Beware of the dogma | Alfred Sant

With all the recent hype about Franco Debono's rebellion against GonziPN, and its echoes of Dom Mintoff's earlier rebellion against Alfred Sant's 'New' Labour in 1998, it seems natural to ask the man who was Prime Minister back then whether he sees any direct comparison himself.

14 years later, Sant admits an analogy can be made: now as then, a government with a one-seat majority in Parliament has lost the support of one of its MPs. But he argues that there are differences, too. 

"Both governments got their majority by having the number of their MPs increased under Constitutional provisions, to reflect the majority of the popular vote they had obtained in the general elections. What's different is that while Labour's absolute majority of the popular vote in 1996 would have justified their having three deputies more than the Opposition, GonziPN's relative majority in 2008 amounted to less than a quota [i.e., the votes required for a single MP to get elected]." 

Another difference was his own response to the crisis in 1998: to go to the polls after 22 months in office. 

"There was no real choice," he says when asked how he assesses that same decision today. 

Applying the same logic to the current scenario, Sant sees no real choice for Gonzi's government, either. "Unless it obtains again the full allegiance of its rebel MP, or engineers some 'grand coalition' with the Opposition, democratic governance in our parliamentary system leaves the government with only one option - early elections."

And yet, that is the one option that Dr Gonzi keeps insisting on is not in the national interest... citing the ongoing eurozone crisis as a reason. As both politician and economist, Sant rejects the view (so popular with pro-government apologists) that economic crises obviate the need for elections.

"The timeline of the eurozone crisis itself is studded with snap elections," he points out. "What is surely not in the national interest is the lack of clarity about the government's future. A snap election should achieve that clarity..."

On the subject of the eurozone crisis: when still PL leader Sant had vociferously opposed the idea of joining the eurozone in such a rush. Was this because he foresaw the present problems at the time? And if so, to what extent?

Sant reiterates that the question was all along not 'if' we should join, but rather 'when'. 

"Under Malta's Accession Treaty to the EU, we were obligated to adopt the euro. The timing, however, was up to us. I argued, and still do, that joining when we did was premature, for three reasons. We needed more time for our enterprises and institutions to get used to operating under EU systems. We needed to enter at a time and an exchange rate that would ensure the competitiveness of our economy. We did neither. Thirdly, it made sense to take some more time to see how the euro system would develop..."

Sant here reminds me that he was hardly alone in doubting the viability of a common currency. 

"There has been for long years a body of economic and political literature claiming that the architecture of the euro system was flawed. Among those who made the argument was Jacques Delors, in a way the founder of the euro idea. Like others, he said that it was not a viable proposition to base the euro on a monetary union within, which economic union was extremely limited. Here in Malta, the ruling elite consistently ignored or dismissed such points as being 'euro-sceptic'..."

Sant has meanwhile made a contribution of his own to this same body of economic and political literature. In his latest book 'Malta u l-ewro' (Malta and the euro) launched last month, he specifically states that "it is counter-productive to argue out of dogma".

I take this to mean that government policy on financial matters (for instance, devaluation) should not be based on inflexible principles, but instead be flexible enough to adapt to different circumstances. 

Sant goes on to write that "monetary policy has been designed in a dogmatic, politically palatable way to facilitate Malta's entry to the eurozone". 

How relevant is this general concept - i.e., dogma before practicality - to Malta's present economic situation? And can he cite any other examples of decisions (apart from eurozone entry) that were taken for dogmatic rather than practical reasons, and for which we are paying a price?

"Let's take the issue you mention: devaluation," he begins. "It is ridiculous to start from the claim that devaluation is 'always right' or 'always wrong'. For every proposition there is an up- and a downside. The conclusion regarding the best way forward has to be based on the circumstances within which an option is being framed."

And yet, he continues, many decisions are consistently taken on the basis of dogma. 

"Consider, for instance, how Mater Dei hospital was launched in the 1990s. The dogma was, how nice it would be for Malta to have San Raffaele build a hospital here. The government never bothered to look behind the San Raffaele façade to discover what they were really doing and how they would fit here..."

