enhancing the relevance and viability of these processes.

On a more positive note, the situation in the Balkans has remained stable over the recent months. Members of NATO and the European Union followed on their earlier timely action in Kosovo with their initiative in Macedonia with, to date, equally encouraging results. In recent years, the Balkan region has had its full share of tragedies that arise when prejudice and fanaticism are unleashed. The events of the last two years do, however, reaffirm the value of effective international co-operation in helping to resolve what, at some stages, appeared to be intractable problems.

A similar balance of positive and negative considerations arises in respect of the current international economic situation. During the course of the last year, this exhibited a somewhat negative trend that was further exacerbated by the events of the 11th September.

At the same time, the process of international co-operation has been maintained. The year has seen the welcome entry of China to the World Trade Organization. In Doha, the prospects for a new round of trade negotiations were also given a useful boost.

Perhaps the most encouraging aspect of these latest developments has indeed been the growing evidence that the international community does possess reserves of resilience and solidarity, which permit it to face even the most extraordinary challenges.

In this sense, the global reaction to the events of 11th September was not an isolated phenomenon. Rather, it unfolded in the context of a growing readiness by the major powers to resolve their sometimes very sensitive and complex difficulties, through calm and patient dialogue. In an increasing number of instances, the United Nations and other international organisations are being permitted to play their useful, and often indispensable role, in tackling problems and resolving issues.

In many ways the award of the Nobel Prize to the United Nations Organisation and its Secretary General was symbolic of the times and a reassurance for the future. The global community has not yet reached the stage where it is ready to entrust in the hands of the United Nations the full responsibility for the maintenance of peace and security, as one would have hoped more than half a century after its creation. There is, however, a new and impressive way in which the established multilateral processes are becoming integral elements in the life and operations of the international community.

There is one other positive development that I wish to mention today. Over the last few days, a large number of the citizens of the European Union have been participating in the final stages of an initiative of major and far reaching political and economic significance. The replacement of twelve national currencies by the Euro is taking place in the context of a global political and economic environment that is less than ideal. And yet, the calm and successful, one could even say good-humoured, way in which this is happening has taken even the most optimistic observers by surprise. There is no doubt a lesson here for those who read too much into the bare statistics about the level of popular support and involvement in the European Union.

Malta has shared in the ups and downs of the last twelve months. Our small and very open economy has been directly affected by international events, showing some overall growth in nominal terms, but a slight contraction in real terms.

The extent to which this is due to external factors, is shown by the fact that the sectors which have primarily contributed to the contraction, are the ones that are most exposed to the outside world. I refer here particularly to the electronics sector in our manufacturing industry, and tourism in our services industry.

Other parts of our economy are showing more positive results, confirming its fundamental resilience, as well as the soundness of the long-term policies upon which it is based. My Government’s primary objective remains the endeavour to provide all Maltese citizens with the opportunity, to play an active and productive role in society, at the same time as they fulfil themselves as individuals. We remain constantly alert to the need to preserve the right balance between those measures that promote economic growth, and those that ensure the proper enjoyment of social benefits and civil rights. It is equally imperative to ensure the correct balance between the immediate, and the longer term, social, economic and also environmental impact of the measures which we are taking.

I am confident that the key indicators remain positive and encouraging. The increase in the gainfully occupied population over the past year was slightly higher than the increase in the total labour force, thus containing the rate of unemployment. The rate of inflation remained at an acceptable level, at the same time there was a relatively higher increase in average income. Our multi-year plan to reduce the Government deficit remains well on course.

This has meant that even in a period of relative economic difficulty, we have been able to proceed with measures aimed at long-term economic and social reforms. During the year, we enacted a significant amount of new legislation and introduced administrative reforms in a number of important sectors. These include the financial sector, social policy, standardisation, customs, state aid, regional policy planning, transport, energy and environment.

Among the results which have the more far-reaching implications over the longer-term, I would highlight the successful restructuring of the forum for social and economic dialogue through the establishment of the Malta Council for Economic and Social Development, the finalisation of the work of the Task Force on the restructuring of the shipyards and the constitutional amendment entrenching the system of local government. In this context, I also wish to mention the recent publication of our White Paper on industrial relations and the continuation of the work on welfare reform and on privatisation.

Over the last twelve months, our negotiations to join the European Union have also proceeded in a very satisfactory manner.

We remain well placed to achieve our basic objective to become members of the EU at the next enlargement. There are by now convincing indications that the political will exists, and the conditions are set, for this enlargement to be completed by the beginning of 2004. This means that the accession negotiations with us, and the other advanced candidates, should be concluded by the end of this year.

The accession negotiations continue to present us with both a challenge and an opportunity. The challenge arises primarily from the technical complexity and sheer scale of the work that needs to be undertaken. The opportunity lies in the manner in which the process of our national development can be complemented, and indeed reinforced, by the exercise of adaptation required for our membership of the European Union.

On both counts, the experience has been more than successful. I remain constantly impressed and encouraged, both by the competent manner in which the Maltese administration is coping with the tasks involved, as well as with the seamless way in which the harmonisation of our legislation and administrative structures with those of the EU fit in with our basic socio-economic objectives and needs.

In a broader context, developments within the European Union constitute renewed sources of interest and motivation on our road towards membership. As the Union prepares to debate its future evolution, it is already clear that what we consider to be the most essential characteristics of the Community method - the two principles of solidarity and of subsidiarity - will be further re-inforced. As much as the principle of solidarity binds together the members of the Union, the principle of subsidiarity ensures the proper separateness and distinctness of the component nations and peoples. Equally important for us is the external dimension that the Union has always read into the principle of solidarity - thereby ensuring its openness towards the outside world and its commitment towards international co-operation.

It is for this reason that we are convinced that Malta’s membership of the European Union will enhance its capacity to further develop its bilateral relations, and to play an active role in regional and wider initiatives for peace and co-operation. In this spirit, I look forward to the opportunities for productive collaboration, that will present themselves in the coming months.

Before concluding, I wish to extend once again my greetings and best wishes, together with the augury that our common endeavours will contribute towards the consolidation of our bilateral relations, as well as towards our collective task of promoting peace and understanding.