Mario Xuereb, CEO, Malta Business Bureau
Equality and equity are not interchangeable. In EU policymaking, uniform rules applied to structurally unequal contexts produce inequitable outcomes. For Malta and other island states like Cyprus and Ireland, this is a daily business reality.
These economies face persistent disadvantages: geographic isolation, reliance on maritime and air transport, small market size, and limited resources. Such constraints drive higher costs, lower productivity, and reduced competitiveness within the Single Market.
Geopolitical instability has worsened these challenges. Volatile energy prices have sharply increased transport and operating costs, directly impacting supply chains and export margins. Unlike continental firms, island businesses cannot shift to cheaper alternatives like road freight.
At the same time, EU green policies, while necessary, are being applied rigidly.
Measures like FuelEU Maritime, ReFuelEU Aviation, and the EU ETS impose disproportionate burdens on island economies with limited energy diversification options, further deepening structural imbalances and threatening long-term competitiveness.
Ahead of the European Commission’s upcoming Communication on islands and coastal communities expected in the second quarter of 2026, the Malta Business Bureau (MBB) is stepping forward to propose a comprehensive 10-point solutions-oriented roadmap for an EU Islands Strategy.
Legislative recognition of our challenges must extend far beyond basic cohesion funding; structural market failures within the Single Market require targeted, systematic regulatory responses.
We are calling upon the European Commission to advance an EU Islands Strategy which effectively addresses the shortcomings of EU policy which we have repeatedly highlighted. We view this as the right tool to make way for binding commitments and ensure both Member States and the Commission implement concrete, enforceable measures.
Among our core proposals, we are demanding a rigorous, cumulative impact assessment of all climate and transport legislation on island states to evaluate the true combined effects on our competitiveness. We are also pressing for a thorough review of EU State Aid rules, which must include the creation of an islands-specific sub-category, greater flexibility for transport operators, and a reconsideration of De Minimis Aid ceilings for island economies.
Furthermore, we are proposing a permanent exemption from the EU Energy Tax Directive for island states, reflecting the stark absence of road alternatives to continental Europe.
Similarly, we need systematic safeguards built directly into the EU ETS framework, specifically an ‘Islands Clause’ mechanism to protect the maritime and air links that act as lifelines for our populations.
Publishing a plan is only the first step; turning it into legislative reality requires aggressive advocacy.
To that end, the MBB has taken these proposals directly to the highest tiers of European decision-making. We have extensively communicated our framework to key European Commissioners, including Vice-President Raffaele Fitto, Valdis Dombrovskis, Apostolos Tzitzikostas, Wopke Hoekstra, and Malta’s own Glenn Micallef.
We have also engaged directly with the President of the European Parliament, Dr Roberta Metsola, alongside numerous MEPs and national government entities. We are ensuring that the structural vulnerabilities of island businesses are clearly understood by those holding the pen in Brussels.
The spirit and intent of Articles 174 and 175 of the Treaty on the Functioning of the European Union already align with our realities. Article 174 explicitly recognises regions facing permanent natural or demographic handicaps, and Declaration 33 clarifies that this includes island States in their entirety.
It is time for the EU’s legislative output to honour its own Treaties. Effective policy requires proportionality, flexibility, and severe context sensitivity. The EU must transition away from blanket regulations and move toward proportionate, geography-sensitive policies embedded directly into all future climate, energy, and transport legislation.
True cohesion requires more than simply treating everyone the same; it demands equitable solutions tailored to Europe’s diverse territorial realities.
