Sunday, 13 March 2011

Libya - Divorce - Bankers Pay - Air Malta and the Rest

The Malta Independent on Sunday

This week is a rare case of being spoilt for choice on current topics to address in this column. Unable to choose, I propose to share condensed thoughts on each topic.

The situation in Libya is becoming disastrously alarming. A stalemate seems to be developing which could morph into a protracted civil war. This will benefit no one and certainly it is unappetising for Malta having to live next to a dysfunctional state. The situation demands an immediate ceasefire and negotiations between the Gaddafi regime and representatives of the uprising to come up with a peaceful solution in the interest of the Libyan people.

The regime has to do some thorough soul searching and hopefully conclude that a 41-year legacy, which sees the country’s resources spent in self-protection against its own citizens, is a dead end. Even if the regime prevails, it will be a pyrrhic victory, surviving with more blood on its hands and shamed by the entire international community.

The insurgents should take a look at the South Africa model and, rather than be inspired by revenge and mirage justice and in the process prolonging the agony of those they seek to defend while holding out for the full pound of flesh, they should focus on how to unite the country under rule of law, respect for minority rights, institutional building on democratic models and respect for internationally recognised human rights.

If it is true that Malta was asked to mediate between the two sides and the government refused outright rather than make such mediation involvement conditional to a ceasefire, then we have failed our mission to bring peace to the region. I just can’t believe we washed our hands of a mediation offer lightly, and must conclude that the government judged the mediation offer insincere and not accompanied by a ceasefire pre-concession.

As a nation we should count our blessings and thank our forefathers, who imbued our culture with British respect for rule of law and adaptation to democratic institutions; and this without giving up on our Mediterranean flair, flexibility, ingenuity to improvise and the joy of living. A perfect recipe that rendered us successful against the odds of lack of resources!!

Whenever I meet someone grumping about being so near to Libya yet never struck any oil, I retort that finding oil will probably be more a curse than a blessing. It could give us a false sense of security, reduce our alertness while the resource-based growth of the economy will displace other successful segments, like tourism and manufacturing, rather than be in their addition.
* * *

The divorce issue has now moved on and the argument is about the phraseology of the referendum question. I remain adamantly against the referendum per se. For me divorce is a civil right, which, like other civil rights, should not be conditioned to the will of the majority.

If I am wrong and divorce is not currently judged to be a civil right, then we should stay put until there is a parliamentary majority that opines differently. I cannot help feeling that the anti-divorce movement is pushing for a referendum in the hope that this will shelve the issue and tie the hands of the next government that would not dare go against the electorate’s opinion as expressed in a specific referendum. Their insistence on a simple ‘yes – no’ question raises my suspicion. The referendum question, now that it seems that a referendum is a foregone conclusion, has to be simple but not simplistic.
A straight yes or no question would be simplistic. A question with the basic parameters regarding access conditionality and rights of minor children can still be simple without being simplistic.

* * *

Bankers’ pay is in the news again. The chief executives of Royal Bank of Scotland, which escaped death only due to the British taxpayers’ direct bailout, and Barclays Bank, which escaped death due to two strokes of luck and the cheap money pumped into the economy by the main world central banks, have been awarded multi-million dollar 2010 bonuses in the form of share rights that remain blocked for a number of years.

Bankers are a special breed. They can destroy the financial world as they did in 2007/2008, forcing governments and central banks to put up taxpayers’ money to come to their rescue, but as recovery depends on their good health they cannot be fairly punished for their misdeeds.

On the contrary, when things return to normality, bankers in full knowledge of their critical importance for recovery, start behaving with impunity and demand outrageous pay packets as they start making money again, building positions leading to the next financial crisis. I don’t think that any banker who relies on deposits guaranteed by taxpayers should be entitled to million dollar bonuses. If investment bankers still consider themselves masters of the universe, they should move their profession to hedge funds sourced by fully exposed and unguaranteed investors’ money.

Utility banking and casino banking cannot be left to reside in the same institution whatever the short-term consequences. Any revised regulation that overlooks this separation is deficient.

* * *

As Air Malta continues to sink further into the red, and the rescue money taxpayers invested continue to be eroded by accumulating losses rather than restructuring investments, we are gradually sliding into a blame game where parties with vested interests attempt pain distribution on the basis of blame apportionment as they perceive it. I hope that while negotiations are going on with unions defending the workers and the government defending its legacy, there will be a voice for the taxpayer.

We cannot have another shipyard, even if the EU were to permit it. The moment the government took a (good) decision to allow low cost airlines to operate to Malta in the wider interest of our tourist industry, it should have immediately pre-empted a thorough restructuring of Air Malta to permit it to compete in the radically changed environment without being burdened by its heavy legacy costs.

Now that we have wasted valuable time and precious money watching Air Malta sink under the burden of its legacy costs, it would lead to nowhere if we base Air Malta’s restructuring on a deadly blame game. I honestly doubt if Air Malta is still in a state of repair. Maybe it is better to consider the formation of a new Air Malta which would buy from the old Air Malta its valuable assets, including fleet, slots and intellectual rights, and re-build it from scratch on a competitive cost structure without its legacy burdens. The GM model used by the US government is worth bearing in mind. The rest can wait.

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