Brilliant intellect, forceful personality

Saturday, 25 Aug 2012, 06:03


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In 1993 the World Bank published “The Political Comparative Study: Economy of Poverty, Equity, and Growth – Five Small Open Economies” (Edited by Edited by Ronald Findlay and Stanislaw Wellisz).

This is what they said about Malta:

"Malta is a small country in which everybody knows everybody else and personalities count as much as, if not more than, formal party programs. The dominant personality of the 1970s was undoubtedly the Labour party leader Dom Mintoff. An engineer-architect by training and a former Rhodes Scholar, Mintoff combined a brilliant intellect and a forceful personality with a confrontational approach to obtaining compensation for the British military withdrawal. His tactics not only appealed to the strong Maltese sense of nationalism but, more important, were eminently successful in extracting the maximum "rent" from the British. His negotiations resulted in a seven-year agreement under which the United Kingdom pledged to pay Lm14 million for the 1972-79 period.

In addition some of the United Kingdom's NATO partners, notably Italy, agreed to provide bilateral economic aid.

“As mentioned earlier, the government's first concern on entering office was to secure foreign financial support. Under existing agreements, the United Kingdom was to give Malta annual grants for the use of the naval and air base facilities. On average, these grants amounted to Lm 4.2 million during 1967-71. In 1972 Dom Mintoff negotiated a new seven-year agreement for rental of the defense facilities used by NATO forces.

“Under its terms, Malta was to receive an annual fee of Lm 14 million, of which the United Kingdom was to pay Lm5.25 million. The rental fees were vital for balancing the budget: in 1974-75 revenues and expenditures were budgeted at Lm 59 million; revenues from domestic sources amounted to Lm 44.4 million (72 percent of the total); and foreign loans and grants brought in Lm 14.6 million, of which Lm 13.7 was from NATO rental fees.

“The increased NATO payments were doubtless one of the factors that helped Malta recover from the 1971 slump and that contributed to the growth in the 1972-79 period. These payments offset the oil price increase that plagued so many other countries in those years. Since the Labour party was committed to neutrality, however, the base had to be phased out by 1979, at which time payments would cease. This commitment was grounded in socialist ideology, but it also had a practical side.

NATO had never clearly indicated whether it wished to maintain a large base in Malta, so the country would sooner or later had to face up to converting to a civilian economy. Another concern was that the NATO forces prevented Malta from expanding its tourist industry and from developing into the international commercial and banking service center it aspired to become.

The prime minister began negotiating intensely for other sources of foreign finance. He obtained grants and concessionary loans from Libya,

Saudi Arabia, the United Arab Emirates, Italy, the EEC, and China, among others. In these negotiations the prime minister made skillful use of Malta's strategic position: the countries with economic or military interests in the Mediterranean, he pointed out, could contribute what, for them, were moderate sums as insurance against having the islands come under the influence of potential foes.”         

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