In fact San Raffaele went on to declare bankruptcy late last year, amid public scandal and losses running into billions. But Sant has already moved on to a more contemporary example - the Piano project; or as he terms it, "the preposterous development that's going on at Valletta's main entrance".

Again, the point of departure was theoretical and had no grounding in practical exigency. "We're investing in a parliament that's going to be empty for most of the week and in an open air theatre... simply because of the 'dogma' that parliament should be centrally located, and that, because there was once a theatre at Valletta Gate, there should be another one now..."

In his euro book, Sant also wrote about the problem of inflation in the 2008-2009 crisis, arguing that it could not be put down only to economies of scale. This same problem is still evident today, as Malta's inflation continues to be higher than the European norm without any clear explanation.

Switching to economist mode, Sant rattles off a number of reasons why Malta's inflation rate is "endemically higher" than the rest of Europe. 

"Private and public sector projects take too long to implement, meaning that competitive bottlenecks build up. Privatisation - another dogma - has resulted in private profit maximisation within an oligopoly (more usually a monopoly or duopoly), with minimal proactive safeguards by regulatory and/or consumer protection agencies. The BOV ride on consumers who invested in its risky funds with no real protection is a case in point..."

Beyond the privatisation issue, Sant also argues that the application of the EU's competitive and consumer protection rules remains primitive to non-operative, "even while the application of EU rules and policies is increasing the overheads to run the government system of our tiny island state".  

Elsewhere, the Maltese tax system, notably VAT, is subject to scale diseconomies, automatically jacking up the costs.

"Efficiency and control of waste in government (and private) operations are just not a priority. That has a knock-on effect on how the economy develops and transmits costs. We have been running investment levels (public and private) as a percentage of Gross Domestic Product that have been declining and are lower than for most other countries of the EU. Low investment means an economy that is running on decrepit assets and at higher cost..."

At the same time, however, one must also acknowledge that Malta's economic structure has changed considerably in recent years. Under the battlecry of attracting 'smart' technologies, Malta has diversified into the internet gaming sector, among other IT-related areas. 

I ask Sant if he shares various concerns that: a) this may lead to large-scale dependency on a notoriously unreliable sector, that moves according to the most favourable tax regimes, and; b) that Malta's reputation may be jeopardised by association with what is often perceived negatively by the international community - as confirmed by the legislation in other countries like the US, which drove such industries to Malta in the first place.

"No matter what we pretend, we aren't choosers in the investment promotion game. What comes our way, we must take care of... within reason. Internet gaming has fuelled Malta's growth at delicate moments of its transition into EU membership, though this has never been acknowledged... even if gaming came independently of EU membership, and would have come anyway. It has also turned Malta into an Atlantic City of the internet. As you say, this comes with problems; but here, again, the local power elites simply prefer to ignore them. The government has not been sufficiently open about the extent to which economic growth has been reliant in past years on the internet gaming sector. The Economic Survey published every year with the budget just glosses over this sector..."

Speaking of local power elites: as leader of the Opposition Sant had long hinted at a network of corruption and nepotism ('barunijiet, 'ħbieb tal-ħbieb', when translated reads as barons, friends of friends) which enjoyed a stranglehold on government. He had taken cue from this to wage 'total war' on corruption before the 2008 election... an election he went on to lose.  

Looking back at the sequence of events: how would he react to the argument that fighting corruption, in itself, is not considered a serious priority by the Maltese electorate?

Sant disagrees. "The Maltese public is seriously worried about the corruption and lack of transparency in public affairs that are endemic in our society. True, it needs to worry even more. However, given the context of a small island society, at election time power elites find it possible to distract attention from this problem by making people focus on their own particular needs and how they can improve their position through patronage. 

"One used to think only lower income people fell for this; but increasingly it's becoming obvious that middle class voters are just as prone to trade the personal benefits, available through patronage, against the public need to clean our administrative system from corruption and nepotism."

Still, efforts to convince the public of the need for a different political approach have so far proven futile. The Labour Party has lost six out of the last seven elections, three of which under Sant's leadership. Many people argue that, even if they dislike the present situation, the Labour Party simply 'isn't an alternative'. Why is it so difficult to convince the electorate of the PL's credentials as a serious alternative government?

