Tuesday, 31 January 2012

Pull the other one too, please

When an incumbent leader of our main political parties offers to have an open challenge to his leadership, he  is simply pulling our leg and the best answer is:    pull the other one too, please.

The culture in both main political parties is such that anyone who does not defer totally to the leader, anyone who dares to openly disagree, would compromise his or her political career.

I learnt that the hard way. For as long as I was not a political candidate I was a trusted political adviser to Alfred Sant and I could speak my mind and disagree where it was necessary to disagree, with respect but with conviction. Then suddenly, when against my best judgment,  I succumbed to pressure to become an electoral candidate, our relationship changed. Disagreements were considered as a sign of disloyalty,  no longer as objective good advice.

The PN expertly made sure to destroy my nascent political career by suggesting that my arguments made more sense than those of the Leader and  openly inferred that I had what it takes to challenge for leadership.

That was the end of it!

Anyone who dares to challenge for leadership a sitting incumbent, even the mere inference thereto by a vicious third party,  could just as well sign a political suicide note.

And anyone who dares challenge Gonzi's leadership can just as well look for a job outside politics.

Gonzi got rid of the two main contenders for his leadership of the PN when Fenech Adami left an empty throne.    Just imagine what fate awaits anyone who challenges his throne on which he remains sitting even whilst the supposed contest goes on.

Pull the other one too, please.   This is just a time gaining, or time wasting, tactic.

Monday, 30 January 2012

The true national interest

The national interest is currently the most used, and abused term in national politics.

Labour says that its own interest would be better served by allowing time for the PN to implode but the national interest would be better served by demanding that Gonzi acknowledges that he has lost his majority in parliament,  that this is causing damaging instability which freezes the economy and scares away investment, and that the best solution in the circumstance is to settle the issue through urgent fresh general elections.

The PN says that the national interest is better served if an injured government continues to limp on hoping that the injury might heal through some patched up deal with the rebel MP who has withdrawn his support and that the country cannot face the instability of fresh general elections.

Personally I stand somewhere in the middle.   Government must be given some time to try to mend its differences with its rebel MP.    The tactic of seeking reconfirmation of Gonzi as  PN leader is nothing but a time gaining excuse.   The undoubted re-confirmation of Gonzi will not of itself move us one millimetre closer to finding a real solution to PN's problem in parliament.   Dr Franco Debono has said time and time again that he has no confidence in Dr Gonzi and that he has resigned from the PN.   I just don't see how a reconfirmation of Gonzi as the unchallenged PN leader will be any solution for the Debono issue.

However this must not prolong unduly.    There is an important money bill in Parliament and on this Franco Debono's abstention cannot be resolved by the Speaker's vote.   This must be settled during February so that if we have to go fresh elections we do so in May latest June.

The instability caused by a general election is no excuse for staying in power without a majority in parliament.   Such instability would only be brought forward from next year when an election has to be held in any event.   If PN continues to limp on in government unstably then the instability will be stretched from a mere 5 weeks to several months.

Gonzi should not hide under his re-election within the PN to avoid doing what is really in the national interest.

Germany offends Greece

Germany has suggested that as Greece is not succeeding to work out financial miracles, delivering increased tax and privatisation revenues when its economy is imploding under the weight of austerity measures imposed upon it, than Greece should lose its fiscal sovereignty and have its Budget controlled by the EU Commission in a direct manner.

Greece has obviously retorted that this would amount to a national humiliation and just a veiled version of a German re-occupation.

Greece should reconsider its approach.   It may well be in its interest to agree to such external control of its budget, but subject to one important proviso:

That, as the great economist John Maynard Keynes had suggested when discussing the architecture of the IMF at Bretton Woods in 1945, the same arrangement would apply to countries in chronic surplus as much as to countries in chronic deficit.

Disequilibria come both from chronic deficits and as much as from chronic surpluses.  The same arrangement for budgetary control should apply for Germany that is causing as much instability for the Euro system from the virtuous side as Greece from the vicious side. I would dare to suggest that unless Germany leaves the Euro system temporarily and rejoins at a revalued rate to the tune of 25% the Euro system will remain in crisis and under pressure.

Germany should beware what it wishes for.

Is Enemalta going green or Greek?

Going green or Greek?
There are many suggestions to think that Enemalta is going Greek rather than green as their logo implies.

  • Audited Accounts for 2009 were only approved in July 2011 and published in December 2011.
  • Audited Accounts for 2010 have not yet been approved/published
  • The figures in the Accounts of 2009 do not tally with figures published by the National Audit Office (NAO).   According to the NAO report for 2010 the government guaranteed loans at Enemalta as at 31.12.2009 amounted to EUR 448.755,253 ( NAO - Public Accounts 2010 page 45).  The same figure is quoted at EUR 494,646,000 in Enemalta's Audited Statements 31.12.2009 (page 33 Note 3.2).  This is a difference of EUR 46,000,000 which someone must explain.  Not exactly peanuts!

  • In calculating its financial gearing Enemalta deducts from its borrowings the amount guaranteed by government ( Enemalta - Audited Statements 31.12.2009 page 33 Note 3.2) .  This is the same as saying that Enemalta is not responsible for the borrowings guaranteed by government and that ultimately the government will make good for these under its guarantee.   This confirms my earlier criticism that the public deficit and debt figures are incomplete without taking the contingent obligations at Enemalta.
No doubt Enemalta is a financial basket case just as Greece!

