Author: Jacques René Zammit

Categories
Energy

That China Connection

1. From Closed Shop to Open All Hours

In 1405 the Great Emperor Yongle sponsored a massive mission of world exploration that would be captained by the explorer Zheng He. The boats used by these expeditions were among the largest sail powered boats the world had ever seen – by comparison Colombus’ three vessels when he set off for the Indies would measure one-eighth of the Chinese behemoths). This Age of Chinese exploration was brief. The expeditions went far and wide and magnificent gifts were brought back from places such as Malindi in Africa (most memorably a giraffe). The next Emperors though believed that such explorations were a waste of public expense and China would soon close in upon itself and clam up to the world (including an outright ban on sailing ships).

Fast forward to  1793 Lord Macartney made a trip to China in a bid (sponsored by Mad King George) to convince the hermit power to open up to European trade. Emperor Qianlong fobbed off the British entreaty towards openness (See the rather interesting reply here) and while ordering King George III to “tremblingly obey” his wishes Qianlong maintained what would be a short lived policy of closed-shop. The main reason imputed to Qianlong’s decision was that China already had everything it needed.

Fast forward again and watch how in gradual steps starting in the nineteen-eighties Deng Xiaoping, Jiang Zemin and Hu Jintao transformed China’s outlook towards the world. The giant nation is now a huge force to be reckoned with and is bulging with economic muscle that can be flexed around the world. This time there should be no turning back…

2. Ma Tagħmlu Xejn Ma’ Dr Joseph

Which brings me to the current government’s sudden trysts with the Chinese behemoth. In the run up to the election we already had a Labour delegation scooting up to the new land of opportunity presumably to prepare the preliminaries for deals should they get into government. Nothing wrong in that, at all. The media exercise in recent days has been such as to highlight the fact that Chinese Investement is sought after across the continent and not just by the Taghna Lkoll government. Such news is brilliant for the non-discerning voter of course – and all it took Joseph Muscat was a little trip to a sort of Economic Forum in Dailan China (a sort of young leaders exercise mainly intended to promote China and Chinese economic clout).

The Bulgarian and if I am not mistaken Finnish Prime Minister also attended this little chat to a mostly empty room in Dailan. Attendance was not important from the Maltese perspective though, what really counted were some sound clips from Muscat such as the fact that Europe lacked real leadership or the assumption that “EU PM’s agreed that Chinese investment is important”. The impression given by the press bytes back home was that there was an impromptu EU28 meeting of heads of state in Dalian and that the leaders had all agreed to issue a statement confirming the importance of Chinese investment.

It’s not that Chinese investment is not an attractive opportunity. Not at all. The CIC that basically manages $200 billion in dollars of foreign reserves for the Chinese government and is constantly injecting capital into public and private projects (Joseph Muscat did mention their foray into Thames Water as an example of special national services being sold to the Chinese). “As of August 2013, the CIC has 575.2 billion in assets under management.” (Wikipedia)

One type of investment occurs when Chinese companies buy into European counterparts. I drive a car that’s nominally Swedish (a Volvo) but the manufacturer is owned by Geely Automobile who bought it off another non-European company called Ford. American today, Chinese tomorrow – capital wise that is but still Swedish safety and know-how. So the Chinese companies are attracted by the expertise and know how of the company they are ultimately purchasing. Back in China the purchasing company gets additional credibility through its collaboration. Luxembourg’s Cargolux was under scrutiny for a similar kind of buyout only last week.

Then there is the Maltese MOU with the Chinese authorities. We should premise that nothing is certain about what was exactly agreed and that we have to wait for the details to be stamped out – presumably in a decent parliamentary debate (without the excuse of economically sensitive information shrouding the whole exercise). The first glaring inconsistency in this “investment” is that in the economic world you do not get something for nothing. So if we do know that the Chinese are paying €200 million into Enemalta we need to know what they are getting in return.

Moody’s seem to know more than the media in this respect, here is what they said in their latest report:

In addition, the government recently announced that it had signed a Memorandum of Understanding with the China Power Investments Corporation (CPIC), one of the five largest state-owned electricity producers in China. As part of the agreement, Shanghai Electric Power, a subsidiary of CPIC will become a minority shareholder in Enemalta, providing the Maltese utility company with a cash injection that will improve its financial position. Enemalta and CPIC also plan to set up a joint venture to produce photo-voltaic units for sale in Malta and across the EU, which would help Malta reach its renewable energy production targets,while providing China with a foothold in the European solar energy market.

Another initiative between both parties is the setting up of a Energy Service Centre that will cater for the maintenance and service of energy production plants in Southern Europe, Turkey, the Gulf and Africa, a venture that is likely to further boost economic activity in Malta.

So if Moody’s are right then the CPIC will provide the “cash injection” and in return set up a “joint venture” to produce PV units in Malta (apart from the Energy Service Centre). Which brings me to the balancing out part of the equation. So the Maltese government has effectively charged a Chinese company 200€ million in order to “allow” it to set up shop in an EU Territory and break into the PV market that is worth trillions of euros last I checked. It does not stop there. The 200€ million give Shangai Electric Power a stake in one of our most important assets – Enemalta – effectively limiting our sovereign independence where energy is concerned.

