Who runs the country?

After long years of spending recklessly without bothering to ensure public expenditure sustainability, the Nationalist government has resorted to higher taxation and large-scale privatisation to address the deficit and public debt problems. Strategic public companies and corporations like Sea Malta and Malta Freeport are going to be sold off to private foreign companies. How will their privatisation affect Malta's incoming and outgoing trade with the rest of the world?

Since both companies are crucial for Malta's imports and exports, what steps are going to be taken to ensure that the new private companies taking them over, safeguard Malta's national interest?

The smaller the country, the more dynamic and active its government must be to safeguard the national interest. Small countries are very vulnerable to external and internal pressures.

Extensive research carried out on small societies shows that personal relationships exert more power than institutional arrangements: who you know is more important than what you know, and family ties and cronyism triumph over merit and hard work.

Once governments of small states cede nationally strategic companies, it is more difficult for them to safeguard the national interest. We are living in a globalised economy but the "national space" still exists and the viability of a country depends on its ability to design interdependent links with the rest of the world that still safeguard its national interest.

Earlier this month it was announced that another company (CP Ships) moved two of its services from Malta Freeport to the port of Cagliari in Sardinia. The company moved these services because of delays at the Malta Freeport. The company used Terminal 1 at Malta for its services between (a) Epic service = India/Pakistan-Malta Freeport-N. Europe (Hamburg, Antwerp, Rotterdam and Tilbury); Malta Freeport-Port Said-Jebel Ali (Arabian Gulf)-India/Pakistan, (consisting of CP Ships + P&ONL + CMA-CGM) and (b) US Gulf-Freeport-Genoa, Fos, Barcelona + Valencia-US Gulf (CP Ships only).

Two mother ships bypassed Malta Freeport in the first week of May and the end of May because of delays.

CP Ships had a contract with Freeport since 2002 and they had their own "windows" (meaning slots of day/time of arrival + day/time of sailing) but nevertheless they were incurring delays because Freeport gave priority to China Shipping, who also use Terminal 1.

China Shipping has a contract with Freeport but they do not always respect their own "windows". China Shipping is well known in the trade for their haphazard way of operating.

Their ships have been known to arrive unannounced at Freeport outside of their windows. Yet Freeport do not always ask China Shipping to wait their turn according to the windows agreed, as they usually do, but sometimes have given them priority over EPIC + US Gulf services.

CP Ships had another service (Canmar - operating between EC Canada and the Mediterranean) which they were interested to bring to Freeport, but now all three services have moved to Cagliari. Needless to say, CMA-CGM who are set to take over the Freeport when it is privatised have exclusivity at Terminal 2 and there own ships are not hit by any delays at all.

Cagliari is handling about 700,000 containers and has ample capacity to handle another 800,000. But Malta Freeport is better positioned strategically for the East Mediterranean and Adriatic than Cagliari and they preferred Malta. Sources in the maritime business state that China Shipping is known for their erratic mode of operation. Before coming to Malta they left from Gioia Tauro, Piraeus and Valencia.

Private fiefdoms

At every port they caused problems to the terminal operator (and in turn other shipping lines) and this is what Freeport are now experiencing. Freeport may be charging China Shipping higher charges but they ought to know that price will be outweighed by lower productivity, but with the privatisation coming, price may be of more concern.

Our Freeport also has the same erratic service of IRISL on Terminal 1 but on a lower scale. IRISL is being represented by the company of Minister John Dalli's relatives, with no previous experience or knowledge of the business they are now conducting at Malta Freeport. Malta Freeport is bending backwards to accommodate IRISL and their local representative.

Although Malta Freeport has been trying to play down the significance of Epic's departure, this means that local importers/exporters have fewer shipping opportunities to several ports.

For example, earlier this month Foster Clark shipped out a large quantity (about 100 to 120 containers) on the last Epic sailing at the end of May and now with Epic gone, they do not have the same competitive possibilities to Jeddah + Arabian Gulf as they had with CP Ships + P&ONL.

CMA-CGM and Norasia will still provide a direct link from Malta to this important market, but their service is reduced and freights are higher. So Foster Clark, for one, is losing out. There are of course other exporters and importers who will suffer when Freeport dictate the market when they acquire the private monopoly of running the Malta Freeport. The same will happen if Sea Malta is privatised and the new company taking over runs down services that are now crucial for Malta's imports and exports.

Malta will be badly hit if privatising its strategic companies means putting them in the hands of a few well-connected individuals and their families, who will start using these structures not in the interest of the country as a whole but in the interest of their families and friends. Those who claim that national sovereignty and national interests are outdated 19th century concepts have no qualms about Malta becoming the private medieval fiefdom of a few individuals.