Sunday, 29 January 2012

Franco’s last dance

This article was published in The Malta Independent on Sunday - 29th January 2012

The vote of no confidence debated and decided in parliament this week produced the exact opposite of what was intended.  Instead of stability it accentuated political instability.   We have a government without a parliamentary majority, an opposition that failed to assemble a majority  for its no confidence vote, and a rebel member of parliament who is not supporting the government but has not stepped  up his resistance yet to the point of total adversity.
Dr Franco Debono has a vested interested in not toppling over the government.  The moment he does so he is history.   And once he is history he cannot deliver the agenda for the progress of the many valid points he raised in his criticism of government’s inertia.

What stands out from these events is that the vast majority of MP’s agree with Dr Debono’s arguments.   Many find fault with his methodology but that’s another argument. What no one can deny is that Dr Debono believes so much in his causes that, not unlike yours truly, he is prepared to sacrifice his political career to push forward an agenda he truly believes in.   He has put the national interest before his own.
 For that alone Franco deserves respect. 

The PN government cannot continue to govern without a parliamentary majority.    The Prime Minister will not be taken seriously in international fora.   And government cannot function if it is not sure it can find parliamentary majority even for crucial money bills.    So when this weekend the PN general council expresses unconditional confidence in its current Leader, it has to mandate him to inform the President that Dr Gonzi no longer commands a majority in parliament,  and to ask the President to dissolve parliament unless in the opinion of the President there could be another member who can obtain the support of a majority in parliament as it is presently composed.
Once this happens the President should not do the same mistake done in 1998 by the then President Ugo Mifsud Bonnici by dissolving parliament without making any effort to explore if there is another person in parliament who can form a majority government.
The President would have to consult with the Leader of the Opposition and with Dr Franco Debono to see if between them they can form an interim government with a parliamentary majority for a strict mandate to deliver the agenda on which there is broad agreement.   This will include, as a minimum, legislation to control the financing of political parties, changes to libel law and changes to the Broadcasting Act to make TVM under the direct responsibility of the Broadcasting Authority with adequate and fair access to political parties.   These matters have been paid lip service for more decades than I care to count, and the PN government is clearly against any change of the status quo which has given it a clear political advantage to achieve and retain power in spite of the democratic deficit inbuilt in the present situation where political parties are financed by ‘donations’ from business circles who then expect handsome return for their investment from the government they help to elect.
If any proof was needed that the PN is not serious in promoting serious legislation in this regard it came along when it brushed aside the work done by Dr Franco Debono when he was parliamentary assistant in the office of the Prime Minister,  and instead promoted a new draft, reportedly authored by President Emeritus Dr Ugo Mifsud Bonnici, which makes a mockery of the whole project to bring discipline to the current chaotic situation of political party financing.
The draft suggested by  Mifsud Bonnici brings in the concept that party members can escape discipline for any amount of money donated.   To avoid the intended discipline, all that a donor with investment expectations has to do according to this draft,  is to become party member.
The draft of Franco Debono which now forms the basis of a private members bill presented to parliament does away with such non-sense but in my opinion is still not strong enough.  I continue to maintain that all donations to political parties should be abolished, there should be no thresholds under which donors can swim without any discipline, and that political parties should be just that, not holding companies for clusters of businesses including media companies, travel agencies or mobile phone network operators.   Political parties, as the main instruments for the execution of democracy, should be financed in a controlled manner by public funds.   Taxpayers pay for so many frivolous projects, even for  a bridge on the breakwater, it is small fry to finance democracy especially if that helps to stamp out expensive corruption.
To ensure that Debono gets the respect he deserves the legislative suite of the interim government should be commonly referred to as the Debono legislation  as he performs  his last dance in politics by delivering on the agenda that he so firmly believes in.
This has to happen within a very brief time frame so that once parliament under the interim government, possibly led by Dr Debono, performs the restricted agenda agreed with the President, parliament gets dissolved and the country proceeds to fresh general elections before summer.
This suggestion will have another great advantage to protect democracy, the national interest and taxpayers’ money.   It will remove the power of incumbency that the PN so masterfully uses in the run-up to the general elections which is a serious source of financial ruin to the country’s economy and the physical environment.
Once the interim government will have a very restricted mandate, the government will go into caretaker mode where new employment with the public sector will be totally frozen, MEPA permit issue will be postponed till after the elections and all freebies and favours so common during election campaigns will be abolished.
So those that have been occupying Armier illegally for decades at the expense of law-abiding citizens, will receive no promises of having their illegal position regularised, hunters and bird trappers will not be promised the impossible,  surplus Air Malta employees will not be promised easy employment alternatives with government, and many other decisions out of the strictly ordinary course of business will have to wait until a new government gets sworn in.
This may freeze the economy for a few weeks ( as all general election campaigns normally do) till fresh elections before summer, but it will save the country the huge cost of abuse of incumbency and will respect true principles of democratic values.
Franco Debono deserves a platform from which he can give us his last bow.

PN General Council: what exactly are they discussing?

I am hearing the Secretary General of the PN Dr Paul Borg Olivier addressing the General Council and he is saying that the choice today is between the experienced and safe hands of Dr Gonzi and the inexperienced hands of Dr Joseph Muscat.

Forgive me, but that would be the choice when and if elections are called.  The choice today is whether the PN can limp on in government without commanding a parliamentary majority, with all the instability and adverse consequences that would entail, or go for early elections.

That's what they should be talking about not the usual Labour bashing which is a mere monologue repetition of what they had all the chance to speak about in parliament in four days debate about the no confidence motion.

Somebody should call order!

Friday, 27 January 2012

Three winners one BIG loser

The events in parliament yesterday produced three winners and one big LOSER.


