China to the rescue

Let me first set aside the irony that Chinese capitalists buying one of our most strategic, albeit vulnerable, assets does not evoke the same fears of invasion that 5,000-odd poor migrants from the African horn do in this country: it's not that we risk 'a Chinese invasion', but we should consider that shedding part of our energy sovereignty to a foreigner has far more serious consequences than the arrival of a boat full of miserable migrants.

Malta's energy landscape is about to change irreversibly by the permanence of the twin pillars of the new government's energy policy: hiving off of 40% of our energy supply and the partial privatisation of Enemalta. Both decisions bind future governments and cannot be easily reversed.

By March 2015, a new private gas-fired power station will sell its energy directly on the grid, while the Enemalta-owned power station (Delimara's phase 2) will be buying gas from this same private operator for at least 18 years.

What's sure is that there will be no risk of another oil scandal: there will be no need for procurement anyway.

And despite an electoral promise not to privatise Enemalta, a Chinese state-owned company will own a minority shareholding in the national energy provider.

This capital injection would ease Enemalta's financial burden, which cripples both the economy and our power infrastructure, apart from not being dependent on oil procurement. I wouldn't underestimate this aspect: with an albatross around its neck, Malta is already not negotiating from a position of strength.

But it's a scenario that raises questions about our energy sovereignty, which become more relevant considering our vulnerable position.

Labour will hive off 40% of our energy provision to a private company. Enemalta will be partially privatized. One could argue that in most countries the energy market is liberalised in a scenario where energy is supplied by a diversity of suppliers.

But Malta would face one monopoly, providing the supply of gas for nearly two decades, while including a company belonging to a foreign nation in the shareholding of the only national energy company.

In a normal country the political left would be asking questions on the implications of this deal. But in Malta it is the centre-right opposition, with its questionable track record (and that includes Enemalta's poor financial state) which is now raising these questions. Surely another example of the topsy-turvy ideological landscape we live in.

Another pertinent question is whether the Chinese company is buying a part of Enemalta simply to get a foothold in the lucrative European energy market in sectors like the export of solar panels to Europe, perhaps without having to apply for a tender to get access to public land and facilities. For while issuing a tender for anyone interested in buying a part of Enemalta's debt is ludicrous, it is normal to issue tenders for companies using parts of Malta's infrastructure.

Still, one cannot blame the present government for setting this precedent. Smart City comes to mind - Dubai's Tecom was asked to build an 'internet city' and was then given Maltacom as a sweetener.

There are other geo-political implications on the China deal. Muscat is energetically seeking a foreign policy that diversifies Malta's partners in an increasingly multipolar world. What impact will this deal have on our foreign policy? Will we have to pay homage to China in our dealings with the rest of the world? Will we ever raise inconvenient themes like Tibet and human rights in China? China is no bogeyman that should be simply shunned; its soft diplomacy provides both risks and opportunities. Unlike most western companies, Chinese companies have the backing of state-owned banks. 

So it is worth asking whether we have fallen into China's embrace to get a quick fix without giving due consideration to the long-term implications on shedding aspects of our sovereignty.

China is no longer the revolutionary republic of Mao. It extols the virtues of socialism and clings to dictatorship at home, but the Chinese state is a capitalist abroad, and one with political ambitions. Western capitalists feel perfectly at ease with Chinese company reps: probably they secretly yearn for the 'harmonious society' where civil society and trade unions are weak or institutionalised.

We should also not underestimate the standing of Chinese foreign companies in Transparency International's rankings, which places China second to the Russians when it comes to offering bribes.