Sunday, 30 January 2011

Vehemently Against Divorce Referendum

30th January 2011
The Malta Independent on Sunday

According to organised leaks about an internal PN meeting, Minister Austin Gatt has declared that not only is he vehemently against divorce but that he would resign from the PN if the Party adopted the introduction of divorce amongst its policies. The meeting was called to discuss the Party and government’s way forward in the face of public outcry from a large section of the population which transcends party ranks, to do something about the introduction of divorce – an outcry that has led to a private member’s bill for the introduction of divorce by two prominent politicians sitting on opposite sides of our Parliament.

Minister Gatt has the right to his opinion, which must be respected. If he resigns it would be no earth-shattering event, given that he has already made public the fact that he does not intend to stand for office at the next general election. At worst, he would be bringing his political retirement forward a little.

It was also leaked that the government plans to present the divorce issue for decision by a public referendum within the next six months.

What I am vehemently against is the very concept of holding a referendum on the introduction of divorce. I consider divorce to be a civil right enjoyed by most civilised societies on earth and I find it unappetising, to say the least, that my civil rights have to be subjected to the will of the majority.

Would anyone accept a referendum on whether we should maintain freedom of expression, the right to travel or the right to follow whatever religion in which we want to believe? Would we allow a referendum on the obligation to pay taxes, on denying pension or social benefits to gays or on the right to form an association with others in the pursuit of common values?

These are all matters of principle, matters of individual rights and obligations, and no one ever dares suggest subjecting their introduction or maintenance to a popular referendum. Even if, for hypothesis sake, a majority opinion forms in society that gays should be denied pension benefits, that majority cannot enforce its opinion on the minority by subjecting such a civil right to a popular referendum.

Referenda should be reserved for matters of opinion, not matters of civil rights. We can have a referendum on whether to paint the windows of Castille blue or red. We can have a referendum on whether to change to driving on right. And we have already had a referendum on a more serious matter, such as joining the European Union, which was a matter of policy, not of civil right.

So the holding of a referendum about the introduction of divorce can only be for one or two reasons – or both. It is either an attempt by religious fundamentalists within the government to kill the issue for a few more years before an intractable majority in favour of divorce sets in among the population and in the meantime create a convenient diversion from discussing more politically harmful issues about government’s performance such as corruption, neglect and incumbency fatigue in general. Or the government, and whoever else supports the idea of deciding the introduction of divorce by means of a popular referendum, does not consider divorce to be a civil right to be enjoyed by individuals who need it, even if it is against the opinion of the majority.

I am not expecting that the Catholic Church, which is still steadfastly against the use of condoms, against the use of birth control medicine, against gay relationships and against sex outside marriage, to come out and say hey, divorce is a civil right and although we are against it we would not mind society applying it under sufficient precautions to safeguard against excessive libertarianism. But because the Catholic Church – and some of its faithful who do not consider divorce to be a civil right – is against divorce, does not mean that society in general, and our civil government in particular, should adopt the church’s standards in our civil legislation.

If we were to do so, then we would have to deny many civil liberties that today we take for granted, such as the right for adults to form a relationship outside marriage and the right of adults to have consensual sex outside marriage without even forming a relationship.

The Church and its followers have every right to their opinion, and to try to persuade others to adopt their point of view, but they have no right to impose their opinion on everybody and to deny the minority, if the pro-divorce lobby is still a minority – which is increasingly debatable – of their civil rights.

Divorce will enter our statute book whatever we decide now, even if it is denied through the inappropriate mechanism of a popular referendum. It is only a matter of time. Those who are vehemently against divorce should direct their energies to the long term and see what needs to be done to reduce the rate of marital breakdown, which is the main reason why a majority in favour of divorce may already exist or will come into being in the near future.

Politically, our elected representatives cannot escape their responsibilities towards a large section of society which, if not a majority today will become a majority tomorrow. Rather than wasting energy and money holding the minority ransom to the majority opinion through the mechanism of a popular referendum, our political parties should put their policy regarding divorce in their electoral manifestos for the next general election.