The PN -
gained some more time in government and can organise the electoral test under less stress.

The PL -

solidified the perception as a government in waiting and as the PN government increasingly looks like  a zombie it improved its chances of winning the next general elections.
Dr Franco Debono -

kept himself in the limelight as he continues to hold the sword of Damocles over the GonziPN government's head.

The nation and the general public - the vote accentuated the political instability causing deferral of investments and general stagnation of the economy.   Even worse it risks seeing its hard earned tax money frivolously spent by a government trying to "buy" votes through electoral favours in the knowledge that either the next budget will be somebody else's responsibility or that it will have another five year tenure in front of it to roll back the electoral favours.  Remember the difference between the budget for 2008 and the one for 2009?

Lord, why should the taxpayers always finish with the short straw?   Anyone for a taxpayers revolution?

Thursday, 26 January 2012

I told you so!

Franco Debono has abstained.  

I hate to say it,  but " I told you so" on the 14th January 2012.   See this link.


The bottom line is that while government can limp on,  it has to admit it is not in command of a parliamentary majority.

For the country's sake, the lingering instability has to be resolved by an election on this side of summer.

Wednesday, 25 January 2012

Tonio's grasp on the economy

Tonio's grasp

Minister Tonio Fenech accused Labour that it has poor grasp over the economic situation.   This implies that he has a firm grasp.  You want proof?   Consider these:

  • In the Budget speech of 14th November he predicted that Malta's economy will grow by 2.3% in 2012.  IMF said it will grow by 1%.  He now explains that the international macro-environment has worsened since the Budget.  This is untrue.   The US economy is doing better.  The Greece problem is cruising towards some solution.   The ECB has flooded the market with liquidity to remove risks of credit crunch.  It was just undue optimism on his part.
  • The EU forced him to shave off Eur 40 million expenditure.  We still don't know which votes will be hit by the fiscal axe.

  • Air Malta will not only not repay the EUR 52 million loan as predicted in the budget but needs many many millions to finance its restructuring.

  • Enemalta published its 2009 on the quiet showing gross losses on hedging and no answer has been forthcoming on the exploding debt of Enemalta ( over 700 million euro) guaranteed by the government outside the budget which can never be repaid except by the taxpayer  ( just like the bank loans of shipyards guaranteed by government which had to be funded at taxpayers expense).
Show us your grasp Minister!!  Admit that the 2012 Budget is dead in the water and present another one before going for elections.   We might learn something which improves our grasp over the economic situation.

Democratic fraud

In parliament yesterday:

Minister Dr Mario Demarco:
That the opposition had moved a no-confidence motion when there was no reason for it amounted to democratic fraud
Minister Mr Tonio Fenech:

there are no arguments as to why there should be a no confidence vote in the government and it was the opposition’s motion that was causing instability
I find this a perfect example of inverse logic.  There is no reason for vote of no confidence, eh!!   What reason is required beyond the maths that going by Dr Franco Debono statements the government no longer commands a majority in parliament?

The opposition causing instability?   In my dictionary instability is sourced by a government continuing to execute without being sure it commands a majority in parliament.  

Has the PN been so long in power that they forgot the basic rules of democracy?

Even if the government were performing an outstanding job, which clearly it isn't, without majority support in parliament it is the Opposition's duty to present a motion of no-confidence if the government refuses to move its own motion of confidence.   It is just obvious that the Opposition thinks it can do a better job than government just as it is obvious that the government thinks itself indispensable for the country.

In the end the people will speak through the ballot box.  That's simple democracy!   Anything else is democratic fraud.

Monday, 23 January 2012

IMF report is no certficate for government

The PN is trying to interpret this report as some certificate of competency to its government wrapped in a warning that any change of administration through democratic elections could jeopardise our economic prospects.

In its annual report the International Monetary Fund (IMF) has issued these warnings to Malta:

  • Malta needs sound governance, effective supervision and robust financial buffers.
  • The policy challenge is now to balance the imperative of maintaining growth and employment against the pursuit of long-term fiscal sustainability.
  • Malta has to navigate very difficult international environment
  • Malta's resilience to date cannot be taken for granted
  • Malta's economy now faces a worsening external environment that has created new risks and headwinds to growth and financial stability.
  • Uncertainty in economic policy could adversely affect growth if investment decisions and structural reforms are put on hold.
  • Malta's GDP growth  for 2012 is expected to be 1% compared to the 2.3% growth assumption made at last Budget presentation in November.

This is a totally distorted interpretation to what the IMF actually said.    If I were to put the IMF's report message in simple language it would read:

Malta has a very versatile and resilient private sector whose resourcefulness, hard work and zeal make up for the deficiencies of the  public administration; but the government has to be careful not to take the private sector's resilience for granted and should work on a truly fiscally sustainable programme as the private sector's willingness to lend on the cheap to the government is not infinite
Malta's economic resilience is shown by our record of turning crisis into opportunities.  The oil crisis of the 70's was used to stimulate an inflow of foreign direct investment in manufacturing that was looking for a cheaper production base to remain competitive.  Some of these industries are still here like Brandt, Merit, and Malta Hospital Products and Malta Netherlands Pharmaceuticals although they have evolved and changed names.   The recession of the 80's brought us ST Thomson.

Even the current crisis has had its silver linings for Malta.   The opportunities of the new realities in Libya;   attraction of tourists who normally would have gone to Egypt or Tunisia;   financial services attraction for offshore funds to register in Malta and come into an EU respected onshore regime.

