Sunday, 27 February 2011

When Fear is Gone

The Malta Independent on Sunday

Who could have imagined that the sole self-sacrifice of a vegetable vendor in an insignificant suburb in Tunisia could have unleashed North Africa’s people power that in political significance surpasses the events in western capitals of 1968?

When I commented in this column on 16 January about the fall of the Ben Ali regime in Tunisia, I mused whether the Tunisian revolution could be the beginning of more widespread movement searching for true freedom in other North African states. Never in a month of Sundays could I have imagined, however, that the freedom fervour would spread so rapidly and in a matter of weeks would bring down the Mubarak regime in Egypt and bring the 42-year hold on power over Libya by Gaddafi under serious strain if not to the verge of collapse as I write.

There are two certainties about the situation in Libya. Things can never go back to where they were and they cannot stay as they are. Something has to give, and it is logical to conclude that in the end the power of the people will overcome the hold of the incumbents so that the final destination is pretty well sketched out. What remains uncertain is how long it will take to get to the destination and what price has to be paid for freedom in terms of loss of life and extreme suffering.

As a peaceful neighbour with great vested economic interest in having Libya as a stable and prosperous country rather than a failed state, we have to hope that the true will of the Libyan people will prevail so that they can take their country forward in the way they wish. No external agent has the right to impose anything on any sovereign country, and certainly the Libyan freedom fighters should not be denied the great satisfaction of earning their freedom with their own hands, as the Tunisians did on their right (looking down) and the Egyptians on their left.

Any suggestions of foreign interference or outright military intervention are grossly out of place, as the Iraq experience has well demonstrated, and the UN should approve measures which protect those within Libya who are suffering from the abuse of international human rights rather than measures which would make their life more miserable.

With hindsight it is easy for armchair critics and political observers to accuse local politicians, past and present, of being too close and comfortable with the Gaddafi regime which is now considered despicable in the eyes of most civilised world. Such criticism would be largely out of place. Gaddafi has, for 41 years, been the recognised head of the Libyan state. We did not choose or vote for him. For as long as the Libyan people were happy or acquiescent to have Gaddafi as their head of state, we had to respect their decision. As neighbours, we had an obligation to maintain the best possible relations with whoever was representing Libya in the eyes of the world. We had to engage with Libyan leaders both in terms of economic self-interest as much as in the interest of two friendly people who had chosen their own different ways of doing internal politics.

As well argued in the leader of this week’s The Economist, it is inevitable that the western world has to engage with dictators but this never has to be pushed to the point of their endorsement. I think we have followed this doctrine well. We have engaged with Libya at all levels wherever it was in our mutual interest to engage. Libyan investment in Malta has generated jobs and Maltese investment in Libya has contributed to development in both countries. When the Libyan people needed Malta as a bridgehead to the rest of the world due the Lockerbie-related international flights embargo, Malta offered them services and hospitality. We have never, however, endorsed the repressive way of internal Libyan politics by the Gaddafi regime. And we never sold out on principles to gain economic advantages, as Berlusconi did when he allowed Gaddafi to humiliate the Italian parliament on its own turf by unorthodox behaviour during a state visit last year.

In the end, the events in Libya should work out positively for us. Following a period of turbulence until post-Gaddafi political structures are set in place, Libya must remain open for engagement with the rest of the world. It could well be that, in the longer term, Libya will be a better and more stable country with which to do business, with a greater respect for the rule of law, property rights and democratic institutions. Libya needs to continue to export its oil and develop new sources of energy in order to gain the economic wherewithal to meet the aspirations of its people.

The world needs continued access to Libyan oil as a strategic source of supply outside the volatile Gulf region. Proper and stable development in Libya could ease rather than exasperate the influx of illegal immigration into Europe. Libya’s potential development goes far beyond its small population and could offer economic attractions to sub-Saharan refugees without the need to make it to Europe illegally on rickety boats. This will be enhanced if Egypt, Libya and Tunisia, among others, join forces as they share their liberation joy and forge stronger North African economic ties leading to a single market and greater economic cooperation.

So all in all, beyond the immediate confusion and suffering, events in North Africa could become a positive force for world economic development. The world should be more concerned about events in the Gulf region. Bahrain is small, without intrinsic significance to influence world events, but it is a microcosm of what could happen in Saudi Arabia. Saudi is a major oil exporter and any instability there would have great economic vibrations. If events in Libya sent the price of crude oil up nearly 20 per cent in the space of one week, just imagine what oil price explosion will result if the free flow of crude export supplies from Saudi comes under threat from Bahraini-style instability.

There are no perfect simulations that can transpose events from one country to another with a different set of circumstances. Saudi Arabia has the riches with which to improve the standard of living of its people and buy their continued support for the benign rule of the Kingdom. But it could well be that there are things that money cannot buy. It could well be that what people really want is democratic freedom and true productive jobs.

While the West can look at events in North Africa with optimism, it would be hard to hide its concern if the situation in the Gulf becomes complicated either through foreign meddling by Iran – inspired religious fundamentalists or by instability created by the sudden fervour on the part of locals to demand things that money cannot buy.

In such a situation, $120 for a barrel of oil will look cheap. The nascent and fragile economic recovery from the morass of the 2008 financial crisis will be stopped in its tracks as we go back to a harsh recession with all the unpleasant consequences for western governments and very restricted fiscal latitude left to manoeuvre through recessions. It looks dangerous out there.

