Within the space of a year, the government has leveraged Malta’s status as a member of the European Union to its advantage on at least two memorable occasions that will undoubtedly go down in the annals of history: when it devised its oft-maligned citizenship by investment programme and, this week, when it signed a Memorandum of Understanding with China.

In the first instance, Malta leveraged the weight of its EU membership to attract wealthy individuals who for one reason or another are looking to settle in Europe or gain European citizenship and all that comes with it. This issue has been beleaguered to such an extent that even the once opposing Opposition, now blue in the face from objecting to the programme, seems to have given up the fight.

Suffice it to say that if one looks realistically at the issue, there will be very few of these new Maltese citizens who are actually more interested in Malta than they are in the wider European Union. Malta has leveraged its EU membership, in this case, successfully and it has even fended off challenges from the European Commission and the European Parliament. That programme will, at least monetarily speaking, yield fruit but the hidden costs attached to it will take far longer to assess.

That brings us to this week’s possibly even greater example of leveraging Malta’s EU membership to the country’s advantage: the MoU with China. Normally, such memoranda are a dime a dozen, usually superficial cooperation agreements that result in very little. But the way in which the government has packaged it and considering other Chinese interests in Malta, such as its hefty investment – hefty, that is, by Maltese standards – in Enemalta, speaks volumes.

Yes, any help that Malta can get with some of the projects mentioned in the MoU – such as a new breakwater, a Malta-Gozo bridge or a monorail system – would be most welcome indeed. But on the surface one would be hard pressed to identify what, exactly, China will be getting out of the agreement.

Once that surface is scratched, however, some answers begin to appear.

The first answer is the most obvious: with Malta partnering up with China, Chinese interests could be at least partially represented around the EU table, where unanimity among the EU’s member states is required for such decisions.

China also stands to gain considerably through the setting up of a joint venture on renewable energy which, through a clever sleight of hand, China will be able to sell its solar panels to the EU, through Malta, and in the process circumvent the bitter trade dispute on solar energy products that is still raging between China and the EU. Similarly, China will also be able to hub its energy services and products through Malta virtually uninhibited.

But there could very well be much more to it than mere trade considerations.

As the Opposition leader observed not too long ago, when the Chinese investment into Enemalta had been announced, there could very well be more than meets the eye to the deal and, as he posited, there could also be the issue of China looking to buy support around the EU’s negotiating table in the equation.

Here he may very well have hit the nail on the head.

In both 2009 and in 2011, under a previous Nationalist administration and well before any such Enemalta investment or otherwise had been conceived, reports by European Council on Foreign Relations, an influential pan-European think tank, had already placed Malta in a group of 11 EU members states which it labelled as “accommodating mercantilists”. These countries, according to the 2009 report, shun political confrontation with China in favour of commercial interests and, through their refusal to bring pressure to bear on China on political issues, have “often kept the EU from developing a more assertive stance on issues like Tibet or human rights”.

One might question what political weight Malta, one of the world’s smallest nations, could leverage for China, one of the world’s largest. But when it comes to the EU’s joint political and commercial clout, each member state has an equal vote around the EU table.

The 2009 report – “A Power Audit of EU-China Relations” – noted that Malta specifically stood in favour of lifting the EU’s arms embargo against China. In terms of Malta’s economic and trade relations with China, the report cited that Malta’s main priority is business development through the identification of market niches in the Chinese economy, and furthering its aim to position itself as a trans-shipment hub in the Mediterranean – an area where Chinese cooperation plays a significant role.

Moreover, the report noted how Malta, which has had close links with China since the 1970s, has been described by interlocutors as a “close ally for China” and that Malta is “keen to see the EU more mindful of China’s sensitivities”.

According to the 2009 report, “The Accommodating Mercantilists’ refusal to bring pressure to bear on Beijing on political issues weakens a key component of the EU’s China policy: these countries have often kept the EU from developing a more assertive stance on issues like Tibet or human rights. At the extremes, some effectively act as proxies for China in the EU.”

In 2011, another ECFR report concluded that China can always depend on some of the European Union’s smaller member states – particularly Malta, Cyprus and Greece – to block any unanimous decision at EU level against its interests.

The report also found that China is “taking over Europe” by stealth bond purchases and strategic investments, and by exploiting internal divisions arising from the financial crisis. 

That 2011 policy brief, entitled “The Scramble for Europe”, claimed that a lack of European cohesion has invited China to deal bilaterally with individual member states to exploit their divisions.

China, it said, deliberately purchases the bonds of individual member states rather than Eurobonds, because “it knows that dealing bilaterally with European nations leads to a better pay-off than bolstering multi-national initiatives”. 

This, the report said, will pay political dividends in the future. It claimed: “Even after 2014 – when majority decisions at the European Council will require 15 member states with 65 per cent of the population – it will be useful for the Chinese to have a kind of ‘China lobby’ consisting of smaller member states.”

This so-called ‘China lobby’, the report suggested, is comprised of smaller member states, among which Malta, Cyprus and Greece were singled out as being of a particularly placating mindset when it comes to China.

But that was then and this is now and Malta’s relationship with China has grown by leaps and bounds over the last 18 months. There is always much more than meets the eye when it comes to governments engaged in horse trading, and one should always look these kinds of gift horses in the mouth.