So far the Euro crisis has been a benefit to our tourism sector.   The Pound Sterling has strengthened and the German economy is booming.  So these two main source market have more than made up for losses from lesser markets like Spain, Greece and Italy ( Italy was always very seasonal and very specifically related to Casino business which has kept its momentum).

So a change of government should not only mean continuity of investment policies but in reality we could benefit from having a government that really respects sound governance so as not to abuse of the private sector's goodwill to keep the economy going and to continue financing government needs without any recourse to foreign borrowing.

Credit should be given to whom it is due.  The Maltese economy has performed in spite of, not because of this government.

Sunday, 22 January 2012

Shaping the PN dynasty by burning bridges

You would expect that following Edwin Vassallo's exhortations to Franco Debono that the PN doors were still open for him and that he will find all the necessary space to meet his aspiration within the PN fold, an effort would have been made in this last weekend before the confidence vote that could make or break the PN government, to smooth talk Franco away from his belligerence.

But it is evident that no one is really in control at the PN's house and there are young turks who are prepared to burn the Gonzi government in order to shape themselves up for the PN leadership as Gonzi will have to leave after an election defeat.

There can be no other explanation to the way that Beppe Fenech Adami went out of his way yesterday to ensure that all bridges between Franco Debono and the PN get burned beyond repair and thus guarantee Gonzi's downfall this week in Parliament.

Evidently there is a dynasty in the making within the PN fold.  Don't be surprised if the next leadership will again be a contest between the Fenech Adami and Demarco dynasties as had happened in 1977 when Eddie Fenech Adami was elected to lead the PN in preference to Guido Demarco.

Obviously this will keep the tradition of lawyers at the helm at the PN who has no space for anyone from the modern professions even if he comes in the quality of John Dalli.

Contrast that to Labour whose only experience of having a lawyer at the helm ( KMB) was disastrous and never won an election.   Otherwise it had a medical doctor (Boffa) an architect (Mintoff) and two Economists/Management Professionals ( Sant and Muscat).

But in the PL there are no dynasties, thankfully.

Friday, 20 January 2012

You are not alone

No this has nothing to do with Liverpool's 'you'll never walk alone'.   It is no secret that I am an INTER fan and would not dedicate an article to a British football team.

Confused about Air Malta

It has all to do with the news coming out regarding Air Malta.   And if the news is confusing you then you are not alone because it is really, I mean really, confusing.

This was reported in the Times today.   My comments appear in red hereunder

The government is seeking EU approval for a capital injection of 78 million euros into Air Malta.

Where is the money coming from?  It is not in the 2012 Budget.
Speaking during the presentation of the Air Malta annual report and consolidated financial statements for the year ending last March, chairman Louis Farrugia said the government also wanted to convert the 52 million euros rescue loan given to the airline into share capital.

In the Budget for 2012 this EUR 52 million appears as revenue and government said that in 2012 it will recover the loan made to Air Malta.  Now in less than 2 months  government seems to have changed its mind and is proposing to convert this loan into share capital.

So could it be that the budget cuts announced earlier are meant to make up for this 'lost' revenue??

Mr Farrugia also announced that that the airline will be selling its property to the government for 66.2 million euros. The promise of sale was signed in December and the first down payment of 20 million euros was received this month.

Again there is no budget for such an investment by government.   This builds the impression that government will be going for an election before presenting the 2013 Budget so all these problems will be inherited by successors.

How was the value of EUR 66.2 million arrived at?   MELA QEDIN SEW!!!  Government gives valuable land at Bugibba to the new owners of Maltacom for free and then it buys land from a subsidiary company at full market price and more!!

Say a prayer for the Maltese taxpayer, please.

Watch this on Youtube



This was recorded on Thursday 12th January 2012 and first boradcast on Favourite TV on Tuesday 17th January 2012

Thursday, 19 January 2012

Hands off the Constitution!!

According to The Times of today:

The Nationalist and Labour parties are both open to discussing a future change to the Constitution to avoid situations where a government ends up with a one-seat majority in Parliament.

Hands off the Constitution!  If the voters want to have a government with one seat majority, then so be it.   Governments should never feel too comfortable in office.  

Any constitutional change should be only made if it reflects better the will of the electorate.   The number of majority seats in parliament should reflect the majority of votes.    If voters give a three seat equivalent vote majority but due to usual gerrymandering of district delineation government ends without a majority or with just one seat majority then it is fine to change the constitution in this sense.

But giving any government a stronger majority than that willed by the electorate is not in my democratic dictionary.

Please show some respect to the sovereignty of voters.

Great promotion for our financial services

Watch this video on Bloomberg and you will see what I mean:

A million dollar advertising will not produce half the benefits of this interview.

Well done to whoever was involved and to the MFSA.

Tuesday, 17 January 2012

No comparison!

The government is obviously trying to gain time before the parliamentary vote on the motion of no confidence is taken, hoping that time might produce a solution which is not immediately available.

To justify this manana government says that Labour, in its thirst to gain power, just can't wait to force early elections and that in 1998 the PN had allowed ample time for Labour to try to patch things up with Mintoff. 

So much so, the PN maintain,  that Mintoff started showing displeasure by abstaining from votes on the 1998 budget late in 1997 and parliament was dissolved after loss of parliamentary majority on the Cottonera project in August 1998.

There is absolutely no comparison between these two positions. Mintoff always made clear that he did not want the fall of a Labour government and did not accept that the vote on the Cottonera project should be considered as vote of confidence.

By contrast Franco Debono has repeatedly stated that he has no confidence in the Gonzi government and will not support a vote of confidence.

