On Friday the House rose for the Christmas holidays.

It was time for the two sides of the House to wish each other a Happy Christmas and the Prime Minister to give his traditional Christmas drink at Castille.

Individual members from both sides pumped each other’s hands and wished each other the best for 2005.

Every year these scenes look and feel more and more surreal. We end the parliamentary year with a walkout by the Opposition, allegedly to show its disapproval of the budget measures. This is rich coming from a Leader of the Opposition who, as Prime Minister, set in motion a scheme of super-increased tariffs for water and electricity that, in the three years that the scheme was intended to run, had Mintoff not stopped Sant in his tracks, we would have witnessed the total obliteration of Malta’s entire middle class. Alfred Sant's penchant for gimmicks knows no bounds.

We leave this current year with an overwhelming, apparent disenchantment with the budget measures. An estimated 45 per cent of the population told researchers that the budget measures have hit them badly while 10.5 per cent say these measures have affected them very badly. Only 7.7 per cent of the population believe that the measures that will be implemented in 2005 will affect them positively. It takes very little engagement of one’s grey matter to understand where those elements are to be found.

These figures, taken in a recent Xarabank survey, may be as true as they may be an extension of the political affiliation of the respondents. From those who vote Labour, almost 88 per cent of the respondents said they were affected either negatively or very negatively while only 20 per cent of those who voted Nationalist said that the budget measures would hit them badly. One can almost smell the political allegiance of the respondents, with Labour supporters wanting to support the line taken by their party while the Nationalists trying to minimise the negative effect of the budget measures. The truth may be somewhere in between.

We end the year with the General Workers Union threatening industrial strife unless the government backtracks on the four days leave that have been taken out. There is no doubt that some of the measures we have to submit to next year may be somewhat tough, but serious observers agree they will not be as tough as they should have been. The bitter medicine we should have been made to swallow has been strongly diluted. In my opinion, this will only prolong the agony. Malta will finally see itself out of the woods but it will take longer and the pain will be felt over a longer period.

Dark clouds appear on Malta’s horizon for 2005, at least until the air begins to clear and until, as I hope, the social partners sit down with the government again and again, for as long as it takes to hammer out a social pact in the national interest.

In spite of the belligerence stemming from the General Workers Union headquarters in South Street, Valletta, and in spite of the darkened fumes that have been emerging from UHM headquarters, I believe that both unions and their leaders are responsible enough not to cause the nation further injury by their actions at a time when the body corporate is not in good enough shape. I will continue to believe that we can still make it together if we all try hard enough.

As regards the cuts in vacation leave announced by the government, it is natural and logical that the unions reacted the way they did. As part of my political training as a negotiator by Malta’s best of the best in the field, I learnt that the harder the line taken by the opposite side, the more likely the chance for negotiation. Those who believe a priori that the end result will lead them to the negotiating table, will recede to the farthest point possible so as to give away as little as possible when the give and take begins.

The GWU’s way of doing things is to threaten with industrial strife, strikes and economic disruption. I would say that there are very very few people among the GWU administration who would willingly advise such a course of action in all seriousness. The people on the forefront, who I know reasonably well, will not consciously put their country at risk to play the hero in front of their members. They know as much as anybody else that, for this country, the time for pills and mixtures is way past its sell-by date if we are to cure our ailing economy and return our industries to the competitive field. The time is not for soothing salesmanship but for surgery.

The unions know that it is partly due to the luxuries we have given ourselves in the past, luxuries and freebies the nation could ill afford, which now necessitate some of the drastic measures that have to be taken. The unions have been as culpable as anyone else in this regard, making claims for increases that could not be afforded and threatening fire and brimstone if the increases were not given, ruining some major companies in the process. PBS is one clear-cut example.

All of that bothers me but it does not frighten me. There are much more serious problems on the horizon that are well and truly frightening, and we would do well, as a nation, to devote some of our attention to them.

For some years I was the Prime Minster’s envoy to the German Chancellery of Helmut Schmidt. My task was to encourage the German government to invest in Malta, using the sizeable number of German companies in Malta at the time as proof of Malta's welcoming investment climate for German industrialists.

While I was trying to stimulate the top, others like Vince Farrugia and Noel Zarb Adami at MDC would be targeting individual industrialists, meeting them on home ground, loading them with printed material, addressing seminars for investors and discussing with German banks how we could win over their clients to invest in Malta.

I remember that the time I spent working on the German issue, before I became Minister of Industry also responsible for MDC, was a very busy time for the administration I was part of. I used to travel to Bonn fairly regularly to deliver the message that my government welcomed investment from Germany, that we would have liked the Chancellery to make the kind of noises that would be understood by its industrialists and other German investors, that Malta was a pleasant receiving country for German enterprises.

The official nihil obstat from the German Chancellery never really came, at least not in my time as special envoy. That could have been partly due to a row between Prime Minister Mintoff and Genscher, then foreign Minister, over some nasty letter Mintoff had sent Genscher after one of their meetings.

