The Report Company: In May 2011, you met with David Cameron in London. What was the outcome and do you now see closer cooperation with the UK Government?
Dr Lawrence Gonzi: The major issues discussed were related to what is happening now in Europe and the region around Malta.
I was particularly pleased to note the British Prime Minister’s appreciation of what Malta did during the peak of the crisis in Libya when the need to suddenly help many nationals, including British citizens, out of Libya required an effort of major coordination. A certain amount of risk was taken by our country in this respect because of our previous close links with Libya, which included the acceptance of two Mirage jets that had defected from Libya. We were effectively right in the eye of storm.
My Government and, I must stress, all the Maltese people rose to the occasion and the humanitarian effort made the operation a major success.
At the London meeting we also talked about how we see the current situation, how we see things developing and what we need to do to get some stability in the region. We also discussed the situations in both Egypt and Tunisia. These matters are not just fundamental to Malta, but to the whole of Europe. On this, I believe there is a common vision between the Malta and British Governments.
TRC: Did you get any sense during your meetings with David Cameron and also the Foreign Secretary William Hague of how the new UK coalition government perceives Malta?
LG: The body language is excellent and the understanding of the two countries’ position is something very special. I have been Prime Minister of Malta for seven years now and during that time have met with Prime Ministers from all over the world. But there is a special spark that exists between Malta and Britain.
I’ve worked with Tony Blair, I’ve worked with Gordon Brown and I now believe I have excellent relations with David Cameron and other ministers. I have yet to meet with Deputy Prime Minister, Nick Clegg, but hope to in the near future.
TRC: Did you come away from the meeting a fan of coalition politics?
LG: It’s not a case of being a fan or otherwise, this is simply the reality of politics. As in my own case in Malta, I have a one-seat majority and must handle that. You have to go with acceptable compromises – not on your values or principles, but on the best policies and how concerns are addressed. Sometimes, when you are trying to find the golden rule, compromise is an advantage rather than a disadvantage.
TRC: You also met with leading finance executives at the new five-star Corinthia Hotel in Whitehall.
LG: That was an interesting initiative organised by our High Commissioner in London, Josef Zammit Tabona. He managed to contact a number of very successful business people from a variety of areas, but all of whom in some way or another have a connection with Malta. It was clear that they all liked Malta, want the country to succeed and are eager to explore the business opportunities that may exist on both sides. Among the issues discussed were questions about the future of Malta and the challenges the country faces.
TRC: The turbulence in Libya has impacted on many different issues, not just the country’s political situation. Given the ties between the two countries, how have recent events affected Malta’s economy?
LG: The impact has been felt, naturally, but mainly by the businesses that have investments in Tripoli. We can also add to that group around 300-400 workers who used travel to work there in the oil industry and who have also been affected. We are looking at how we can best support businesses affected by the turmoil.
TRC: How has Malta faced up to the global economic crisis?
LG: Like most countries, we have also experienced the crisis, but the effect was minimal as our financial services and banks are very strong.
In addition, we have one basic ingredient which is fundamental to our strength and that is that the Maltese citizen remains very conservative as far as savings are concerned. As such, our banks remained financially very liquid. The banks were in possession of considerable liquidity during the recession because people kept their money there. As such, the banks did not have to risk exposing themselves to international markets, sub-prime markets or other banks.
The other key factor was the very strong regulatory authority that we have here in Malta. During the economic crisis, we were one of last countries to enter recession and also one of the first to get out.
In terms of the economy, with Malta, it is a case of small is beautiful. It is much easier for us to know what is happening on the ground, with individual employers and individual companies, and this made it possible for us to have a robust programme of stimulus packages. But instead of having to do the same as other countries – which was to spread it thinly between everyone – we asked every employer to come to us and explain what the problem was. If it was related to the economic crisis, then we would help them retain staff, but instead of going down to a four-day week, we would suggest keeping the five-day week and using the fifth day as a training day. That way, we helped employers get ready for the time when the recession was over and they could restart their ‘economic engines’, as it were, without having to go through a re-employment programme. That is why in 2010, we had an increase in exports of some 12%.
TRC: What is your strategy regarding the key financial services sector in Malta?
LG: The success of our financial services sector is one of the major pillars of our Vision 2015 initiative, which has now been fine-tuned to take it beyond 2015. Along with the financial services sector, we also include ICT, tourism, manufacturing, education, health, plus the creative and logistics sectors.
Specifically, in terms of financial services, we realised from the very start that the way to succeed was to aim for a strong reputation as far as professionalism is concerned. We are not interested in tax havens and being the cheap, easy going, ‘come here and do whatever you want’ approach. Ten to fifteen years ago we had an offshore financial services base, which we just closed down. We’ve changed to a system that is now all onshore, fully regulated, ensuring that we are as transparent as possible.
After joining the European Union in 2004, I kept the finance portfolio under my remit, as my target was to join the eurozone as quickly as possible. In 2004/5, our tax system went through a detailed analysis by the Code of Conduct Group in the European Union, which gave it a clean bill of health. I was also scrutinised by the OECD and given a clean bill of health.
The success of our financial services sector is also dependent on the support of constantly developing and improving ICT.
TRC: Just how ‘green’ is Malta and what are the environmental challenges being faced?
LG: Energy is a major challenge in Malta for the next 20-30 years. I keep reminding everybody that we need to use energy to generate water and we generate water from the sea, so the use of that energy places us at a disadvantage compared to other countries.
The population of Malta is only around 400,000, but the needs of around 1.3 million annual tourists obviously place a huge extra strain on the energy infrastructure. The only way to provide energy in the future is to invest in alternative energy resources, such as wind farms. We are also looking at an interconnecting cable linking Malta to Italy through which we could buy ‘green’ electricity and encouraging the installation of solar panels. It’s as ‘green’ as we can get.
