Malta: The small island with big ambitions

Steve Mallia

Malta may look like little more than a sun-drenched holiday resort, but closer inspection reveals a nation with a robust economy and a government determined to get the most from membership of the European Union.

Mention Malta and most people think of sun, sea and churches. And there is no doubting all three of these are present in great abundance, so much so that the majority of visitors could be forgiven for thinking there is nothing else to this island. Anyone who peels back this alluring skin, however, will find a place that is very different to the one they imagined. Under the sun they will find thriving industries (as well as some ailing ones), on the sea a bustling Freeport, and in the churches a population obsessed with politics and commerce. Welcome to the real Malta.

As with other countries that spent many years under colonial rule, Malta went through severe growing pains before it developed into the modern state it is today. After toying with the idea of integration with the UK in the late 1950s – a proposal rejected in a referendum – the Maltese took the giant leap into statehood in 1964 when the island declared its independence. Just ten years later it had become a republic with a brand new constitution to match. However, throughout the 1970s and 1980s the country regressed: although the governing Labour Party, led by Dom Mintoff, introduced a number of positive social measures, it ruled with an iron fist, and violence against its Nationalist Party opponents was commonplace. It was not until the severely divided country was on the brink of what many believe could have been civil war, that democracy prevailed and the Nationalist Party, which had been denied a rightful electoral victory almost six years earlier, was swept into government in 1987.

The first Nationalist Prime Minister, Eddie Fenech Adami, set about restoring Malta’s reputation abroad, as the island had been shunned by many as a result of Mintoff’s dalliances with Communist states. Adami’s government recognised early on that attracting foreign investment was crucial to ensure the island’s survival and set about creating the right conditions for this to take place. But, it was his dogged and relentless pursuit of European Union (EU) membership that would be the hallmark of his administration. In 2003, following a divisive referendum campaign, Malta finally gained entry to the door it had been knocking on for so long when the EU Accession Treaty was signed. The Labour Party had been staunchly opposed to the island becoming a member but the pro-EU movement, spearheaded by the Nationalists, had transcended traditional party support.

On the country’s admission to the EU on 1 May 2004, many Maltese waited with outstretched arms to receive the promised benefits. Some of these were instantaneous. A new employment market opened up providing job opportunities in Brussels with pay packets that in many cases were three to four times higher than back home. The removal of levies on products imported from EU countries meant numerous items – from wine to television sets – became markedly cheaper. And Maltese citizens were now able to travel freely within the EU. Students also benefitted as a series of EU-funded  educational programmes allowed them to enrol in universities abroad. With the arrival of a number of back office industries – at first call centres and then the more lucrative IT and iGaming companies – the future looked like it could only get better, especially once the euro replaced the Maltese lira as the national currency in 2008. And things have improved – the Dubai-based Tecom Investments saw the potential of a centrally located EU country with an English-speaking workforce and announced it would build a huge IT city employing 5,600 people.

Malta’s membership of the EU also gave rise to a dramatic increase in the numbers of African migrants, who began to arrive in boatloads – sometimes intentionally though more often by accident, either because their rickety boats ran into trouble or they mistakenly thought they had reached Italy. In 2008 alone, there were 2,700 immigrant landings and the 27-kilometre-long island was ill-prepared to receive them. The country, crowded already with 400,000 inhabitants, was in need of help, but found little comfort from the EU. Other member states were reluctant to add to their own burdens, which led to resentment in Malta against the EU’s inertia, but more particularly against the hapless immigrants themselves.

As the threat of racism increased and support for far right movements grew, Prime Minister Lawrence Gonzi, who took office in 2004, defended the migrants’ rights while the Labour opposition attempted to capitalise on hostile public sentiment. Immigration became the number one issue until, in 2009, Italy and Libya (the country from which the majority of the migrants embarked) struck an accord that put into practice an aggressive push-back policy. Since then, very few immigrants have set foot on Maltese shores (in 2010, there were just 28 till the end of October). This may have eased the government’s burden, but the UN High Commission for Refugees has posed a number of legitimate questions about the safeguarding of immigrants’ rights, questions that have not all been satisfactorily answered.

As one problem was resolved, at least for the time being, another one in the form of the economic crisis reared its head. Fortunately, Malta has been less affected by the crisis than most other developed countries, thanks largely to its traditional banking system. But some international companies based on the island, especially those involved in manufacturing, would certainly have been forced to close down their

The Maltese would find it difficult to argue that the EU experience has not been positive. Rather than give in to the pressures resulting from their expanded horizons the Maltese have adapted. And adapted rather well

operations had it not been for aid from the government, which put saving jobs at the top of its agenda when the crash hit. To date, it has disbursed over €80 million to more than 2,000 companies.

In the meantime water and electricity rates have tripled, putting pressure on businesses and ordinary citizens alike. And the deficit has soared – it reached 3.8 percent of GDP at the end of 2009 – attracting negative attention from the EU, which has threatened to take action if that figure does not fall below the 3 percent benchmark. In the latest budget in October 2010, the government increased taxes on fuel and tourist accommodation. There have also been reports questioning the future of the proposed IT city, since Dubai was one of the countries worst hit by the recession.

Despite all the stresses and strains, the Maltese would find it difficult to argue that the EU experience has not been positive. As well as opening up hitherto undreamed-of opportunities, membership has forced the government to make improvements, in particular to the country’s environment. And Malta remains a net beneficiary – for every €1 contributed since 2004, the country has got €2 back and it stands to receive a total of €1 billion from the EU if it maximizes funding opportunities. Rather than give in to the new pressures resulting from their expanded horizons, the Maltese have adapted. And adapted rather well.

About the author:

Steve Mallia is Editor of The Sunday Times of Malta


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