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The news that Malta has decided to write off eight million US dollars of Iraqi debt must have surprised quite a lot of people. How Saddam Hussein’s oil-rich Iraq had managed to become indebted to this small resource-less island is surely an intriguing story. Many begrudged the generosity of the present administration without bothering to think about the folly that led to the debt in the first place.
The story harks back to the early eighties when the Mintoff regime was trying to boost Malta’s exports not via normal trade channels but by persuading ‘friendly’, ‘neutral’ authoritarian governments to choose Maltese products for political rather than commercial reasons. The story of the Soviet order for timber carriers from Marsa Shipbuilding is well known – Malta ended up subsidising the Soviet Union… although this did not help it to prevent its collapse, and leaving us holding the baby in the form of some seven timber carriers that nobody wanted and with a market value that was a small fraction of what they had actually cost.
The Iraqi connection was a counter-trade venture. Malta persuaded Iraq to buy Maltese products in exchange for goods to be imported from Iraq. A system was set up through the Central Bank whereby Maltese exporters were paid by the Central Bank that then used the credit to finance the importation of Iraqi goods. As to oil, it seems that it suited Malta better to import that commodity from nearby Libya and hardly any oil was imported from Iraq. If I recall correctly, the only thing worth importing from Iraq were dates, but unfortunately the Mintoff regime did not manage to persuade the Maltese people to eat enough dates to make up for the value of goods – mainly shoes and jeans – that had been exported from Malta. It was in this manner that, it now seems, Iraq ended up with some US$8 million in the red. Apparently, we could not eat another US$8 million worth of Iraqi dates!
This is, of course, ridiculous. More so, when Saddam Hussein allegedly used to carry more than US$8 million with his entourage, just to have some small change…
I still remember making fun of Joe Grima, then Minister of Industry, who had returned from a sales trip in Iraq boasting of the popularity of Malta made shoes in Baghdad! I could not believe it that the crowds in the Baghdad souk were actually clamouring for Malta made shoes – as the then Minister Grima would have us believe – as I was sure that the percentage of Iraqis who knew of the existence of Malta must have been less than anyone would care to calculate.
Those were the days when ministers were travelling salesmen selling jeans and shoes abroad, while handing out telephone lines and colour television sets to privileged Labour Party members.
The stark reality of that sham ‘export policy’ ostensibly based on barter principles has now made the news with a vengeance! Probably under the prodding of the US and the FMI, the Maltese government has decided to forgive the Iraqi debt. Realistically, the chances of Malta recovering the debt were slim and the long-standing amount would have certainly been considered as a ‘bad debt’ by any accounting standards.
Should we now tell all those factory girls who thought that they never had it as good as under Labour, that at the end of the day, it was the Maltese taxpayer who paid them their wages? By now they must all be peroxide grandmothers screaming Viva l-Labour at every Alfred Sant jaunt!
Should we, perhaps, now revise the export figures of the eighties so that the US$8 million short in the Central bank ‘Iraqi account’ are deducted from the sham export figures of the eighties?
The biggest lesson from this episode is that we can only survive if we are competitive. Leaning and relying on foreign political support from the likes of regimes such as the one led by Saddam Hussein is short-sighted and, in the long term, a boomerang.
Incidentally, Austin Gatt, the much-maligned current Minister of Industry, Investments and IT outlined the challenges Malta is facing today in a very interesting article that appeared in The Malta Independent last Thursday. Tellingly, he stressed that we have to change to survive, grow and excel; that there cannot be any sacred cows; that we have to forget sectarian interests; and that we cannot protect inefficiency on the premise that the status quo is preferable.
Austin Gatt wrote much more than this but I do want to transform this article into an opportunity to repeat all the Minister’s arguments in his article, even though I am convinced that they need to be repeated over and over again from all Malta’s rooftops.
My point here is that Minister Gatt’s thrust and vision for the future is the very antithesis of the ‘begging bowl’ policies that inspired Labour in the sixteen years between 1971 and 1987.
The problem is that while the current MLP leadership fully knows what the challenges of the future are about, it tries to capitalise on people’s natural instinct to resist change. It also tries to give the impression to its supporters that their good old days will be back if the MLP is in power, as if nothing has changed in the world in the last quarter of a century! This is why in his speech at the PN Independence Day meeting, the Prime Minister stressed on the importance of the Maltese people having the courage to face the changes that this country needs to pass through.
Writing off Iraq’s debt owed to Malta can only be a good thing if it actually signifies that Malta – all Malta – is ready to write off the old systems that propped us for some time, only to fail us miserably in the long run.
All Malta must understand this: all political parties, all trade unions, all employers’ associations, and every Tom, Dick and Harry.
Only then can we happily say: So long Saddam… and the eight million dollars you owed us!
micfal@maltanet.net
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