Navigating through buzzwords, confusion and hypocrisy of the 2017’s political hysteria.
by Raisa Galea
The year 2017 in Malta was eventful to the extend of disbelief. Hardly could there be a better metaphor for the state of politics than the collapse of the iconic Azure Window. Ever since Malta’s best known attraction became a memory, the country has been through a sequence of corruption scandals, snap election hysteria, MaltaFiles revelations and more corruption scandals. The culmination of this disturbing chain of events happened on the October 16th, when Daphne Caruana Galizia was assassinated in a car bomb attack. The murder was then followed by a cacophony of farce, half-truths and battles of obscure economic interests which delivered the country on the brink of a political turmoil.
Anyone trying to comprehend this sequence of events as a coherent whole must have ended up confused and frustrated. Discussing the top hypocrisies could offer a better understanding of the tragic farce we witnessed this year.
(Please bear with me. I understand you have probably read too many an identical commentary and are tired of repetitions. Whether you will find something of a value in this article or not, I promise not to be unnecessarily repetitive.)
The Rule of Law Will Cure Malta From Corruption
“Corruption” is one of those terms that has multiple interpretations. It can (and should) be seen as an inevitable consequence of social inequality. According to Transparency International, corruption and inequality are interlocked in a vicious circle: The higher is social exclusion and the more profound is economic inequality, the higher is corruption index. That means that corruption is a symptom of a social malaise and it cannot be treated without tackling socio-economic inequality.
Another way to define corruption is by attributing it exclusively to a faulty morality of select individuals in power. While it is certainly true that the abuse of power involves individuals, this interpretation misses a larger social context and focuses only on the ‘very bad people’ narrative. The anti-corruption talk that has been circulating in Malta since April 2016 is based on this (lopsided) definition.
The anti-corruption rhetoric of the Civil Society Network and the various ‘rule of law’ speakers does not elaborate on the established connection between corruption and social inequality. They are not concerned about the effect of corruption on the daily lives of citizens; what worries them most is the impact of ‘perception of corruption’ on Malta’s business climate. The ‘perception of corruption’ (also referred to as ‘reputation‘) talk is deeply misleading. It diverts a much needed attention from the structural causes of corruption (such as the growing economic inequality in Malta) to a bizarre mix of legalisms and moralising – all in defense of corporate mobility.
The anti-corruption pseudo activists deliberately miss the point that Malta’s own tax regime, designed to attract the businesses to Malta, could be the incubator of corruption through aggravating economic inequality. And, sadly, this corruption incubator is perfectly legal.
Anti-corruption rhetoric on its own does not have democratic credentials. Slamming “crooked Hillary” was a significant part of Trump’s (hardly pro-democracy) campaign. The far-right candidate Marine Le Pen accused Emmanuel Macron in having an offshore account. Does it make her essentially pro-transparency and pro-democracy? Certainly not.
Thus, the anti-corruption hot air offers little to the general public to relate to. Instead, the opposition’s lack of concern for the public interests and the CSN’s failure to engage into a democratic, open debate are laden with contempt for an average Maltese voter. This is hardly surprising – the pro-PN old middle class turned hypocrisy into an art form.
The top priority for all democratically-minded citizens should be safeguarding public assets such as healthcare from predatory private interests, and ensuring economic and social equality.
Traitors and their sinister plan to harm Malta’s economic success
The aftermath of Daphne Caruana Galizia’s assassination has been a goldmine for political opportunists. The murder was followed by countless speculations, starting from formally-backed versions of the Libyan-Italian fuel-smuggling criminal networks being behind the murder to rumors on social networks blaming the government of Azerbaijan and even the opposition. The latter, of course, could not have missed a chance to undermine its rival and thus capitalised on the “corrupt government silences the journalist” narrative.
In their zeal to oust Labour, the Nationalist party and their CSN associates missed an important detail: The outsides do not see the ‘crooked’ Labour and the ‘clean’ Nationalists, but Malta and the Maltese as a generic whole. The vengeful statements of the PN MEPs prompted the international media outlets to announce that the Maltese are “calling on the European Union to come to the rescue.” Hence, the opposition’s ultimate goal – to return to power and to safeguard the financial services industry by putting on a display of ‘clean’ government that plays by the rules – was misinterpreted as a deliberate act of harming the country’s reputation.
