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An exclusive economic zone for Malta

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TimesofMalta An exclusive economic zone for Malta 1

Malta Maritime Forum explains its views.

The Malta Maritime Forum (MMF) has considered a public document entitled ‘Exclusive Economic Zone – A Sea of Opportunities’. This document followed the enactment of the Exclusive Economic Zone Act 2021 (Chapter 625 of the Laws of Malta).

The act enables the government to declare and designate by legal notice as being in the exclusive economic zone (EEZ) of Malta an area that extends beyond the country’s territorial waters and that partially or fully coincides with the continental shelf of the country, without prejudice to a final designation of the zone itself. The zone has the potential to extend to an area of 71,446 square kilometres.

The MMF examined the document in detail, carried out additional research and formulated a position paper with its views. The position paper is divided into four main sections as it sets out to identify:

a) The economic activity that takes place at Hurds Bank, which to a large extent (albeit not entirely) is situated outside of the country’s territorial waters; and who are the beneficiaries of that economic activity.

b) The opportunity cost of a designated (and, therefore, regulated) exclusive economic zone.

c) The effect of potential designations on international navigation routes.

d) The legal framework which necessarily must be put into place for the purposes of enforcement and control of a designated area.

Particular reference is made to point (b) of the position paper. Of concern to MMF – from an industry and macroeconomic perspective − is the effect of a hindrance to legitimate business activity, and ensuing multiplier effect, resulting from a potential limitation of anchorage at Hurds Bank, even by means of an anchorage fee that could be seen as prohibitive. Such a limitation could potentially be detrimental to the business of bona-fide service providers, with negative impact on the local economy in terms of:

 (i) jobs;

(ii) indirect business activity through the multiplier effect;

(iii) investment;

(iv) foreign currency earnings; and

 (v) direct and indirect tax revenue.

A comprehensive (though non-exhaustive) list of sectors which would be affected is highlighted in the position paper.

"From a legal perspective, MMF maintains that there are a number of matters which would require consideration"

Another important issue to dwell on is the movement of shipping in the centre of the Mediterranean. A huge concentration of shipping traffic moves along Area 1 (Hurds Bank, as denoted in the diagram) that is directions E to W and E to SE within the Malta Channel (the sea between Malta and Sicily) when compared to the relatively sparse shipping traffic south of Malta. 

Even for these reasons, MMF firmly believes that Area 1, that comprises Hurds Bank, should be assigned exclusively for shipping purposes, that is marine traffic and anchorages, under the control of the Malta authorities. 

As regards Area 2, MMF is of the view that any regulated allocation of an EEZ should always respect the rhumb lines and navigation routes so as to ensure that maritime traffic may still flow freely, avoiding disruption and costly delays to shipping lines. Because of this concern, MMF recommends that a thorough risk assessment should be carried out prior to any decision regarding the area in question.

Despite the less advantageous bathymetry, Area 2 still lends itself well to marine projects in the area of floating alternative energy-generation installations, aquaculture projects and refuelling infrastructures. 

Locating projects of this nature in Area 2 to the west of the coast of Malta would ensure less disruption to maritime traffic and mitigate risk on the east coast of Malta, which is crucial to other pillars of the economy, not least tourism.

From a legal perspective, MMF maintains that there are a number of matters which would require consideration, quite apart from residual risk and the overarching idea that the country must assess its legal rights and obligations, which in turn would translate into financial burdens.

MMF contends that any declaration of an EEZ needs to follow a number of elaborate and technical studies not least: a shipping traffic risk and impact assessment; an environmental impact assessment; and an economic impact assessment.

With reference to the last consideration, it would be of paramount importance, crucial for the authorities, to estimate the net financially-balanced benefits to the country as a whole less the deduction of forecasted costs that would derive from the economic exploitation of a designated area in the EEZ. This crucial exercise would need to incorporate costs that the country would need to incur in shouldering added responsibility, together with rights and obligations related to monitoring and enforcement in the designated area in question.

The authorities have an obligation to examine the projects carefully to ensure they are compliant with ecological and environmental standards. This point is vital, taking into account the declared intention to fast-track PA and ERA permits of EEZ-related projects.

MMF underlines the importance of ensuring that projects sited in the EEZ do not create negative environmental and/or economic externalities which are detrimental to other economic sectors and/or the common good.

 

ARTICLE WRITTEN BY TIMES OF MALTA

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