"Elections are won and lost mainly for reasons that are particular to each election. However, over the past decades Labour has faced the following structural and institutional handicaps. First, it always had ranged against it the vested interests of elites and traditional power structures: the Church, the professions - especially in the legal sector, the business sector and the media. Efforts to counteract their antagonism from the 1950s to the mid-1980s (such as by street action) sometimes got out of hand and created long-term damage. Secondly, between the mid-forties of the previous century to the early 1970s some 120,000 people emigrated. Conservatively estimating that close to 70% of these emigrants were Labour or Labour-leaning voters, this represents a vast drain of the Party's electoral pool..."

Surely, however, Labour has had enough time since then to rebuild a support-base, especially among younger voters. Why hasn't it succeeded? 

Sant here acknowledges a paradox, whereby Labour may have been a victim of its own policies. "The problem was compounded by the shift of working-class families into the middle-class, which ironically was triggered by the social policies of the Labour administration of the 1970s..."

Interestingly, he also echoes pre-Independence arguments that had once pitted the Stricklandjani against the Nationalist Party: i.e., the question of whether Malta could survive 'on her own'.

"It is now evident that there is a persisting majority of people in this country who do not believe that Malta can operate on a stand-alone basis, but needs to be positioned within a wider decision making structure. Labour's policies, apart from a short spell when the party actively promoted integration with the UK, were predicated on the vision of an independent island state."

However, the PN has consistently pointed towards another reason: namely, Labour's recent past - the incidents of the mid-1980s: Tal-Barrani, Raymond Caruana, etc, which have ever since been used as a political trump card to "frighten" voters away from Labour. 

Two questions about this: how does Sant himself (who was president of the party for at least some of that time) assess this period in his party's history? And how seriously, if at all, will this element influence the electorate's perception of Labour at the next election?

"The events of the mid-1980s need an impartial reassessment. For too long the PN's version has been taken on board by people who should know better. Admittedly, the then Labour administration made big mistakes... but to pretend that it was all a one-way process of anti-democratic attrition is a huge travesty of the truth. For instance, how come that, in those years, there was a spate of bomb attacks against government buildings? To believe that they were organised by Labour-inspired thugs is just not on. Then there are also questions about how the police system was being manipulated... exactly by whom has never been clarified. People who were accused by the PN of having mounted cover- and frame-ups were later promoted and cherished by the Fenech Adami administration post-1987. That's more than curious..."

Sant however doubts that the PN's 'scary '80s' tactics still carry the same political currency. "Dr Joseph Muscat, and many of the people he has brought upfront in Labour, were kids in those days, or not yet born. So what happened in the 1980s should really have no influence on how they are perceived..."

Yet another of the 1980s bugbears concerns public broadcasting at the time of Xandir Malta. Then as now, the national broadcaster was pilloried for its pro-government bias; and Sant, like many within his party, sees no fundamental difference between TVM's past and present incarnations. 

"Public broadcasting is as unfair and partisan now as it was claimed to be in the 1980s," he points out. "Today, things are done in a more sophisticated manner to camouflage this reality. But no doubt, future researchers committed to a sense of fairness in public broadcasting will be flabbergasted by what went on in 2003 during the EU referendum and election campaigns, and what has continued to happen since..."

Up until that election and its aftermath, Sant had been equally critical of how the private media treated the Labour Party and its platform. Does he still retain the same view today? 

"Any scientific study of the private media will confirm that they are biased in a wide variety of ways against Labour. Variables to focus on in such a study would be: the control and ownership structures; the composition, recruitment and promotion of administrative cadres and journalists; the organisational culture, formal and informal; the relationships with power structures within the government and allied organisations; advertising and financing relationships; the house style and writing conventions adopted in the media texts that are published or broadcast; editorial policies. However, no such study will be carried out given that the establishment dogma is that private media are independent by definition."

Meanwhile there is a rumour doing the rounds that Alfred Sant is considering retiring from politics altogether. Does he intend to contest the next election, I ask?  

"There is no decision as yet," is all he will say.