In circumstances like these the government has an obligation to verify whether it has a parliamentary mandate, and the sooner the better if we truly believe that the country needs stability and that such stability comes from the normal evolution of the democratic process, not from its denial.

Sunday, 15 January 2012

Logic does not live here anymore

This article was published in the Malta Indepenent on Sunday - 15th January 2012

The government and the PN seem to have been so upset and unprepared for the possibility of losing their single seat majority in parliament that they have lost all sense of logic and seem to have learned nothing from Alfred Sant’s  experience in 1998.   This is surprising given that they had warning signals flashing for several months.
They should have learned that in circumstances like these, the least said in public the better and that restoration of the majority stands better chance through direct encounters away from the cameras and reporters’ note pads, than through gladiator pronouncements issued for public consumption.

I have never seen the Prime Minister giving such a poor performance as he did on Xarabank of Friday 6th January when the issue blew up in public after the cabinet reshuffle.

His argument that the country needs stability and therefore he would not be seeking a vote of confidence in parliament is an absolute non sequitur.     There can be no question about the need for stability, but such stability cannot come by continuing to govern without validating the executive’s parliamentary mandate when it is, in the best of circumstances, highly improbable that such parliamentary support still exists.  It is the very uncertainty about the existence of a parliamentary majority that creates instability and the earlier the issue is resolved one way or the other, the better for everyone and for the national interest.

The Prime Minister’s argument that because there are important EU meetings scheduled for the coming weeks we should practically suspend the rules of democracy,  is nothing short of condensed arrogance, to the point that it seems to be arguing that there is no one else who can represent Malta at such meetings other than Dr Gonzi.  

Even more arrogant is the PN’s attack on the Opposition in general and its Leader in particular, as if the Opposition is responsible for their problems in parliament.   The PN stooped as low as claiming that Dr Muscat was ‘bowing to extremists within his party and seeking a general election even though this was not in the national interest’.

That general elections are not in the national interest is a gratuitous assertion.  What is surely not in the national interest is having government persist in executive authority without commanding a parliamentary majority.   In such circumstances general elections would be very much in the national interest as a means to restore democratic stability.   This unless the PN imply that stability depends on their being  in government and that  if the PL were to win a democratic mandate to govern they (PN)  will still have the means, through their network  with other cells of power  in society outside politics, to destabilise a democratically elected Labour government.

The Opposition Leader has so far reacted with wise caution.   The Speaker’s decision not to convene parliament early was accepted gracefully.   He has also wisely counselled government to test its majority mandate in parliament and warned that undue procrastination would lead to instability.  In such circumstances the Opposition will be left with no alternative but to settle the issue by demanding a vote of no confidence.

Or are the PN expecting  Labour to support them in parliament to restore their lost majority?    What goes round comes around even if it takes thirteen years.    In 1998 the PN Opposition did all it could to foment trouble within Labour’s parliamentary ranks to negate a democratically elected government of its majority and force it to an early election when it had executed only one-third of the legislative term.  This in spite of the fact that Labour had obtained a majority which should have produced  a three seats margin rather than the one Mintoff-dependent seat it actually got.

The PN have executed three quarters of their legislative term for which it received a popular vote majority of only one half a parliamentary seat.   However as parliamentary seats, unlike shoe sizes, don’t come in half measures they got an overstated majority of one parliamentary seat.   Furthermore this majority is not being compromised  by a senile 82 year old at the end of his political career and whom the PN had opposed for nearly half a century, but by a young MP who was never criticised by PL and who is standing for his views even if in the process he is sacrificing a promising political career.

In all this there is the insulting attitude, which exists even at the PN grass roots level, that the blues have a God given right to govern this country and that the reds are an inferior race, children of a lesser god,  incapable of taking this country forward and whose electoral wins should remain at the level of local and European Parliament elections.

Logic seems to have taken its leave even at the Ministry of Finance.   In order to get released from the EU discipline for Excessive Deficit Procedures (EDP) resulting from EU review of its 2012 Budget,  it issued a dry statement, on the same Cabinet re-shuffle day, declaring that it had agreed to shave off 0.59% of the GDP from the Budget expenditure that Malta parliament had approved before the Christmas recess.  0.59% does not look like much until one explains that really it amounts to EUR 40 million which suddenly government has found it can do without.

This raises more questions than it answers.    The Budget for 2012 projected a deficit of 2.3% of GDP.   This is well within the 3% limit which triggers an EDP.   So if the EU forced government’s hand to shave off 0.59% it means that the EU concluded that in its judgement the 2.3% calculated deficit was unrealistic and that it would have been nearer to 3.59%.    This is a difference of EUR 87 million which  could have resulted either because economic growth was considered too optimistic or because budgetary revenue was considered unrealistically high, or a bit of both.

Following all the process to have the Budget approved by parliament one would expect that such a major change coming so soon should be accompanied by an explanation as to why it was considered necessary and on which votes will the expenditure axe fall.   Nothing of the sort!  The press release simply states that the major part of the cuts will come from Programmes and Initiatives (0.21%) and Government Entities (0.17%).

Unless one assumes we are all morons and should accept government’s outbursts uncritically, we deserve a more detailed explanation.

Saturday, 14 January 2012

So what's next?

So what's next?

The news this week was dominated by Franco Debono's declaration of no confidence in the Gonzi government and by consequence whether the Gonzi government still commands a parliamentary majority.

This has been discussed on Bla Agenda, Inkontri, Bondi Plus, Iswed fuq l-Abjad, Xarabank and other current affairs programmes and has dominated the news bulletins all week long.

