A common sense approach

The Opposition's main finance spokesman, Leo Brincat, argues that the Central Bank governor's position would become untenable should there be a change in government, given the abrupt manner in which he dismissed Labour's option for a partnership with the European Union.

The very same sources who had no qualms about attacking the Ombudsman and the Broadcasting Authority's chairman for simply taking positions which did not go down well with the Tal-Pietà "clique", were the very first to jump to the Central Bank governor's rescue when I publicly criticised him for having decided to sing the praises of Malta's prospective full membership in the European Union without even having had the decency to pinpoint one single reservation to slightly mitigate the unendless "pros" listed in his speech at the annual dinner of the Institute of Financial Services.

This they did by claiming that Labour remains a "violent and intimidatory party" as well as that my comments were "below the belt".

First, let us get the record straight.

Those who cannot distinguish between a person's dismissal from office and his own disqualification from office are either political morons or happen to specialise in economising with the truth.

This "defensive" attitude by Nationalist ministers, propagandists and fellow travellers becomes even more pathetic when one compares and contrasts the governor's behaviour with the approach adopted by Bank of England governor Eddie George over the euro issue and the forthcoming euro referendum in Britain.

It was announced in August that Sir Eddie and his senior officials at the Bank of England have decided to take a vow of silence during any referendum on the euro to prevent the bank's reputation for independence being sullied by what it expects to be a bitterly fought campaign.

In fact they have already committed themselves to refuse to comment on whether the government has made the economic case for Britain to join the monetary union.

The bank argued that, although it is braced for a campaign to last for perhaps six months, it believes that even attempts to put both sides of the argument will be subject to distortion, misinterpretation and cherry-picking by the media, thus arguing that self-imposed silence is the only way to ensure that the MPC (Monetary Policy Committee) can operate effectively before and even after a poll.

The bank believes that anything it said would be subject to intense "textual analysis" with the risk that a running commentary on the euro would dent confidence in the MPC's decision on interest rates, thus leaving a suspicion that officials were being offered jobs in return for support for the government's line.

Most important of all, the governor stated that it would be completely untenable for bank staff to continue in their jobs if they had expressed views in a referendum campaign that were at odds with the public's as expressed in a vote on the euro.

It has been publicly predicted that, should Mr Blair decide to hold a referendum next year, both the yes and the no camps will be eager to claim support from the bank, which has been responsible for setting interest rates since June 1997.

Sir Eddie is such a stickler for impartiality that he has already told the Commons Treasury Select Committee that when the Finance Ministry officials have completed their assessment, the bank will comment on whether the report is a reputable piece of analysis but not on whether it has come to the right conclusion.

Such action is being taken in the UK despite the fact that the governor and the MPC are independent and should be technically free to speak their mind.

Nevertheless, despite their new-found freedom, they have opted for caution and restraint - a common sense approach under any circumstances.

Even before having come forward with his self-imposed vow of silence, the governor had always been cautious as to how to express himself on the euro.

When he did so he mentioned in the same breath that although there were potential economic advantages to Britain's joining the euro, there were also problems associated with the "one size fits all" effect on the Eurozone.

Commenting on the governor of the Bank of England, Sir Peter Kemp had this to say in The Source, the public management journal:

"For though on paper Eddie George is just another non-elected apparatchik, he is clearly a great deal more important than just that. Certainly he can't decide things - that is for ministers - but his voice will be persuasive, especially if and when a referendum comes to be held."

Before resorting to his self-applied omertà Sir Eddie had always commented on UK membership of the euro in the sense that it is a balanced debate where in his view there are pros and cons, adding that "we" would have to take account of potential benefits and risks.

When asked how he would vote in a referendum, Sir Eddie jokingly replied: "The answer is that I don't know, I would have to think about it overnight and ask my wife."

In our case, the governor seems to have already mulled over it, over-night and consulted his wife!

Sources: "Bank to don euro muzzle", The Guardian, August 26; The Evening Standard, October 31, 2000; The Source, the public management journal - Sir Peter Kemp, July 26, 2000; "Sterling rate key to euro debate", The Scotsman, April 12.

e-mail: leo.brincat@magnet.mt