Genscher had taken the insult personally and constantly tried to shield Helmut Schmidt from anything Maltese. The other part was explained to me by high-ranking officials from the Chancellery I met. The message was that Malta was far removed from the German beat. German interest was not in the Mediterranean but in Asia in countries like Laos, Vietnam, then still at war, Cambodia and other Asian countries. Above all West Germany’s principal interest was in bonding with China.

Helmut Schmidt wanted to prepare for the time when the Vietnam War ended and when those devastated countries that were being bombarded daily by American B 52s would be free to begin the rehabilitation process. Schmidt was afraid of a strong China as a major player in world politics. At that time China had a border war with the Soviet Union, at which one million Chinese soldiers confronted almost as many Soviet troops and where border disputes were not infrequent. At that time China and the Soviet Union were sworn enemies. Schmidt dreaded the day when the barriers between the two would fall and a joint China-Soviet Union pact would be in place to confront the free world. Malta could not have been farther from his thoughts.

Well, that time is now, 30 years later maybe, but it’s there. I support the view held by many international observers, that a China-Russia axis is a frightening prospect. It has begun to exist under the guise of a Union to combat the threat of Islamic extremism. The partners are the Shanghai Cooperation Organisation, another name for the Chinese government, and the former Soviet Republics of Uzbekistan, Kazakhstan, Tajikistan and Kyrgyzstan

It was reported this week that China and Russia will hold their first military exercises next year and that China has called for an expansion of the rapidly growing alliance between the former Cold War rivals. Chinese president Hu Jintao is reported to have told Russian Defence Minister Ivanov “We want to promote the development of the two countries strategic collaborative relationship in order to safeguard and promote regional and world peace.” When Communist States speak of world peace, we all know what that means. Under normal circumstances it is another name for world domination. This is happening just two months after Beijing and Moscow buried their Cold War hatchets. Slowly slowly, after the collapse of the Soviet Regime in 1991, Beijing and Moscow have been drawing closer to each other and have built political and military ties that could only be intended to counterbalance the military might of the United States and the rest of the free world. Now the new bonds have become public and official.

It is not Tony Zarb and his sword brandishing that frightens me. It is developments like these that to us, militarily insignificant as we are, may not bother us much. We are small but central and our strategic importance sways with the times. Our greatest advantage is that now we are not alone. We are part of a huge European Union that has its own defence policy in which we are also involved. In his recent speech at the ceremony of the assignment of the nation’s honours to Malta’s selected few, President Fenech Adami made an important point where our foreign policy is concerned. He called on both sides of the House to recognise the realities of the times and to agree on changes to the Constitution of Malta that would reflect the times we are living in.

My view is that the neutrality we believed in for years is now anachronistic and sits ill at ease with our membership of the EU. This government, to my mind, never an avid supporter of Malta’s neutral status, has nonetheless respected the Opposition’s adherence to its past and has gone as far as to include a separate document referring to Malta’s neutrality in Malta’s agreement with the EU. That is now all in the wash as the new Constitution replaces all the individual agreements made by the individual countries on accession. As far as I know the neutrality document is now just a piece of Maltese history that is there to be revived if the need arises, but also there to remain a dormant set of statements as Europe and the rest of the world face new, more dangerous strains and tensions.

If one just takes a cursory look at the manner in which the sweet, docile Putin has changed in recent months and the way the Russians have started to revert to Cold War tactics (Yushchenko’s attempted murder attributed to the KGB formerly led by Putin) and the direct interference in the Ukraine elections by Putin himself in support of the incumbent, in an obvious attempt to retain Russia’s sphere of influence intact. In the new and certain arrogance towards the US and the West demonstrated by President Putin, one can almost witness a glimpse of fears to come.

Malta needs to broaden its horizons and its vision and, in the European and international forums, to act purely in our own interest as Maltese living in a tricky, not always peaceful Central Mediterranean. In the other frightening issue, that of Turkey’s accession to the EU, we have to be sure whom we are supporting. Seventy million Moslems will become part of Christian Europe when Turkey accedes.

The Prime Minister told me on Opinjonisti that it is better to harness Turkey as part of the Union than to have Turkey as a constant threat on the outside. That to me is tantamount to trying to avoid being bitten by a snake by putting it in one’s own pocket. Islamic expansionism is bad enough today let alone when and if Turkey joins the Union in 15 to 20 years' time. For once I am at one with Chirac’s view on Turkish accession. Not only does Chirac refer to this accession in remote terms but he is now insisting that if, during the negotiating process, one member State of the EU objects to the continuation of the discussions those discussions will automatically stop until the EU member State says they may continue.

These are some of the issues with which we welcome in 2005. Those of us who believe that we are too far removed from these problems had better think again of the global world we are living in. I had hoped to end the year on a more cheerful note but some things have to be said so that we can all reflect. Our politicians do not live in a vacuum. They live among us. They sense our feelings. Our hope is that in their actions they will also reflect both our hopes and our fears as citizens of this country.

A merry Christmas and a very happy new year to all.

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