According to Alfred Sant, the European People’s Party (PPE) exploited the arguments of the PN MEPs to pay back the Socialists and Democrats (S&D), “in which Labour MEPs play an active role”, for criticising the PPE’s and the Conservatives’ defense of Poland and Hungary. Sant’s warning made it look as though the Nationalists were orchestrating an attack on Malta’s economic success and, consequently, on the interests of general public.
Once the opposition was convincingly painted as ‘traitors’, a surge of patriotism smashed the PN and brought the PL to a historic 75,000 votes ahead of its rival.
Here is to ask: Did the PN MEPs truly plan to put Malta’s financial services at risk? In fact, the opposite is true – safeguarding the financial services is their top priority. After all, Malta’s present economic model is a PN’s child – it was put in place in 2005, a year after Malta joined the European Union. The vehement critique the PN threw at Keith Schembri’s and Konrad Mizzi’s Panama accounts was neither about legitimacy nor the compromised ethics of offshore finance. To the opposition, the Panama scandal endangered Malta’s financial services by arming the international anti-finservices lobby with yet another argument.
When MaltaFiles hit the headlines, Daphne Caruana Galizia blamed Schembri’s and Mizzi’s Panama accounts for “attracting … hostility” to Malta. She wrote: “Malta was getting along swimmingly before the Prime Minister and his two henchmen decided to set up companies in Panama”.
The Forza Nazzionali’s electoral campaign was built on a single point: Labour’s tarnished reputation is harmful for the economy. The argument was mediated best by Matthew Caruana Galizia, the son of the late journalist. He wrote: “Every month since Panama Papers the count of companies registered with foreign shareholders dropped by an average of 1.6%.” Hence, the Nationalist Party’s solution to all problems is unsurprisingly simple – remove the PL from power and Malta forever will reside in paradise.
The Labour, on the other hand, insists it knows better how to boost the economy. Starting from 2013, the PL has been the PN’s best apprentice – it has largely followed the course set by its predecessor by privatising public assets and attracting the global rich to Malta. Both parties belong to the same establishment, same St Martin’s/St Edward’s/St Aloysius’ milieu playing “good cop/bad cop” with the electorate for the sake of political gain.
Both the PL and the PN are devoted to defending the financial services and both do so by exploiting every opportunity available. They even join forces when it comes to protecting the shady industry – all of the Maltese MEPs refused to back a draft EU directive designed to improve transparency.
The multinationals and the big business both major parties are so keen on attracting to Malta are a threat to democracy. Companies like Henley&Partners and Pilatus Bank undermine the freedom of speech; they are responsible for exacerbating economic inequality worldwide and facilitating money laundering (read “corruption”). The activities of big business in Malta are directly tied with its financial services industry. Hence, defending this industry equals to treason – it betrays democracy and the interests of general public – and both parties are equally guilty of it.
“We do not want Malta labelled as tax haven”
The Panama accounts of Keith Schembri and Konrad Mizzi are indeed despicable. There are, however, a tad more reasons to brand Malta as tax haven than the offshore accounts of these officials, as the PN suggests. Malta is the European Union’s number four facilitator of corporate tax avoidance. According to the research undertaken by MaltaToday, every year Malta wipes out €2 billion in foreign tax by giving shareholders 85 percent tax rebates. Officially, 70,000 offshore companies are registered in Malta. The ‘record-breaking’ economic growth rests on dubious foundations – almost a quarter of Malta’s GDP relies on financial services and online gambling.
The shady dealings extend far beyond Pilatus Bank and Henley&Partners. The MaltaFiles revealed the scale of illegitimate transactions that pass through the country: secret accounts belonging to Azeri state oil companies, Russian and Turkish elites, shell companies of tax-dodging German corporations and Ndrangheta-run gambling companies. These dealings are assisted by regular law firms (including the one David Gonzi is a director of).