Sunday, 13 February 2011

Lost Plot

The Malta Independent on Sunday - 13 02 2011

Lost Plot

The government’s irrational behaviour is gaining a rhythm of consistency providing evidence that it has lost the plot. Objective observers can quite safely conclude that the bungling of Cabinet’s self-award of an astronomic remuneration rise, totally out of synch with the pace of the general economy, has left this government in a state of detritus. Rarely have I experienced a measure that attracted so much distaste and condemnation from a wide spectrum of the electorate not only for its substance but also for the stealth surrounding its execution.

 The sudden interest in pushing ahead with a divorce referendum in summer, when the full implications of the issue have not yet been properly disseminated and permeated down to the grass roots, is nothing if not an attempt to create a diversion of focus away from government’s general performance. In the process the crusaders hope to secure a majority against divorce before it fizzles out as the upcoming pro-divorce generations replace their conservative predecessors.

In subordinating the civil rights of a substantial minority to the will of a dwindling majority, the conservatives’ plan to mothball the divorce issue for a few years until it eventually becomes a political liability for any political party that keeps opposing it.

The excuse for calling a referendum is (I quote from the PN resolution) “that no political party in Malta has the electoral mandate to propose legislation for the introduction of divorce and, therefore, the parliamentary approval of a Bill for the introduction of divorce should not be enough for the law to come into force and this should be confirmed through a referendum”. If every measure that is not covered by an electoral mandate were subjected to a referendum, we would be voting every weekend.

 If the introduction of divorce is a major issue that needs inclusion in an electoral manifesto, it would be much better to address this issue after the next general election when the parties would have explained their position in the manifesto, rather than subject the civil rights of a substantial minority to the orthodox views of the majority. If the Jeffrey/Varist Bill is presented in Parliament with a compulsory referendum clause, my counsel is for pro-divorce MPs to vote against the Bill too.

More evidence that this government has lost the plot is the way it is dealing with private individuals and their property. A large parcel of land has been requisitioned without any advance notice to its owners by the issue of a Presidential decree offering compensation based on its agricultural value. The Presidential decree states, as is normal, that the land is required for a “public purpose”. Before even the dispossessed owners of the land had time to realise the fate of their valuable real estate, Mepa approved the integration of the ‘agricultural’ land within a larger sports complex project, which will now be offered to private interests for commercial development. Since when has it become acceptable for Big Brother to dispossess its citizens of their private property, offering them a pittance in compensation by valuing the land as agricultural, and then suddenly and within days morph this land into a real estate sports development project which will be offered to the private sector to develop?

What difference in substance is this from the PAPB days of the seventies and eighties when the Minister used to decide who becomes rich and who remains a pauper purely by drawing the line of the development limit?

And talking of the seventies and eighties, you would know that a PN government has lost the plot when it needs to revert to scare tactics by reminding the public of the excesses of a Labour government of the seventies and the eighties. This is desperate recourse to a hackneyed and ineffective tactic.

Labour has paid the price for its excesses many times over. For the last quarter century since the PN have been in government, Labour if anything has been on the receiving end of government excesses, with people with known Labour sympathies completely struck off the list of public appointments irrespective of their merit. The PN may not be as bland or as disgraceful as Labour was in handling the worst events of the seventies and eighties, but the substance is not much different. Instead of killing you with one or two blows, they kill you with a thousand cuts.

 It is the thousand cuts strategy that has transformed the country from being debt free a quarter century ago to a public debt of 75 per cent of GDP if only central government debt is measured, and well past 100 per cent of GDP if debt guaranteed explicitly or implicitly by central government is included; and this without counting the present value of future deficits on pension commitments. No way can infrastructural developments undertaken offer anything like fair value for the debt accumulated. The state of our road network, the quality of our air and other infrastructural shortcomings bear witness. 

The Maltese saying ‘l-e┼╝empju jkaxkar’ has been forgotten. I hear horror stories of bonuses which fringe public sector executives award themselves with very scant governance standards of remuneration committees and the like. But how can Cabinet members fight such lax attitudes if they themselves set a bad example?

Take another demonstration of how this government has lost the plot. The Leader of the Opposition has been taken to task by the government and PN media merely for suggesting that we should increase our tourism advertising budget to capture some of the business which is avoiding North African destinations, Tunisia and Egypt in particular, but probably also Jordan and Morocco among others. The PN media pretended to be scandalised by the mere suggestion that we should exploit the misfortunes of neighbouring competitor countries and try to increase our market share of Mediterranean tourism by promoting ourselves as a safe destination.

 What on earth is wrong with this suggestion? What is wrong is that we are not already doing it. We have always made a meal out of the troubles of our neighbours. We would be stupid not to. Of course no one is suggesting that we get involved in any comparative advertising somehow denigrating competing destinations. We should merely extol our virtues.

 The symptoms are all over the place. Pushing ahead with a divorce referendum as a diversionary tactic; heavy handedness when dealing with private property of individuals for public purposes which morphs into commercial development within a matter of days; awarding itself bulge size remuneration increases while demanding sacrifices of the electorate; the need to defend present failures by raising the spectre of 40-year-old excesses by opponents; fake outrage about a suggestion to enhance our tourism appeal as potential clients are cancelling their bookings for competitor destinations experiencing internal political turmoil.

What else is needed to prove that this government has lost the plot?