The position of the two main parties has been contrasting as usual.   The PN said this is not the time to seek votes of confidence or no-confidence in parliament which could trigger early elections as it is not in the country's national interest to have such early elections.  Labour argued that what is not in the country's interest is the instability of having a government that is not backed by a parliamentary majority so it is important to settle the issue one way or another as a matter of urgency.  PL in fact presented a motion of no-confidence which will have to be voted upon probably next week.

While Franco Debono has kept firmly to his line of criticism of the Gonzi government, he has avoided Yes or No answers about the confidence motion.

So what outcomes are likely from the parliamentary vote on the no confidence motion?  

There are four possible outcomes:
a. Debono succumbs by resigning or restoring his confidence in Gonzi in which case Labour's motion would be withdrawn.   Probability:   VERY VERY LOW

b. Debono simply votes against the no-confidence motion in which case it will be like Shakespeare's 'much ado about nothing'.   Probability: VERY LOW

c. Debono simply votes for the no confidence motion in which case it will start a constitutional process involving the President with the probability of holding early elections.    This would take Debono out of the spotlight he evidently cherishes, so it has a VERY LOW probability.

d.  Debono abstains or simply absents himself in which case the no confidence motion will probably be defeated by the Speaker's casting vote, in which case Debono keeps his spot in the limelight, the instability keeps on and we enter a high gear election campaign that could be as long as 17 months.  Probability QUITE HIGH.

So whilst everyone is paying homage to the absolute need for the country to be restored to political stability the likely outcome is the one which delivers the exact opposite.

The PN argument that early elections are a source of instability is simply false.  Early elections would trigger instability during the 6 week long campaign but after that the country has a properly mandated government with a five year term ahead of it.   Instead the PN seem to find stability in the instability of a 17 month long election campaign where Debono from time to time throws an arrow threatening to destabilise the government unless it wakes up from its lethargy.

Sometimes preserving fake stability is the very source of instability.

Tuesday, 10 January 2012

Let's stop mumbling!

Have you ever seen a Press Release that mumbles its message as this one announcing a revision of the 2012 budgetary expenditure figures?

The first question is whether this is a government own initiative or an imposition by the EU whilst reviewing our Budget for 2012.

From subsequent comments it appears that this initiative follows feedback from the EU.

If this is so what exactly has the EU told us?   Our Budget for 2012 projected a deficit equivalent to 2.3% of the GDP and therefore well within the 3% trigger limit of Excessive Deficit Procedures (EDP).

So if the EU is forcing us to shave off 0.59% from our deficit does this mean that the EU concluded that the true realistic deficit for 2012 was 3.59% of the GDP rather than the 2.3% initially pencilled in the Budget approved by Malta's parliament.

That is a gap of 1.29% of the GDP which in quantitative terms amounts to EUR 86 million difference.

If my interpretation is correct it means that Government has to shave off 0.59% of GDP expenditure equivalent to EUR 39.5 million to deliver a Budget deficit of 3% rather than the 2.3% planned.

After having the Budget approved line by line by parliament it is not enough for Government to change the figures by shaving off expenditure of almost EUR 40 million without informing which votes are being changed and from where these savings are coming.   Only by having such detailed submissions can one judge how realistic these expectations are.

Most objective observers, yours truly included, had criticised the 2012 Budget for the optimistic base estimates it was making especially on the revenue side.    Is the expenditure cut meant to make good for unrealistic revenue expectations?

These are serious matters which merit a detailed presentation not a mumbled Press Release.

Saturday, 7 January 2012

Offending democracy

Prime Minister's decision, announced on Xarabank yesterday, that in spite of loss of parliamentary legitimacy for his government he will not seek a vote of confidence, is democratically offencive.   His reference to Alfred Sant's gallant decision to go for elections, when Mintoff withdrew his support and removed his one seat parliamentary majority, as an error further shows Dr Gonzi has lost respect for basic democratic principles.

There is more reason for Dr Gonzi to seek a vote of confidence in parliament than was the case for Dr Sant.   Dr Sant had a 1st count vote majority of 8000 votes and should have had a 3 seat majority in parliament.   Dr Gonzi 1st count vote majority is only 1600 odd votes which is overstated by his one seat majority in parliament because, unlike shoe sizes, they don't come in halves.

When politicians put themselves above democratic principles and do so in name of the democracy itself than the situation becomes dangerous.   When politicians think themselves indispensable for the stability of the country, then they cross the line from democracy to dictatorship.

If in spite of the clear statement made again this morning again by Dr Franco Debono that he will not support a government led by Dr Gonzi, the Prime Minister refuses to behave gentlemanly and democratically in the footsteps of Alfred Sant, then he loses his democratic credentials.  If he persists the Opposition has the duty to request a vote of no confidence in the government and the President, as the guardian of the Constitution, has the duty to ensure that the Prime Minister, in the absence of a clear vote of confidence, either makes way for a new leader or dissolves parliament.

The alternatives are:

If Dr Gonzi wants to plod on he has to persuade Dr Debono to show support or at least abstain.

If this is not possible and the PN want to stay in government then Dr Gonzi has to make way for someone else whom Dr Debono may approve of.

If none of this is possible the President has to ask the Leader of the Opposition if he wishes to form a government which will have the support of the majority in parliament.  If this is not possible then the President has to ask Dr Debono if he wishes to try to lead such a government himself.

If none of this works then the electoral mandate needs to be refreshed through dissolution of parliament and  general elections. 