The dubious Individual Investment Programme (IIP) would not have been in place, had Malta’s tax regime not been as attractive to multinationals. Willem Pieter De Groen, who has researched offshore financial structures, argues that the so-called golden visa policies go hand in hand with offshore dealings.
Oxfam insists that Ireland, Luxembourg, the Netherlands, and Malta should be on the EU’s tax haven blacklist.
Thus, it is no surprise that the criticism of Malta’s tax regime came from the PL’s EP group – the Socialists and Democrats. S&D MEP Ana Gomes stated that corruption in Malta (and not only) results from a corrupt tax regime. Socialists traditionally stand for tax justice, thus S&D’s proposal to regard Malta as tax haven is fair. Had they succeeded to put this in practice, Malta would have been among the four EU member states to be blacklisted. (What is legal today might become illegal tomorrow, that is why we should stand for public interests irrespective of legalisms). The fact that the EP’s S&D had to go against its PL members only confirms that the Labour Party’s policies have nothing to do with social democracy and left-wing politics.
Is Malta’s tax regime truly a national interest though? Does everyone benefit from the tremendous scale of corporate tax avoidance? The answer is no.
Do not write off the struggle for tax justice as “envy for Malta’s success” – it is infantile and intellectually dishonest. Corporate tax avoidance is detrimental to the interests of the general public (it only keeps a few fat cats well-fed). It is fundamentally unfair when a low earner is subjected to higher tax rates than a uber-wealthy individual.
The offshore financial jurisdictions are directly responsible for the growing inequality worldwide. According to the Oxfam studies, in 2010 the number of people whose wealth exceeds that of the poorest 50 percent of humanity was above three hundred. As of January 2017, this number was eight! Unless tax justice prevails, such inequality will inevitably lead to grave consequences.
Frankly, Malta’s integration in the global economy and the single market leave few options other than flirting with the global rich. In order to stay afloat, small peripheral EU member states compete with established ones by underbidding on tax rates. However, we should support EP’s initiatives for tax harmonisation, which could be the first step towards wealth redistribution within the Eurozone. This kind of international solidarity will transform EU from a single market into a proper union between the member states.
Daphne Caruana Galizia was a martyr for truth in a country plagued by impunity
It goes without saying that the assassination of Daphne Caruana Galizia deeply shocked the country. Still, the biased reporting of the tragedy was bizarre and upsetting. Undeniably, Daphne was brave and a number of her revelations were based on facts. Yet, the international media proclaimed her what she was not – a martyr for transparency and against corruption, an anti-establishment crusader tirelessly fighting misogyny and racism.
Daphne firmly assumed a colonialist viewpoint by regularly discriminating Maltese as “essentially criminal”. She did not hesitate to deride women for their allegedly poor dressing style and advised some of them to refrain from political commentary (a feminist would have never done such a thing). She practiced personal attacks in a proxy ‘doxxing’ style. She was a staunch classist who denigrated upwardly mobile and who resorted to racial slur. An anti-egalitarian herself, Daphne regularly gave a platform to reactionary commentators such as H. P. Baxxter who openly sneered at social equality (this alone is enough to debunk Caruana Galizia’s pro-democracy credentials).
Caruana Galizia only condemned corruption of a very particular kind. She did her utmost to expose the illegal behavior of so-called bogans, but she ignored the identical misdeeds of the old elite and their associates. Calling her activism anti-establishment is completely unjustified: rather than assaulting the powerful tout court, she guarded the establishment’s privileges from the aspiring elites she deemed inferior.
Caruana Galizia’s vociferous revelations pursued to expose the PL’s innate corruption and governing incompetence as harmful to Malta’s offshore economy. Nevertheless, her revelations could have become antagonistic to what they were intended to be – they must have become a threat to the interests of the financial powers. It is too early to conclude who was behind her murder, but it is fair to acknowledge that speaking out in a country, where the interests of global capital blend with the activities of organized crime, is a deadly risk even for a member of elite.
P.S. Legalisation of same sex marriage was a ray of light amid the surge of hypocrisy. Congratulations to the LGBT community!
On behalf of Isles of the Left, I wish you a more fair, transparent and democratic 2018.