In the Chinese calendar 2013 is marked as the year of the snake and people born under that sign are said to be altruists.
China’s decision last week to invest “tens of millions of euros” in the heavily indebted Enemalta has the hallmarks of altruism.
Whether this decision was influenced by the year of the snake is debatable but economist Karm Farrugia argues the answer is not found in astrology.
He believes the Chinese would have evaluated the investment from a purely business perspective.
“They owe us nothing and to consider this move they are definitely seeing the prospect of profiting from the venture.”
The smell of Chinese money is strong indeed. China’s GDP has grown at an average of 10 per cent per year since starting market reforms in 1978, according to the World Bank. The Chinese economy recently surpassed Japan, becoming the second largest in the world.
Mr Farrugia says with such rapid development China wants to expand beyond its shores, seeking “safe places” to gain a foothold in the EU’s common market.
“China is not the China [Dom] Mintoff visited 41 years ago. Their considerations are business and no longer political like at the time,” he says of the former Prime Minister’s historic visit to China in 1972 that cemented Maltese-Sino relations.
Mr Farrugia says the most important thing is to attract Chinese investment to Malta and the Enemalta agreement makes sense because China is a leader in the energy sector.
But the part-privatisation of Enemalta has raised concerns over the country’s loss of energy sovereignty.
They owe us nothing and to consider this move they are definitely seeing the prospect of profiting from the venture
Opposition leader Simon Busuttil was the first to raise the alarm. He questions the judiciousness of selling part of Enemalta to a company owned by another State, more so when the new gas power station planned by the Government is also going to be foreign-owned.
His concern is echoed by Alternattiva Demokratika energy spokesman Ralph Cassar, who asks whose interests Enemalta will serve.
The Government’s response so far has been that the Chinese will only hold a minority shareholding in the company.
The agreement with China Power Investments, a state-owned electricity producer ranked among the world’s top 500 corporations, still has to be finalised in the coming months.
For former Enemalta chairman Robert Ghirlando, an engineer, “the devil will be in the detail” of the final agreement.
“We have to wait and see whether there will be an escape clause allowing the Government to regain full control of Enemalta if something goes wrong,” he says. While Prof. Ghirlando believes roping in a strategic partner is not a bad idea, it depends on who the partner is.
“What I found strange is that the Chinese company will be ready to invest a reported €200 million to gain a shareholding. But what is Enemalta really worth?”
It is a pertinent question that will only be answered after technical talks between both sides are concluded. According to Energy Minister Konrad Mizzi (see interview) the Chinese have twice visited Enemalta, looking at the company’s financials and seeing potential for the long term.
But Prof. Ghirlando has his doubts on the commercial attractiveness of the deal to the Chinese. “To me this does not look like a commercial deal but a political deal.”
Judging whether the Chinese decision is politically motivated may be premature at this stage but Saviour Rizzo from the University of Malta’s Centre for Labour Studies argues that politics has become an exercise in fine tuning to the exigencies of realities dictated by the globalised economy.
“It is quite clear that through the agreement Malta is getting benefits from the largesse of a state which has increasingly become powerful not just politically but also economically,” Mr Rizzo says.
We have to wait and see whether there will be an escape clause allowing the Government to regain full control of Enemalta if something goes wrong
But the debate over Enemalta’s part-privatisation has also raised concerns over the sale of a basic service like electricity generation to private enterprise.
Reacting to the deal, the Opposition leader said the Nationalist Party was opposed to the privatisation of essential services, seemingly reversing his party’s long-held belief in privatisation.
But Mr Rizzo does not believe the PN and the Labour Party, which had in the past been allergic to the privatisation of public entities, have reversed roles. “They are simply adjusting to the new realities in order to survive.”
He argues that even education is an essential service and yet the country has been witnessing a surge in non-State education. “Hasn’t this process partly privatised education which was always hailed as being a public good? There hasn’t been a whimper about this phenomenon.”
As each of the political parties tries to adjust to the logic of neo liberalism, he adds, there seems to be little substantive differences between the two major political parties in terms of philosophical or ideological content.
It is a sentiment shared by Mr Farrugia who argues that over the past 25 years Nationalist governments never had a problem with doing business with China.
“Today we import far more than we export to China, creating an unfavourable balance and the Chinese may want to partially redress this by investing here as they expand their global influence,” he says.
But this raises the argument whether the Enemalta deal is just the excuse for China to use Malta as a stepping stone to get round the EU’s concerns on the dumping of cheap solar panels produced by Chinese companies.
The memorandum of understanding includes setting up a joint venture company in Malta specialising in the manufacture of photovoltaic panels.
News agency Reuters has already framed the Malta deal within the solar panel controversy even though the European Commission and China have reached a temporary arrangement on minimum pricing for Chinese photovoltaics.
Prof. Ghirlando is unsure the PV controversy has anything to do with the Chinese energy interest in Malta.
He argues that if solar panels produced in Malta are to earn the ‘Made in EU’ label, there has to be a level of manufacturing that contributes substantial value added to the final product.
“If this happens the EU cannot accuse the company of dumping because it will be a Maltese company operating under EU standards and paying national wages,” Prof. Ghirlando says, reiterating that what matters are the fine points of the agreement.
Altruism is unlikely to be listed in the clauses but people born in the year of the snake are also said to be determined to achieve their goals, something the Government seems intent on doing.
Whether it does so at all costs will only be determined in March when the deal is sealed and the details emerge.
ksansone@timesofmalta.com