Denying the Denial

Maltastar  

Labour is in a state of denial. Since the election defeat of 12th April 2003 one is finding difficulty to understand what its policies are and what it stands for. One has to arrive at this by conjecture.

The most one can make is that Labour’s position is as follows:

‘Whatever our beliefs and feelings that Partnership was a better option for Malta’s future relationship with the EU, EU membership is now a closed issue and we have to accept this reality. Any talk of pulling Malta out of EU membership is unthinkable. However the actual experience of EU membership will prove that Labour was right in its original policies, forcing the electorate to regret its EU decision. Consequently Labour will find a source of credibility which will make it electable in five years time or even earlier as the discontent could be on such a scale that a five seat parliamentary majority might not be large enough for the government to spend its whole term’.

I propose that this policy is ambivalent, confusing and risky and will lead to eventual denial by the electorate condemning the MLP for more terms in opposition.

 

In deciding future policies one has firstly to examine and form an opinion on why past policies did not succeed to gain popular support in spite of having the advantage of facing a tired and fatigued government that had messed up things quite significantly on the domestic front. It is for this reason that I continue to maintain that such analysis should have come before the election of the leadership and certainly before policies start being moulded and communicated, formally or informally.

Regarding the electorate decision of April 12th my views are:

- People did not vote for the PN but voted for EU membership

- In choosing EU membership people were aware of the critical state of domestic policies under a tired and corrupt PN government.

- Labour successful criticism of the government’s handling of domestic affairs fortified people’s mind to vote for EU discipline to sort us out of our problems.

- People did not believe that Labour, that could not stay in government for more than 22 months when elected, could deliver the sort of high quality leadership and discipline needed to make a success of the Partnership policy.

In synthesis at last election Labour was its own worst enemy. It adopted policies that ensured that it would remain in opposition and that Malta would join the EU. By forcing the electorate to choose between EU membership and a Labour government Labour lost hands down in a winner takes all contest.

 

If, as I had long counselled both internally and externally, Labour adopted from an early stage the policy that the two issues are separate and that an election would be immediately followed by a binding referendum, we would have had at the very least a Labour Government with a mandate conditioned by a people’s vote to seek EU membership on the terms negotiated by the previous government. It is quite possible, though not probable, that we would have had a Labour government with a specific referendum mandate to negotiate a Partnership deal. It is not unknown for public opinion to shift following an election victory to give the newly elected government a chance to execute its policies. In either case Labour would have been in government, where it deserves to be.

Come next election time we would be four years into EU membership. It is quite possible, I would say probable, that the discipline aspired for would have been administered with the pain being assigned to a necessary unavoidable part of the re-structuring which starts showing green shoots in terms of investments, employment opportunities and economic growth in general. There should be no doubt, this time round the PN government will have to re-structure and not just talk about it. The calls for consensus are clear evidence of the determination to take unpleasant decisions at the early stage of the legislature. With or without consensus they have to do it though they prefer consensus as a guilt sharing exercise.

Those Labourites who voted for the PN would not necessarily be disappointed with such an outcome. It is what they voted for. It is what they expect. They would continue to hold a grudge against the leadership for forcing them to vote against their own Labour Party. They would not be ready to come back if the party insists that it was right and the electorate was wrong. Second denial is always easier than the first.

Which brings me to the firmly held conclusion that Labour is playing with fire, indeed is threatening its own existence, if it insists on this ambivalence; on selling its new product in an old wrapper. This will strengthen that party faction against EU membership as a matter of principle in their endeavours to make the content fit the wrapper, and will scare off those who like the new content but give it low credibility due to the old wrapper.

Labour’s state of denial is dangerous. It obfuscates visibility for political strategy. Denying the denial is however even worse then the denial itself.


Portfolio

Strategy 1 No Risk Lm 1005.135
Strategy 2 Medium Risk Lm 1001.160 (after Lm40 charges)
Strategy 3 High Risk Lm Lm 1241.460 (after Lm20 charges)
Strategy 4 High Risk For Currency . Lm 1021.410 (after Lm40charges)

All prices and rates of exchange are the latest available on Saturday 2nd August 2003.

Strategy one continued to accumulate interest of 3.5% Strategy 2 recovered slightly in line with equities bounce over last week which exceeding the retreat of bonds. This strategy is a 50/50 balanced international fund.

Strategy 3 finally delivered as it had to. Maltacom shares having went up 5c0 the previous week and went ahead a further 9c0 last week. 24% gain in the space of 2 months normally gives rise to serious consideration to cash out the profit. But I feel this was a unique case where Maltacom shares were artificially undervalued and they still have mileage to go to reach their fundamental value though one can expect that after such a sprint they might have to pause. Strategy 4 also bounced ahead in line with international equities. Excluding charges this strategy made 6% in 2 months and could well have further to go once the economic growth evident in the US will cascade down to the payroll numbers.

No changes were effected to the portfolio.