Greece will not be able to repay the loans granted by Malta and other eurozone members unless the EU’s approach to its crisis changes, former prime minister Alfred Sant insisted in parliament on Monday.
Dr Sant was speaking during the parliamentary debate on the bill which would approve Malta’s contribution to the second Greek bailout, which was approved by the eurozone earlier this month.
Finance Minister Tonio Fenech stressed that saving Greece was important, not because of its size but because failing to do so would negatively effect perceptions of the EU and of the eurozone in particular.
He noted that the bailout is matched with demands for economic reforms to help Greece recover, including the liberalisation of economic sectors and the creation of structures to make use of EU funds more effectively.
But Dr Sant insisted that the EU’s imposition of austerity measures was counterproductive. He noted that it affected whole sectors of Greek society, particularly the most vulnerable.
Moreover, the MP said, it led to an economic contraction which increased the relative burden of the country’s debt.
Dr Sant said that there was a need for efforts to ensure that economic convergence occurred in the eurozone, adding that this was sorely lacking. No balance was being sought between the need to be prudent in managing public finances and avoiding having countries drown in austerity measures.
He observed that the eurozone appeared to be going through a period of relative calm, but attributed this to the European Central Bank’s decision to provide €500 billion in low-interest loans to European banks. Greece, however, was not meeting its targets, and appeared unable to meet future ones.
As a result, the MP said, instead of making a modest profit on the loan to Greece as the government predicted, Malta stood to lose the loan money outright.
As he has done on a number of occasions in which bills concerning Malta’s ties to the EU were discussed, Dr Sant insisted that parliamentary debates should be more thorough. The present system, he lamented, involved shallow debates on issues which are presented to parliament as a fait accompli.
The MP said that in a number of other EU member states, parliaments hold debates ahead of EU summits, and must approve the national government’s position. Malta should emulate these procedures, he said.
Dr Sant also took the government to task for delaying discussion on the opposition’s motion on justice and home affairs, stating that the government appeared to be trying to lengthen its stay by gagging the opposition, at a time when serious challenges were ahead.
Home Affairs’ Minister Carm Mifsud Bonnici resumed where Mr Fenech had left off, explaining the details of the bailout agreement and stressing its importance.
The minister also criticised the concept of a technocratic government, as has been the case in Greece and Italy recently, and said that it would be wrong to introduce this concept in Malta.
Labour MP Charles Mangion rounded off debate for the evening, also shedding doubt on whether the conditions attached to the second bailout would guarantee progress in Greece. He noted that if no means to pump money back into the Greek economy was found, the country would not recover.
He also pointed out that Malta would be borrowing money to lend money to Greece, and that the government was obliged to explain the impact.