Convictions of the eurosceptic

The opposition spokesman on finance, Karmenu Vella, opened his Talking Point on August 13 by saying that the euro would be tested at the first serious economic downturn and that the “... first (economic) downturn is upon us”. He is obviously grossly incorrect and about three years late in his assessment.

The current turbulence is as much linked to the economic and financial turmoil that started to unfold three years ago, at around this time, as much as it is its direct consequence. However, the opposition, in its nonsensical frenzy to lambast the government for everything it says and does, never acknowledged one of the biggest financial and economic crises since World War II and preferred to conveniently ignore it completely lest most of its unjustified criticism would be seen for what it was.

Mr Vella makes a number of assertions that are either untrue or at best grossly misconstrued.

He starts by saying that Europe was not united in tackling this crisis. Nothing can be further from the truth. Both at the euro area level and at the EU 27 level, heads of state and of government as well as the finance ministers reiterated on many occasions their determination to do all it takes to safeguard the economic and financial stability of the euro area. Their declarations were followed up with very concrete action.

The strong economic governance package, the creation of the European Financial Stability Facility (EFSF), the European Financial Stability Mechanism (EFSM) and of the European Stability Mechanism (ESM) as well as the adjustment packages for Greece, Ireland and Portugal are clear examples in a string of actions within a strategy to honour the commitment to safeguard the economic and financial stability of the euro area as well as of the wider Union.

Mr Vella asserts that the euro area countries are not singing from the same hymn book. In making this assertion he mistakes the democratic discussion on the different policy options and tools for lack of unity. Moreover, he overlooks the real and tangible policy solutions that have been agreed to and which are being implemented by the euro area member states and the wider EU 27.

All the EU member states and, especially, those in the euro area have economic and financial stability in the Union as their ultimate objective because they all realise that their economies are strongly intertwined and heavily interdependent. What the opposition spokesman for finance construes as being dissonance in the voice of the member states, whether in the euro area or not, is nothing but a healthy and constructive dialogue about the various policy options and the best way forward to address the prevailing problems.

Even the UK is highly supportive of the measures being taken within the euro area to address the instability.

Indeed, contrary to what the opposition spokesman asserts, the UK government has reiterated ad nauseam the need to have economic and financial stability in the euro area not least because this serves its interests as well. However, the UK went beyond such declarations of policy and contributed tangibly to the work on the economic governance package and also financially to the adjustment packages for Ireland and Portugal either directly or indirectly through the EFSM.

Greece has implemented a large number of austerity measures and a good number of structural reforms since the start of the first adjustment package. Indeed, without these measures and reforms, Greece would have been in a much worse situation that it is today. However, while some of the measures that have or are being implemented leave the desired effect in the short term, others take much longer to give the required returns.

Those countries, which, like Malta, extended bilateral loans to Greece, are assisting it to get out of its present predicament and are not subsidising it. No country, including Malta, is losing any money because of its loan to Greece.

The euro area’s collective determination and challenge is to assist Greece through this rough patch because that is what solidarity is all about and that is what commitment to euro area economic and financial stability requires. Therefore, while the doubts that are being cast by the opposition spokesman are well noted, our collective objective should be to inspire confidence that we can succeed in our ultimate objective and not to sow mistrust and fear because that might appeal to some segments of our voting public.

The decisions taken by the Council of Ministers and the heads of state and of government have averted a much bigger economic and financial crisis following the fall of Lehman Brothers. Their positive and very concrete actions averted a much deeper recession and contributed in no small way to the return to growth of most European countries. They are doing the same now by tackling the problems at hand. Adjustment packages have been prescribed to those countries that need them.

However, the countries that are undergoing adjustment are also being assisted to carry out the necessary structural reforms and, more so, that these would improve the economic flexibility and enhance their competitiveness. Apart from this, these countries have been accorded more flexibility in the use of EU funding in support of their economic regeneration.

Are we in a better shape than many euro area countries? Mercifully, the opposition spokesman agrees that we are. A rare admission indeed but, thankfully, he admitted it.

Our economy is still growing and generating jobs. Unemployment is quite low by historical standards. Investment is still flowing in and our exports are still healthy. Continuous efforts are being made to keep our public finances under control. The results are there for whoever cares to look at our situation in an objective manner. These results came about by taking the right decisions at the right time and through sheer hard work.

Are we facing any risks from the ongoing turmoil? We are because we are an open economy that is firmly entrenched in the world and, especially, European markets. Therefore, anything that happens in these markets is bound to affect us either directly or indirectly. Unlike the opposition, we have been very consistent in regularly drawing attention to these risks. The opposition has always preferred to ignore them. For them, any ills that might afflict us are always of the government’s doing. Elsewhere, economic and financial turmoil was non-existent and, in any case, was irrelevant to Malta’s situation. Fuel, food and other commodity prices that would impact local inflation were a figment of the government’s imagination.

That they are now following us and acknowledging these risks seems to be a reluctant step forward. That they are now following us in urging non-complacency is now fine and dandy.

The only snag is that their advice sounds too hollow and too opportunistic, especially when placed within the context of their recent and not so recent statements. While the government was and is still taking the tough decisions to ensure our continued viability, the opposition engages in endless populist posturing and silly mud-slinging games.

The Maltese government has been actively participating in all the deliberations on the crisis at a European level. It has also extended its support to the many initiatives that have been taken in order to address the problems at hand with a view to ensuring the economic and financial stability of the euro area. In doing so, the government never failed to balance out the national interest with the wider European interest. Stability at the European level is extremely important for our economy and for the welfare of our people. Without such stability, our economy will not thrive. However, the government has also been careful not to over-expose and over-extend itself and it will continue to do so.

The opposition’s spokesman on finance ends his contribution by talking about the ongoing turmoil out there. However, to be consistent with himself, he once again casts doubt on our economic and financial stability. Forgetting his caution against complacency and the risks at hand, he goes ahead creating new risks by trying to erode confidence in our country. The spread of doubt and fear, especially at such a juncture, is certainly not helpful and will definitely not help strengthen either our economic or financial stability. It certainly does not help to generate more wealth and work for our people!

The opposition spokesman ends his contribution by spelling out and reiterating his beliefs in our currency and his convictions of the euro project. Fine words indeed. However, it is pity that these beliefs are betrayed by arguments that are tantamount to the convictions of the Eurosceptic.

May I remind the opposition spokesman for finance, lest he so quickly forgot, that both on the financial assistance to Greece and the establishment of the ESFS the vote in Parliament was a unanimous one. Once again, an opposition trying to please everyone, its Socialist friends in Europe, and who govern Spain, Greece and were responsible for the Portuguese mess, and trying to score points with the local public by attacking government strategy both local and at a European level to avert a further escalation of this crisis.

Can the opposition tell us where it stands? We stand for defending our economic stability and jobs.

The author is Minister of Finance, the Economy and Investment.