Many more questions need to be asked about the PV manufacturing plant in Malta. Hopefully these will be done in the right forum in Parliament. Meanwhile the optimism among the Labour crowd is palpable. Joseph Muscat has got Malta a “deal” like some latter day Mintoff and brought much needed money to the Enemalta purse. At what cost though? Are we fully aware of the risks involved and of what really has been sold to the Shangai Electric Power?

As for Moody’s report. It just calls a spade a spade. IF the Labour promises do work out then the outlook is deemed to be good. Call me negative if you will but the most significant paragraph in the report is the following – something none of the media seems to highlight:

We do note, however, that the planned reforms are ambitious and there are risks to its successful implementation. For instance, the building of new infrastructure relies on the interest of private partners, adding a degree of uncertainty as to whether a suitable partner may be identified. Moreover, Enemalta’s financial health could be jeopardised by a premature cut in tariffs should anticipated savings be delayed. Nonetheless, we believe that the sovereign will benefit from a less volatile Enemalta and a more resilient energy sector that is likely to attract greater investment to the country as input costs fall.

Private partners can easily be found if you sell your wares for cheap or if you offer to “prostitute” your sovereignty for a measly cash-injection (Shangai Electric Power are buying into our sovereign Energy for the price of two Welsh International Footballing Superstars – and they get a foothold into the PV market to boot). True the opposition populist taunts of “China with a finger on our Energy button” are still part of the same old same old diatribe but then again other huge alarm bells begin to ring when you notice that our Energy Minister has a not too nuanced China Connection that runs in the family so to speak.

Add to that the wanton nonchalance with which this labour government seems to want to appoint personnel in the diplomatic and economic fields on the basis of what can only be described as nepotism and you can begin to piece together a not so rosy picture.

This government was elected with promise of cheaper light, it seems to be rushing headlong into a tunnel of darkness. And this is not only thanks to the Chinese.

 

Categories
Politics

Broken Bad the first

The most expensive salvage operation in history takes place today. It will cost nigh 300 million dollars to lift the Costa Concordia out of the waters close to Giglio Island in Italy. Captain Schettino’s handiwork has led to a magnificent effort in logistics and this in turn has hogged the headlines this week – ahead of Japan’s latest natural crisis.

Closer to home the Nationalist party begins its preparations for the annual Independence Day celebrations. The young PN leader was the author of what I thought was a rather weak catchphrase in the run up to the last election: “Gas down għal-ġol ħajt” would be repeated with ecstatic fervour by the die-hards at every other rally. Fast forward half a year and Simon Busuttil finds himself at the helm of a shipwrecked party that risks total collapse into oblivion if no salvage operation takes place some time soon. Sadly the focus seems to be (or, given the way things work in the PLPN world, has to be) on the money.

I hate to use words like “the problem is” because this blog is about punditry that does not go to the extent of scientific analysis. In other words I have no polls and statistics to back what in the end are “hunches”. Yet, given the sufficient dose of necessary caveats, I would not think it to be amiss to state that “the problem with the PN is” that it is still thinking in the same old, same old mould. This “Broken Bad” series is an attempt to look into what is wrong and what can be righted. Like the legend of the phoenix…

Get Lucky?

So to begin with, what is left of the PN admin seems to have this massive obsession with financial debts. You cannot reasonably claim that this worry is not understandable yet there is much to be said about the fact that the financial burdens of the PN are an inheritance that is directly related to the current modus operandi and mindset of the party. In other words the current debts can only get worse if the party keeps on thinking in terms of playing the game as they have for the last thirty years. Unsustainable media and the absence of a real thinking machine (that was forfeited ages ago to be replaced by a combination of “crowd sourced blah” and “knee-jerk-I-have-an-ideas”) meant that the PN was fully equipped only for the race to mediocrity.

The whole party structure is geared to reward yes men and “loyalists” of a very troubling kind. They’re the kind that think in term of village kazini and would follow any dictat without batting an eyelid. Don’t be fooled by the upstarts who brought the last government tumbling down – they were the price to pay for an all-embracing pick and mix of candidates that our two party alternating system has created. They are the wrong symptom to look at.

What the PN should be focussing on at this stage is one crucial question. “Where are our leaders?” The answer to that should explain why there is a current dearth of leadership now and even more crucially why there does not seem to be a concrete possibility for future leaders to emerge. The PN could wrongly try to emulate the PL and come up with populist rhetoric and cheques that will bounce back in the very near future. The temptation is there and the current brand of PN politician is very much made in that mold.

It is useless to think strategically if you have no basic plan. It is even more useless if your lack of a basic plan exposes the lack of a soul. The PN should be asking itself why it is in the business of politics. Yes, after all these years this is the kind of question that should be at the very basis of it all. The next step would be to build around that. To start thinking again instead of reacting ridiculously. Get out of the box. Think differently and build a party around those thoughts.

