Vella tells government to consult Security Council on effects of Libyan actions

Updated at 8pm

Labour MP Karmenu Vella has proposed that the government consults the Security Council on the solution of problems that the Libyan conflict has brought upon Malta.

Vella was opening a general discussion between the two sides of the House on the situation in Libya, where he made an appeal to government to consider mitigating measures for Maltese businesses left in the lurch due to the conflict in the North African state.

“The UN Charter provides for member states to consult the Security Council if enforcement measures it has taken against a country has generated economic problems. This is a proviso for any country that feels it has experienced problems due to the actions in Libya,” Vella said.

Vella also criticised finance minister Tonio Fenech over comments he gave to UAE newspaper The National on 6 April, claiming that the Libyan conflict had created opportunities for companies considering to set up business in Malta.

“I’m amazed that such things are said when the Opposition leader was criticised for saying that tourists going to Tunisia and Egypt should be encouraged to come to Malta. The difference is that what Muscat proposed is happening... but everybody knows Fenech is wrong. Malta lost out much more from the Libyan conflict. We gained nothing.”

The former minister asked government to consider aiding these companies especially in terms of tax and VAT payments. He specifically proposed the provision of schedule tax payments; an allocation of bad debts from the inland revenue department for companies which are still expecting Libyan payments; and arrangements on national insurance contributions.

“Companies in Libya are not expecting bailouts, but aid from the tax and VAT departments,” Vella said.

He also appealed for government intervention in asking banks to grant moratoria on loans and refinanced payments. “I know that as soon as the conflict started in Libya, banks started asking for higher guarantees against the loans, worsening companies’ cash flow problems,” Vella said.

Vella also proposed that overdrafts be hived off with low interest rates. “Banks can also help companies look for alternative markets.”

The Labour MP also asked the government to see what the European Commission could do in mobilizing its resources to safeguard jobs and incomes for these businesses; and what assurances had the Permanent Representative Richard Cachia Caruana got from the EC when the government raised reservations on the package of sanctions against Libyan leader Col. Muammar Gaddafi and his family.

Prime Minister Lawrence Gonzi said over 80 companies had received support from Malta Enterprise in aiding their operations in Libya. “I’m informed that employers kept the majority of employees with them, out of a moral duty. I feel this action deserves to be applauded. In the case that these employees will not be able to be kept on the payrolls, the Employment and Training Corporation will be able to help these employees,” Gonzi said.

The prime minister added that Malta had safeguarded business contracts signed before the Libyan conflict in the sanctions that the EU launched against the Gaddafi family, by ensuring that these contracts are honoured.

In his speech, finance minister Tonio Fenech said his comments to The National were quoted out of contest. “I said that we were concerned in terms of the economic impact that that could have on the investments themselves. Another state of fact I said was that many companies used Malta to organise their evacuations and in the process some decided to set up shop here. The way Mr Vella tried to portray this interview was somewhat unjust.”

Fenech said the Labour MP was creating the impression that the government had not acted at all in aiding Maltese businesses in Libya. “We suspended provisional tax payments at zero interest for four months and increased the deposit guarantee scheme to €100,000. It’s not true we’re dragging our feet here.

“It is ridiculous to accuse us of helping Greece and Spain in the sovereign debt crisis, when our actions in loaning money to these countries is to actually protect our economy and families. The Opposition is tarnishing our efforts in a bid to discredit our efforts at protecting the economy.”

On Vella's proposals to delay payments on tax and VAT, he said that while this was possible since they are payments owed to the State, he could not consider a change in social security payments which were directly tied to national pensions and were effectively 'taxpayers' money' in the form of insurance.

Fenech also said that while banks could choose to alleviate certain payments owed to them by companies, the government could not commit tax money to alleviate payments incurred in the risks assumed by businesses. "We did not help all manufacturing factories during the economic crisis, but those that were ready to invest and create jobs. We didn't just choose to help companies that were experiencing financial problems before the onset of the crisis. Even aid of this sort should be taken in a proper context."