That's how democracy works and nobody, I repeat NOBODY,  is above it.

Friday, 6 January 2012

What a day!

Development No 1

The government has rescinded the ministerial pay rise which was decided in 2008.

When Government introduced these pay rises they were given by stealth and they were discovered much later  to the consternation of the whole nation that was being asked to accept austerity.    Now that the election is on the horizon  the pay rises get publicly and officially rescinded, but not with retroactive effect.

Does government expect us to applaud?

I consider this gesture as an insult to my intelligence.

Development No 2

Three parliamentary secretaries made ministers

Probably these three deserve the promotion as they worked better than some fully fledged ministers.   But how would anyone working on the Titanic feel if the Captain handed his promotion letter just before his call for abandon ship?

Development No 3

Cabinet reshuffle

The Prime Minister seems to have reshuffled the ministries out of convenience rather than conviction purely hoping to secure Franco Debono's support in parliament.   It seems to have backfired.

Development No 4

Franco Debono: "I have absolutely no confidence in the government"

There are no two ways about this : government no longer commands a parliamentary majority.   What goes round comes around even if it takes thirteen years.   My views are the same as they were in 1998.  The seat belongs to its holder but the parliamentary vote belongs to the Party on whose platform the holder was elected.  But the PN did not argue that way in 1998 and certainly cannot argue that way now.

Development No 5

Opposition leader calls on PM to seek vote of confidence

There is no need for such call.  Government has an obligation to seek a vote of confidence given that Franco Debono's  position negates its thin parliamentary majority.

What a day! And it has not ended yet.

Tuesday, 3 January 2012

GRECO - no Greek rules for party financing, please!!

Political party financing is a very crucial aspect for the working of a true democracy.   The EU has set rules to ensure such financing is well regulated and a  Council of Europe Group of States against Corruption, acronym GRECO, supervises national regulations.

It is reported that GRECO has objected to government's suggestions to make a threshold of EUR 10000 above which donations will have to be reported and the donor identified, and that such threshold should not apply to donations from party members.

The PL has said it has not been consulted either on the Government's proposal or about the GRECO report and has stated that the threshold of EUR 10,000 is too high and that it objects to different rules for party members as it is just a way to take the bite out of the regulations.

Franco Debono MP has publicly disassociated himself from the PN's submissions.

I have been writing about this matter for years on end and my thesis is that political party funding should be done by the State under strict controls and that all private donations should abolished.   Any threshold will only serve to defeat the very scope of the regulations.

Here is a typical article I published in 2003:

Regulating Party Finances


13th June 2003

The Malta Independent - Friday Wisdom
Alfred Mifsud

The Treaties of the EU expressly acknowledge the role of the European political parties as important factors for integration. The Treaty of Nice, which entered into force on 1 February 2003, stipulated that the statute and financing of political parties at European level should be regulated. The Treaty changed the decision-making procedure on this issue from unanimity to qualified majority, and gave co-decision - as well as registration - powers to the European Parliament.

Party donors could become
a shadow government

Now that we have decided to adopt EU standards for regulating the most trivial matters of the way we do things, I trust there will be no resistance in adopting EU benchmarks also regarding party finances.

Political parties are the backbone of our democratic system.    Parties spend hundred of thousands liri each year just to keep their operation going.   They made, and in the case of the PN continue to make,  substantial capital investment in immovables and equipment.  Each year they have to run expensive elections at local level and once every five years, at least, they have to meet the exorbitant cost of running  general elections.

Political parties source  their revenues from three main sources.   Membership fees collected annually, fund raising leisure activities,  and donations.  I could have included a fourth in the form of commercial profits earned by subsidiary commercial enterprises.  These are  engaged in exploiting a loyal captive market through provision of services in media and travel.   However, I am under the impression that such commercial activities are more a drain rather than a source to central finances at least on a cash flow basis.

Of the three sources identified donations by far constitute the largest source of income for political parties.   It here that the issue of democratic governance comes in.   Are the interest of democracy prejudiced by allowing political parties, as  the principal mechanism for execution of democracy, to raise their finances by private handouts beyond any democratic control?

Both main parties try to give the impression that such donations are collected in the form of small donations from their followers on a no strings attached basis.   In the absence of any serious regulatory controls doubts remain that this is just a fa├žade to justify a situation which is far less innocent.   Stories about donations demanded or given which run into sizeable thousands abound.   It is here that democratic governance risk serious offence as the larger the size of the donation the more difficult it becomes to justify its no strings attached status.

For as long as political party finances continue in their unregulated state the feeling will continue to prevail that the capital rich sector of the economy can use its resources to invest in giving political power to the party that best protects its interest.   Living in a media dominated society it is a small step to deduce that whoever has the financial resources to dominate influential opinion forming sectors of the media, will gain a substantial electoral advantage over adversaries who do not have access to similar financial resources.

The need for democratic governance through controlling the way political parties finance their activities is loud and clear.   The EU has acknowledged and is addressing this need.   It is time that we acknowledge it too by setting an autonomous Commission to study the situation and submit recommendations. 

To my mind once citizens pay their taxes it is fair to expect that political parties get the finance they need from the state in whose service they exercise their democratic role.   State financing would bring in two disciplines.   Control over the way the money is spent to ensure that it is used for the approved purpose and the abolishment of all forms of donations, large or small, to ensure that citizens are not subjected to indirect taxation or are tempted to make donations in the form of an investment to be traded for political favours.

Alfred Mifsud

Monday, 2 January 2012

Pride and blushes

This article was published in The Malta Independent on Sunday - 1st January 2012

At the end of each year a regular columnist should look back and acknowledge the things he got right or wrong.

