Timing is everything
Few will have missed the poetic congruence of last Monday’s vote on the fate of Richard Cachia Caruana as Permanent Representative to the EU. Finally, a lion was thrown to the Christians. We heard them roar.
It took a dentist to show that Parliament had teeth, Jeffrey Pullicino Orlando to show it had dignity. Mr Cachia Caruana was buried by a grave opposition. The only false note was struck by Jesmond Mugliett, an architect who abstained from the build-up. But nothing’s perfect.
However, there’s an aspect of the argument that I didn’t grasp. George Vella, winding up for the opposition, told the Prime Minister why the censure motion had not been proposed earlier, when the Wikileaks documents mentioning Mr Cachia Caruana were released.
In politics – Dr Vella told the Prime Minister – timing is everything. He also reiterated that it is Parliament that decides where Malta’s best interest lies.
Here’s what I’m still trying to understand: Why does Parliament believe that it’s perfect timing to get rid of our permanent representative just when the eurozone is in the eye of a storm that can wreck it? Why is that where our best interest lies?
Mr Cachia Caruana is not irreplaceable. We must have other public servants who can combine his highly technical, strategic knowledge of Malta’s dossiers with an astute political brain capable of early detection of potential problems and coalitions among fellow member states.
But, not having occupied his position, they cannot have his fine-grained, insider understanding of the state of the EU now: what’s possible, what isn’t; how to read different personalities’ performances and coded messages – to sift display from substance – in the forums where Malta’s representative is needed; how to deliver the same message to different personalities.
In time, with a managed succession, that knowledge can be acquired. But to have to impart that knowledge urgently, in a highly volatile situation while the EU is itself in a state of red alert, is to create an emergency within an emergency.
Just to review the scale of the larger emergency, consider the following. Today, in Luxembourg, at a meeting of the eurozone’s financial ministers, Spain is expected to ask for a bailout of up to €100 billion. Its 10-year borrowing costs have just passed through the seven per cent ceiling, the level at which borrowing becomes unaffordable.
At the G-20 summit in Mexico, a few days ago, there was much anxiety expressed about the implications of a eurozone disaster for the entire world. The US is anxious. The World Bank has warned of a global crisis. The markets’ uncertainty is raising costs for development countries. Steps are being taken to protect north Africa and west Africa.
Last week, the UK’s Chancellor of the Exchequer was ready to tie himself up in rhetorical knots. He virtually argued for greater integration of the eurozone while claiming both opt-outs for the UK and a greater say in the economic decision-making. The times make politicians ready to make such speeches.
By the time you read this, Greece will probably have a new government committed to respecting its bailout conditions, while arguing for some relaxation of its tight schedule. However, it will also have a strong parliamentary and popular opposition to the bailout terms. It is likely that market anxiety about a Greek default will return.
Should a Greek default happen, it will be unlike another famous one – that by Argentina 10 years ago. Argentina went on to recover well. But it managed this because its economy had certain comparative advantages that Greece doesn’t have. Its export-led growth was helped by a booming global economy. Greece would have to engineer a return to growth in an environment where its closest trading partners are struggling.
It would also have to default in a context where it cannot devalue its currency. It cannot just switch to an existing one, either. The drachma no longer exists. The switchover to a new currency would require some bending of the rules, which probably would undermine market confidence in eurozone rules generally.
The situation is tense and unprecedented. It has been compared to the 1930s’ Great Depression that saw every major currency leave the Gold Standard and to the 1970s’ end to the Bretton Woods system.
In such a situation we shouldn’t be surprised that international political leadership hasn’t quite risen to the occasion. The leaders know it’s serious but they haven’t quite agreed precisely just what the occasion is.
It’s why we’ve had a lot of shadow boxing. Most prominently, there’s been the game of chicken between Angela Merkel and Greece. At least, most people now think that that’s what it has been; it’s never been too clear.
But there are several other issues where sheer experience of European arguments and grandstanding will be crucial, not just for navigating out of the storm but for setting the course of a reformed Europe, with new rules that will have a significant impact on Malta’s position within the Union.
I would have thought that this was not the time for on-the-job learning for a new permanent representative. But, then, timing isn’t my forte.