They should explain what legislation they are prepared to bring to parliament for a vote on the divorce issue and detail what conditional precautions they are proposing to ensure fair accessibility but not libertarianism. I would support divorce being accessible on mutual consent of the parties where there are no minor children. Where there is no mutual consent, or where there are minor children, divorce should only be accessible to couples who have already lived apart for more than five years to ensure that all hopes of saving their marriage have been explored and exhausted.

As divorce happens to have no distinct political delineation, the parties should offer their MPs a free vote on the issue, as it is unlikely they can find sufficient consensus to consider divorce as an inalienable civil right, as I do.

Voters should then make it their business to know the opinion of the candidates in their district on the divorce legislation that their party proposes to bring to parliament. I personally would not vote for any candidate, even within the party I support, who would vote against divorce legislation and thus be willing to deny the minority, if minority it is, of an important civil right.

We will then have a situation where the elected representatives would have a popular mandate to bring the issue of divorce in front of parliament for a free vote, something that the present legislature does not have as it did not form part of the electoral manifesto, and would force our elected representatives to carry out the responsibilities for which they were elected, i.e. to legislate or not to legislate on the subject of divorce without throwing the issue back to the electorate in a hideous attempt to avoid doing their job.

Alfred Mifsud

Sunday, 16 January 2011

Breaking Point

16th January 2011
The Malta Independent on Sunday

It is amazing how events in Tunisia this week transformed themselves so quickly from small riots in the suburbs into a mass movement for change in the capital city, leading to the emergency escape from the country of President Ben Ali who had to flee to Saudi Arabia for his – and his family’s – life.

Years of a slow accumulation of tensions finally reach breaking point and give way to sudden eruptions which brush aside all that stands in their way. We saw it in the late 1980s and early 1990s, as communism imploded. Former soviet satellite republics and East European countries reached out for freedom through street demonstrations, the most remarkable of which was the bringing down of the Berlin Wall.

Could the Tunisian revolution be the beginning of a more widespread movement searching for true freedom in other North African states? Neighbouring Algeria is particularly vulnerable, but other states are not immune.

What was despicable about the Tunisian regime was that it was grossly authoritarian but falsely dressed as democratic through the guise of oppressed elections. Ben Ali seized power in 1987 and since then had kept tight control off the country, even changing the constitution through a sham public referendum to permit him to win five consecutive democratic terms in office, the last of which was in 2009 with a declared majority of 89 per cent that was meant to last until 2014, by which time Ben Ali would be 78 years old.

Whenever a supposed democracy produces such huge majorities it also produces an unerring assessment that the democratic apparatus is a sham purely to give cover to the authoritarian hold on power of the establishment. It is much better to have a dictatorship that declares itself as such, instead of an authoritarian regime disguised as a democracy.

Tunisian protestors may have sent a message of defiance to Arab rulers, but they have also sent a rather different message to the West. For decades, Western governments depicted Tunisia as an oasis of calm and economic success – a place with which they could do business. They turned a blind eye to President Ben Ali’s harsh suppression of dissent – and ignored the fact that, while the elite prospered, ordinary Tunisians suffered.

Suddenly there has been a change of tack. In Washington, President Barack Obama has been quick to denounce the excesses of the Tunisian police and voice the hope that the country will move towards a more democratic future. His Secretary of State Hillary Clinton – at the end of a visit to the Gulf – delivered a blistering critique of corruption and political stagnation in the region.

The Obama administration – perhaps stung by criticism that it has been too timid on these issues – seems to have sensed that it has to speak out or lose credibility. The response from the EU, especially from France – the former colonial power, cannot be that different.

The EU has an obligation to ensure that true democracy is cultivated in Tunisia rather than there just being a regime change, as was the case when Ben Ali took over from Bourguiba 23 years ago.

What lessons are there for us in Malta from this Tunisian affair? The first lesson is economic. As often happens, someone else’s problem could for us be a blessing in disguise. While we regret the loss of life and hardships in neighbouring friendly countries, we should not fail to grasp the economic opportunities presented.

Our tourism industry should be ready to grab the opportunity of increased demand as tourists – at least temporarily – remove Tunisia from their shortlist of holiday destinations for 2011.

