1 May 2006, marked the second anniversary of Malta’s accession to the European Union – an occasion that spurred some politicians and opinion-makers to take their bearings.

Not unexpectedly, many surveyed the past two years through the prism of their prejudices.

Detached observers of the Malta scene, with both feet firmly on the ground, would do well to set aside the euphoria and dazzling predictions, as well as the black anticipations that filled the air during the run-up to the last general election.

Now that the two-year EU honeymoon is over, it is possible to look reality in the face and to balance the pluses with the minuses.

The point of departure was accession day two years ago, when the people of these islands were confidently promised a “New Spring”.

The honeymoon did not start on the right note.

As soon as the act of accession had been consummated, the EU took umbrage at Malta’s past profligacy and insisted on a “convergence programme”, designed to rein in the country’s structural deficit and redimension downwards its national debt.

Austerity programme

Call it what you will – this signalled a period of austerity which is still on-going. It meant restraint in public expenditure. It meant more taxation. It meant restructuring. It meant less steam for the national economic engine and, by implication, a corresponding slowing down of the tempo of local activity. It meant goodbye to all past tricks of make believe.

Considering that the Nationalist administration had applied for EU membership as long ago as l990, the government had all the time in the world to converge and conform to EU criteria and standards.

If it had done, accession would have been smoother and less painful.

With hindsight, it is now clear that the PN administration had its own reasons for playing the money-no-problem card, and capitalising on the feel-good factor. The ploy worked. This will not be of particular concern to the EU, so long as Malta makes amends by way of steady compliance with its Convergence Programme.

Situation on the ground

The situation on the ground in Malta, during the two years since accession, has not been rosy.

The economy became bogged down. The tourism sector faltered. The local manufacturing sector shrank.

There was an investment fatigue. Taxation squeezed enterprise as well as consumers. People in the middle and lower income sectors have been significantly set back, and are steadily bearing the brunt of the government’s spendthrift years.

It has transpired that the bureaucracy has not been able to cope with the demands of accession; Malta has not, as yet, transposed all the EU legislation and, moreover, has failed to keep pace with some directives, with the result that the government has been warned of legal action by Brussels in the event of non-compliance.

It is no wonder that the economy has stagnated. The sad, undeniable truth is that the administrative-set up in these islands has been going to the dogs and the bureaucratic machinery has been creaking loudly. Part of the evil comes from political interference and mismanagement.

It is obvious that the learning curve has proved to be longer than anticipated. There are problems yet to be ironed out.

Although some things can wait, life must go on.

Challenges ahead

Meanwhile Malta has to gear itself to confront the challenges ahead. The challenges are as plentiful as they are real, and Parliament, which is there to oversee the Executive, must be equally geared to rise to the occasion.

MPs must ask themselves: is the present set-up capable of keeping pace with current exigencies? This question calls for an answer and in no sphere is it more important than that of industrial policy.

Is the government administrative machine at fault in its relations with the industrial sector? Are Ministers and MPs under the present system qualified to decide what industry requires to make it prosper? Has the civil service sufficient commercial and industrial knowledge to give advice to ministers?

What reforms are possible to enable the government machine to improve its relations with both sides of industry? What contribution can industry itself make in order to facilitate forward movement?

Whether Malta is in or out of the EU, our industrial base must expand on a profitable basis. On that depends Malta’s economic survival, now that it operates in and relies on a market economy.

The welfare services, and their future development, will be endangered unless Malta continues to receive enough foreign earnings.

Permanent forum

I remember that, way back in December l996, a newly elected government informed Parliament of its intention to “legislate for the setting up of a Permanent Forum for a Better Economy”. The idea was sound. The execution was disappointing.

Malta badly needs an industrial policy drawn with the cooperation of all the social partners, approved by Parliament and implemented by Ministers through the civil service. There must be the closest cooperation between the government and all spheres of industrial and business activity

The key to the solution of Malta’s foremost problem is a partnership formula between all those engaged in the economic process. The government’s modern role is to direct, to guide and to lead, to set tasks and to see that these are carried out in the context of a free economy. It must see that it has competent civil servants to manage an increasingly complex network of detailed and highly technical activity.

Is there a case for the higher echelons of the Civil Service to be strengthened by an intake of trouble-shooters with practical business experience and knowledge of applied economics? Many of those who have been in the saddle in recent years were manifestly unequal to their task, and without a steadying hand by their side, the Ministers responsible made a right royal mess of things.

The challenge is to get out of this impasse.

jgv@onvol,net