Under-Rated Events

3^rd November 2006
The Malta Independent - Friday Wisdom

A string of four events in these last few days have been under-rated by the media. They are worth dwelling upon.

Let me start with the two local events. In his replica for the budget speech, the leader of the opposition made a very important declaration which practically was eclipsed by his other pledge to remove half of the energy surcharge on acceding to office.

He pledged that if elected to power before Malta joins the euro, ie. should elections be held during the course of 2007, he would not abort the process for Malta’s entry into the euro.

The leader of the opposition was not specific enough about the rate of conversion, given opinions he had expressed in the past that we should only join at a more competitive rate. However the evident assumption is that the process of joining the euro could only be accomplished if the chosen rate at the ERM stage will not be changed on the eve of accession. The leader of the opposition would do himself and his party a hell of a lot of good if he clarifies this point beyond doubt in the course of the budget debate in parliament.

The implications of this novelty for the outcome of the next general elections should not be underestimated. But endorsing this policy of continuity for the euro project, the leader of the opposition has removed an unfair advantage he had given to the PN who were clearly planning of making the euro entry as a key point of distinction for the next election.

With the MLP now aligning itself to the rest of the country regarding the euro, the election will be fought on real bread and butter issues which is not what the government would have preferred.

Another local event which merits further attention is the clarifications which the Parliamentary Secretary for Finance gave in this newspaper last Monday to technical queries I raised in my contribution of last week. Thankfully he clarified most of my misgivings by pointing out where in the maze of figures I could find the answer to my doubts about revenue neutrality of certain measures, without which the whole issue of budget sustainability could be brought into question.

But one important issue which was only clarified in a negative way was that the true sustainable budget deficit for 2006 is in reality well above three per cent if the extraordinary revenue from sale of land is treated substantially rather than superficially.

The point made was that the budget deficit for 2007 is planned well below three per cent without the help of such extraordinary measures, but frankly the weight of the current numbers is much heavier than that of projected ones.

On the international front, one should give much more weight to the report published by the British government on the economic cost of neglecting the problem of global warming resulting from uncontrolled carbon emissions.

A report by Sir Nicholas Stern, former economist of the World Bank, endorsed by former US vice-president Al Gore, suggests with convincing empirical research that the cost of taking preventive measures now will be surpassed by five to 20 times over the next 50 years if the problem is neglected. An increase in the average world temperatures of a mere four degrees would bring economic havoc on an international scale which Stern suggests could easily compare to the great depression of the thirties.

By framing the problem in economic terms, it is hoped that politicians who were against the Kyoto agreement, which indeed is by itself a very insufficient first step compared to the measures which Stern considers absolutely necessary, will surrender in the face of stark economic reality and accept the introduction of marketdriven measures which can sustain a global effort for a step reduction in carbon emissions.

But what takes the cake for the under-rated event of the week is the statement made by George Bush during a press conference, meant to address the damage being done to the Republican’s party prospects for retaining control of the House of Representatives and Senate in next week’s election, by the bloody events in Iraq which rendered October 2006 as one of the most casualty heavy month for US forces there.

President Bush said that over these last three and a half years since US forces have been on the ground in Iraq there has been a mixed bag of good and bad news and identified amongst the bad news the inability to find weapons of mass destruction.

This is turning history on its head and I wonder how the President was not torn to pieces about it by the journalists present.

The absence of weapons of mass destruction is not bad news. By itself really it is good news. The bad news is that the US had entered into war on false pretext and faulty intelligence which is why it is desperately trying to find new reasons to justify their staying there.

In fact one of the most raving arguments in the US campaign is whether America’s interest, now that the Iraq omelette cannot be switched back to wholesome eggs, would be best served by staying in Iraq or by withdrawing.

The Republicans justify US presence in Iraq as a success by linking it to the absence of new terrorist attacks on US soil. The cause and effect in this argument is very subjective and I would rather think that the absence of new attacks is more related to military activity in Afghanistan and the strengthening of intelligence services. If anything Iraq has been turned into a breeding ground for new terrorists that may haunt the western world for many years to come.

The argument whether US forces should stay or get out of Iraq should rest only on what is in the best interest of Iraq. Would Iraq tear itself apart if US forces leave or would the country unite to rebuild itself as Vietnam did?