But the lessons should go beyond that. Even here we have had a perfectly democratic regime change in 1987 to a governing party that has maintained power practically ever since, except for the brief interlude of 1996-1998. We obviously do have a much more effective democracy than Tunisia, borne out by the fact that the last election of 2008 was won by a razor-thin majority, not by 89 per cent.

Yet governments who persist so much in power inevitably accumulate over-confidence which becomes perceived as arrogance and which ultimately leads to a democratic change. Why the democratic change has not happened before is mainly attributable to two basic reasons. Firstly because, as the country was focused on a mission to join the EU, not least to acquire an external means to keep control over its own domestic political forces, it could not find a decent alternative in the opposition to achieve its aims. And secondly, because we still have a gross democratic deficit in the way political parties finance their operations.

When the difference between the popular support of the two main parties is as narrow as it usually is in Malta, then this democratic deficit could have significant influence in the final outcome that decides on which side the respective parties sit in parliament.

The Tunisian affair should be an eye-opener to our government – long in power, but undoubtedly still with the country’s interest at heart. For the sake of true national spirit it has to do three things during 2011 to ensure that our country can continue to prosper under a truly working democracy.

It has to address once and for all the democratic deficit caused by the obscure way in which political parties fund themselves.

It has to come to its senses and eliminate the party divide in its public appointments. It is an insult to the half of the population of Labour creed that, with such a razor-thin majority, the government only involves the Opposition when it needs to share the blame, as with the Air Malta restructuring exercise. The appointment of George Abela as President (without any constitutional executive power) is mere eyewash and does not meet the true national need to make public appointments on the basis of merit rather than party allegiance.

Lastly, it has to realise that when people suffer for reasons over which none of them has control, as in the case of the increase in the price of energy and food, the government cannot leave it completely to market forces to sort things out through free price mechanisms. There are people who genuinely cannot afford further price increases in such basic things as heating and our daily bread and milk. Direct subsidies would not make economic sense, as they would assist everyone, not just those in need, and would delay the necessary consumption pattern changes to take account of the new price realities.

But direct payments through taxation to those most in need to protect them from the atrocious price increases that may be expected in the price of food and energy should be seriously and urgently considered, even if that would stretch our journey to a balanced public budgetary position over a longer period. Social cohesion comes at a price that is worth paying collectively if we want to collectively enjoy the benefits of living in social harmony, rather than with Tunisia-like riots.
Alfred Mifsud

Sunday, 2 January 2011

Hard Choices

The Malta Independent on Sunday
2nd January 2011

As a new year pushes the old one into history it inherits the problems that straddle the calendar divide searching for a lasting solution.    On the economic scene one such crucial problem is the Euro Monetary Union (EMU), the sustainability of which came in for serious questioning during 2010.

The EMU is a pressure cooker on burning coal building internal tensions which unless checked will ultimately explode.   Countries experiencing very contrasting economic fortunes are locked together in a single currency which prohibits rather than aides the adjustment needed to regain the harmonisation necessary for the longevity of a monetary union.
As the anchor of the union, Germany has a restricted menu to choose from to avoid a violent explosion as financial markets continue to question EMU sustainability and will certainly test the political will to go beyond lip service and actually do what needs to be done to restore it to sanity.

Basically there are four choices, three of which are very painful for Germany whereas the other is very painful for the deficit countries but quite beneficial for the surplus countries chief amongst which Germany.  Unsurprisingly Germany is trying to impose this option on the rest.

Germany is currently attempting  to force deficit countries ( Greece, Portugal, Ireland and Spain in particular) into a painful and extended adjustment process which goes against all economic logic as it imposes sharp mandated fiscal consolidation on economies that are already suffering from stagnation or outright contraction.  Keynes would be turning in his grave!   Never in the history of humankind have such fiscal adjustment programmes been successful when unaccompanied by economic growth strategies.   As the mandated fiscal consolidation spread over a number of years delivers contraction rather than growth, unemployment rather than job opportunities, poverty rather than riches, popular acceptance will wear out, aptitude for sacrifice will disappear and disenchantment will lead  to toppling of  incumbent governments with a grave risk of electing irresponsible nationalistic demagogues who promise an easy escape from new bondage. 

