A sense of perspective on Brexit

Malta has done well out of the financial services and related industries, but it would be unwise to rely too much on a notoriously fickle sector for economic growth

6 April 2017, 8:25am
 Article 50 was triggered on the same day that Malta celebrated the departure of the last British warship in 1979
Article 50 was triggered on the same day that Malta celebrated the departure of the last British warship in 1979
The recent Daily Mail article which described Prime Minister Joseph Muscat as “the Maltese former radio journalist who’s holding Britain hostage” caused a bit of stir.

But looking beyond the undisguised insulting tone – with references to Malta as a ‘puffed up minnow of the Med’ – the same article also underscores the profound change in historical fortunes of an island that was a British dependency up until only a few decades ago.

Perhaps the starkest allusion to this change is the following sentence: “As leader of one of the 27 nations who must sign off on any deal, we must treat Malta every bit as seriously as France or Germany if we are to prosper.”

This may well be galling to a nation that was a global superpower in former centuries: but it is also a graphic confirmation of one of the cornerstones of the European Union that Britain is in the process of leaving. 

Though small, Malta shares equally in the power structures that define and regulate the European Union. It is perhaps even more revealing that this simple truth – so often hidden from view – would be acknowledged by The Daily Mail: an essentially Eurosceptic newspaper. 

It illustrates a fundamental difference in perspective: the EU itself was built on a vision that all member states should share power equally, regardless of geographic size or financial/political clout. For all its other faults, in this respect it has clearly been true to its founding principles.

The question facing Britain (and, by extension, Europe as a whole) therefore becomes: do we agree with the equality principle, or not? Has Europe matured to a point when even the smallest of its minnow states can take their place at the decision-making table... or hasn’t it?

The tone of that article suggests that eurosceptics in Britain believe it hasn’t, and shouldn’t. This in turn may shed significant light on Britain’s decision to leave. It boils down to fundamental disagreements about what the EU should be.

To anyone looking from outside the narrow editorial perspective of the Daily Mail, however, this same inclusive power structure can only represent a vast improvement over the colonial mentality that existed before. It seems that, while the rest of Europe has evolved beyond a historically anachronistic mindset, isolated pockets of resistance continue to cling to outmoded, outdated ideas.

This puts a somewhat different perspective on reactions to the article. Some expressed outrage at the insulting tone of an article that belittles Malta, and pokes fun at Prime Minister Joseph Muscat simply because he is Maltese. In itself, this is nothing new. The article was written for a British audience, and a predominantly conservative and right wing one at that.

Admittedly the historic coincidences are indeed ironic. Article 50 was triggered on the same day that Malta celebrated the departure of the last British warship in 1979... while also holding the EU’s rotating presidency. It is easy to see how today’s scenario may represent a reversal of fortunes for Britain. But one would be reading too much into these details, to argue that Muscat was trying to get back at our former colonial masters. 

The reality is much simpler than that. By driving a hard bargain on Brexit, Muscat is doing what any other Prime Minister at the helm of the EU’s rotating presidency would do: toe the line and sing from the same hymn sheet as all other EU leaders. Muscat is simply doing his job.

Nor should one be surprised if Malta seems poised (to capitalise on Britain’s departure. Brexit can present Malta with a lot of opportunities if big banking, financial services, betting companies, etc, relocate to Malta. It has been reported that Tesco may relocate head offices to Malta. EU countries with established financial centres such as Luxumbourg, Ireland and The Netherlands are likewise scrambling to woo UK-based financial firms in the wake of Brexit. 

Cities such as Amsterdam, Frankfurt and Paris are being more  aggressive still in trying to claim London’s place as Europe’s business capital; and recently Opposition leader Simon Busuttil urged government to pull out all the stops to ensure that businesses leaving the UK make their way to Malta.

This is understandable, but also short-sighted. Malta has done well out of the financial services and related industries, but it would be unwise to rely too much on a notoriously fickle sector for economic growth. Such companies move according to favourable tax conditions; and Europe is beginning to clamp down on existing loopholes.

Moreover, it is easier said than done. According to new research by international auditing firm KPMG, Malta together with Ireland, Cyprus and Luxembourg look set to be “the biggest losers” from a deterioration in UK-EU relations.

Maltese imports from the UK will face increased tariffs and duties and countries with which the UK has a large trade surplus will have the greatest interest in securing a good deal once Brexit negotiations commence. Our newfound sense of ‘importance’ in these negotiations may well be exaggerated.

In brief, it would be wise for both sides of the Brexit debate to get a sense of perspective on the issue.