These comments in my column of 16th January 2011 about the Tunisian revolution make me both proud and blush.

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.

I got the result right by but the direction wrong.  Instead of westwards the revolution spread eastward!

I am pleased with myself that I was out early with a firm opinion that the Libyan regime was on the way out.  On 13th March 2011, before the UN vote approving NATO intervention I said:

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.

Two weeks later of 27th March I was even more direct:

Whilst it is unlikely that lasting stability could come about without regime change, this cannot be the goal of the UN-enabled forces. Such decisions pertain to the Libyan people. If the insurgents are determined to liberate Libya and convert their country into a modern democracy that commands respect from its neighbours and world institutions, they must work hard for it rather than expect the world to deliver it to them on a platter.

Having neutralised the regime’s fire power, the UN-enabled forces should retreat and work on political initiatives, including the recognition of the Benghazi government as the legitimate interim representative of the people. Following such recognition, the new government will need to be helped with Bosnia-type training and equipping to give them a fair chance of victory over the Gaddafi regime, which has delegitimised itself through the use of military force against its own people.

I am also quite happy with myself about the contribution I made in favour of divorce in the referendum as embodied in this quote from my contribution of 8th May 2011:

Strange as it may sound, by using various agencies to mount a negative campaign against the introduction of divorce, the Church is actually allying itself with such egoistic animal instincts that are against the introduction of divorce for anything but holy and spiritual reasons.

The Church should be against divorce but not against its introduction. The Church has a duty to guide its faithful to live their religion and to abstain from divorce as a matter of personal choice and lifestyle, without imposing it on others who are not members of the Church or who make a personal choice not to live their religion.

Some comments I made make me blush and reflect bad judgement.  Take this quote from my contribution of 10th April 2011 about the Euro crisis and Jean Claude Trichet, the then President of the European Central Bank:

(Trichet) even engineered temporary support for sovereign bonds to keep yields within acceptable boundaries until the politicians build permanent structures more appropriate for such role.   Doing this against the opposition of the German boy on the Board and at the same time being courageous enough to start raising interest rates when other central banks would not even dare think about it, shows Trichet’s mettle in protecting the credibility of the ECB to underpin the continued mooring of inflation expectations at low levels.

Events proved that Trichet was not aggressive enough in loosening monetary policy and under-estimated the seriousness of the Euro crisis.   The crisis in fact is still rambling on dangerously.   Raising interest rates (twice) in the midst of a liquidity crisis was a grave error of judgement which his successor had to reverse as soon as he moved into position.    The ECB under Trichet has not been forceful enough to make politicians do what’s right rather what’s popular.    I gave Trichet a rating higher than he deserved.

However nothing makes me angry at myself more than what I wrote on 19th June 2011 about whether Maltese taxpayers funds should be used to bail-out Greece:

I would say that Maltese tax money would have to be used to bailout Greece because in the process we would be bailing out the whole European financial system and the general EU economy which we need in good health to maintain our exports and our tourism. However the bailout must not be temporary patchwork, just kicking the can down the road till it explodes in the face of successor governments. The bailout must be a true solution (involving)……acceptance of the austerity measures through a national government or the conduct of referendum or fresh elections whereby the government seeks a popular mandate for acceptance of the austerity package or for the stark alternative of exiting the euro. It is inconceivable that if Greece were to default it could stay in the euro.

Anything short of this would be wasting our scarce resources.

I feel much better about reversing my opinion publicly in my column of 14th August 2011:

Some weeks ago I was in favour of our contributing, as a still solid link in the EU chain, our fair share for the Greek bailout. Given developments since, I am changing my opinion. Unless EU leaders get themselves ahead of the markets, piecemeal bailouts will ultimately mean there will be more members in the rescue ward than rescuer members. Contagion will make sure that is a given.

Unfortunately EU leaders still do not get it and continue to plod from one crisis meeting to another without providing real long term solutions which have to go beyond imposing austerity measures on weak countries and must include tangible show of solidarity, a European Marshall Plan, to get ahead of the markets and base redemption on economic growth as much as on austerity.

With national elections on the horizon the leaders of German and France are gripped by conflicting loyalties between the narrow views of their domestic audience, from whom they get their democratic legitimacy, and the wider needs of the whole EU. This does not augur for anything but continuing to kick the can down the road.   The problems come at the end of the road when there is nowhere else where to kick the can.

The best I can wish you for 2012 is that European leaders will get above themselves and take the bold decisions that are needed to save the Euro, unpalatable as  such decisions  may be for  their domestic audience, and by consequence probably also for their own political legacy.    The alternative could be too hard to contemplate.

Sunday, 1 January 2012

A New Year resolution for the Nation

Rendering ourselves ridiculous
Let's make a resolution for the New Year which not only does not cost any money but indeed it saves both expenses and blushes.

Let's resolve that we stop making ourselves ridiculous posting senseless signs, the sort of the one that has been set up for weeks at the Paceville entrance junction,  telling us that the road has been resurfaced by Transport Malta.

Just imagaine what a funny impression tourists get about us showing off by a prominent sign in the heart of the main tourist hub simply to mark that a perfectly maintenance job, the re-surfacing of a road, has been completed.

If Transport Malta ever builds the multi level trafiic junction so necessray at this spot and further down near the old ' tank tal-gass' what sort of sign will Transport Malta fix?  Probably something like the flashy signs of Piccadilly Circus!!

Get real and stop making us look ridiculous!