All this economic austerity is the price deficit countries have to pay for accessing cheaper sovereign financing from purposely created central EU mechanisms, temporary or permanent yet to be seen, in replacement of financing from the international bond markets which are demanding too high a price for lending to such deficit countries as the risk of default gets priced in, motivated not least by Germany’s double talk about bailing out countries in distress or cutting them loose.  Governments in Greece and Ireland have had no option but to accept the bitter medicine whereas Portugal and Spain may have to follow before long even though they have started their own austerity programmes in an attempt to manage their way out of the crisis rather than be overwhelmed by it.

The unsustainability of this approach is rendered evident by the fact that Germany is a great beneficiary of the distress of peripheral countries as the weakness of the Euro adds further stimulus to Germany’s export oriented economy.   As a result, whilst the peripheral countries in distress are experiencing austerity-induced contraction,  the German economy is rumbling on at growth rates higher than those experienced before the crisis. 

Can this dichotomy exist in a monetary union?   What if distress countries find it impossible to stay the course?   What if democracy elects governments with a mandate to switch off the austerity sausage machine?
Germany would then have some hard choices to make from one or a combinations of the following:

·         Letting deficit countries to default  on their debts to ease the burden of adjustment without continuing a prolonged austerity programme
·         Organising a temporary and well –planned break-up of the EMU into a hard and soft areas allowing the hard Euro to revalue substantially against the soft Euro and engineer a re-integration into a Euro V.2  at rates of exchange that would rebalance external competitiveness across the whole EMU area.
·         Accept a disorderly dismantling of the EMU with members returning back to their old currencies, inevitably leading to capital controls, sovereign defaults and probably the disintegration of the EU project.
All these three alternatives are unthinkable doomsday scenarios which will bring extreme pain not just to the deficit countries but also to the surplus countries whose banking systems are gravely exposed to the fortunes of peripheral EMU countries.  There will be no winners in such scenario, all would be losers and none would be spared the pain.   The very foundation of 65 years of peace in Europe will be brought to an abrupt end with consequences that could be too terrible to contemplate.

Germany and allied surplus countries would therefore be well advised to desist from playing Russian roulette with periphery countries in distress.    Forcing successive rounds of unbearable austerity could backfire with grave consequences.   I am not arguing for any bail-out to deficit countries through fiscal transfers as if the EU were a single state.    This is not politically possible as the EU is not yet ready for a fiscal union.   Even if it were possible, fiscal transfers would create moral hazard and remove the discipline on errant countries to mend their ways.   What I am arguing is for austerity programmes to be spread over a much longer period of time and to make economic growth an indispensable ingredient in the adjustment process.  

For this to happen the central EU financial mechanism which distress countries can access when bond markets shut their windows will have to be much better resourced and with funding costs not higher than 1% over what the strongest EMU country pays for its own sovereign funding.   Access to such funding will continue to be subject to IMF style of conditionality to ensure that aid and adjustment move hand in hand.
Suggestions for deficit countries to borrow through a  Euro bond on the collective responsibility of the  EMU members are dangerous and surely unacceptable both politically and economically to the surplus states whose reluctance to put their own balance sheet to back up weak states without having levers on the discipline for continued macro-economic re-structuring is understandable.
The Euro-zone needs German discipline but it equally needs German leadership, understanding and generosity to keep the EMU intact and remove gradually the internal tensions built by Germany’s obsession with export led growth rather than balanced growth with a strong component of  domestic demand.

It is in Germany’s interest to do all that needs to be done to ensure that the Euro survives.  The loss of competitiveness Germany will suffer if it is forced to go back to an appreciating Deutsche Mark, to say nothing of the stress that will be suffered by German banks with exposure to Euro sovereign claims on peripheral distress countries, will deal a big blow to the German economy and to the EU’s stature in the world.  What needs to be done must be done in a programmed manner now and urgently.   Otherwise it will have to be done in crisis mode on the strike of midnight when financial panic threatens to blow away the door on which it is already knocking
Alfred Mifsud