Double blow for EU plan to expand

An election upset in Malta and chronic political deadlock in Cyprus threatened yesterday to derail the European Union's carefully laid plans to admit the Mediterranean islands in its next phase of enlargement.

The EU is keen to take in Malta and Cyprus as a way of strengthening the bloc's southern European dimension, but in Malta's case it is suddenly uncertain whether membership talks will start at all.

The reason is that Malta's opposition Labour Party, which opposes EU membership, scored a surprise victory in general elections last Saturday over the ruling centre-right Nationalists. Labour took 50.72 per cent of the vote to 47.80 per cent for the Nationalists, and is certain to overturn the government's three-seat majority in the 65-member parliament.

Labour's leader, Alfred Sant, campaigned on a promise to abolish an unpopular 15 per cent value added tax that the Nationalists introduced on consumer goods. Abolition of VAT would disqualify Malta from joining the EU, since the tax applies in all member-states and is used to finance EU activities.

Labour also argued that EU membership could compromise the policy of neutrality which the party says is best for Malta. Neutrality was declared by a previous Labour leader, Dom Mintoff, who won notoriety in the 1970s for ending Malta's defence alliance with Britain and forging a close relationship with Libya.

Mr Sant is unlikely to be so radical, and stressed during the campaign that he would adhere to United Nations sanctions on Libya imposed in connection with the Lockerbie aircraft bombing of 1988. However, in a reference to Libya and other North African states, he said: "We want a special relationship with Europe, but I argue that you start with your neighbours."

Malta and Cyprus are due to open accession talks with the EU six months after the end of the EU's Inter-Governmental Conference on revising the Maastricht treaty. This is expected to finish in the middle of next year, meaning membership talks should open in early 1998.

Some EU officials had anticipated that Malta and Cyprus might join the EU ahead of former Communist countries in central and eastern Europe, since it would prove relatively easy from an economic point of view. However, Mr Sant may now withdraw Malta's membership application and seek a relationship with the EU similar to that of Norway, which has close trading ties but rejected membership in a 1994 referendum.

Cyprus's bid to join the EU is complicated by the fact that Turkish Cypriots in the north say the Greek-led government of the south had no right to lodge an application on behalf of the whole island. Cyprus has been divided since 1974, when Turkish forces invaded the north in response to a coup in Nicosia intended to bring about the island's annexation by Greece.

Turkish Cypriots fear that the Greek Cypriots, Greece and the EU generally are trying to use the prospect of EU membership to force a settlement of the dispute on terms unfavourable to the Turkish-held north.