It is hard, very hard for a whole system to be completely upgraded… from scratch. The last six months have exposed a seriously weakened PN – lacking moral fibre it has coughed up hopeless positions that are sons of panic thinking. Just think on how the PN congratulated the Labour government for its Libya energy agreement only to notice much later how shallow the MOU really is. This weekend the PN toyed with the idea of making a fuss about Busuttil being booed – it’s back to the “x’gharukaza these Laburisti” way of thinking that will get it nowhere.

So the first rule the PN must look at is the most important one: Know thyself. Why is the nationalist party in politics in the 21st century? It takes a second to wreck it… it takes time to build. 

Categories
Mediawatch Politics

Agrodolce

MaltaToday reports that the public has been given only one week to send in comments on the proposed new policy that will affect ODZ (outside development zone areas) “to facilitate the redevelopment of existing farm buildings into agro-tourism establishments or visitor attractions.” This is never going to be an easy issue. The very character of an agriturismo is such that implies preservation and utilisation of natural and environmental assets without causing any damage. Farmhouses and whole estates are adapted to be able to host a sustainable number of residents (no multiplex) who would opt to visit in order to enjoy the natural habitat as well as learn in different contexts (cooking, horse riding, nature rambles, historic visits etc).

It is of utmost importance that the excuse to “develop” (adapt) within areas that would otherwise be a no-go for the ugly word is not abused of. A policy that is aimed at encouraging agri-tourism must be holistic and also be aware of the huge potential for abuse. Whole swathes of land from Mistra to Ghasri run the risk of being cruelly exploited under some feeble excuse of “agri-tourism” conversion. This is the country where a squatting group of caravans suddenly develop “legal rights” thanks to the wheeling and dealing of consecutive governments. Can you imagine a free for all with our rural areas?

Conversions and adaptations for agri-tourism can be a gold mine as the mafia soon discovered in Sicily. EU subsidies, special permits in ODZ areas and more will attract the worst of the worst unless the policy is carefully thought out. It’s not a good start – just one week for the public to react. It seems to signal the beginning of the end of another scarce resource in Malta.

Plus ça change.

Categories
Politics

See no evil

According to a news item that went viral over the weekend the Splash and Fun complex is full of shit. Actually to be more precise, tests have detected the presence of E Coli bacteria in the pool water at the popular summer resort. The news gets worse though. Apparently the Health Department tests and results took place early in August but uncharacteristically the resort was not shut down and remained open for business. Some wise guy must have thought that the balance between shutting the resort down during the busiest summer month and a few sick clients should definitely shift the business’ way. Meanwhile the resort has issued a denial of the contamination report. The shit has only just hit the slides…

Denial aside there is a feeling of complacency that was best summed up in a recent Times editorial (was it Sunday?) entitled “Anything Goes”. The silly season is no longer an excuse, what with the rumblings and showers of early September. A Labour government elected on the Taghna Lkoll mantra has been in power for six months and has proceeded to ride roughshod over any semblance of promise that might have conned even the most lukewarm of supporters.

The Great Libya Deal is the latest in a long line of jaw-dropping charades that could only have been fed upon an audience still high on the (false) 36,000 rush. First we had a deal that was greater than any other trumpeted ad urbi et orbi. What the nationalists did not do in 25 years we did in 6 months. Now it transpires that the “deal” is nothing more than a memorandum of understanding based on the hope that the government with whom the deal was made will actually be in control of the oil that was promised at preferential prices to the Taghna Lkoll Gang. Or so they tell us. Joseph tells us that the oil is there, it is only a matter of crossing our fingers that the right people get their hands upon it. Which is actually a complete new definition of hedging (more like betting really) and speaks volumes about the diplomatic acumen of this government.

(A small aside for those silent mice at the pre-coffee shop at Dar Centrali – what the hell was all that applauding the deal for? The PN will be the subject of another post soon enough but please… wake up. )

The Libya deal was not enough though. We also had MEPA accepting some kind of extension for the use of HEAVY FUEL OIL at Delimara. Yep. This government that had promised black on white to end the use of damaging heavy fuel oil is actually going ahead with an increase in our capacity to use it. A promise is to Joseph Muscat as an open bottle of ether, there one minute – gone in the air the next. I wonder what ever happened to those people who went on about “Jiena nemmen f’Joseph ghax hu jemmen fiha”. A yes, they got a place on a board.

Still. Many are those who are still prepared to applaud this government and its shenanigans. Their counter that “these are always better than the previous lot” gets weaker by the minute. So long as we get a bit of the iced bun (copyright the runs), a discount here and a board member there… then it’s all par for the course. The evil they saw everywhere just up to the last election seems to have magically vanished simply because everything is sold to them with a taghnalkoll wrapper.

As for the nationalist party. What they need is defibrillators, life support machines and the like. Still, their heritage runs deep too… Manuel Delia must have been so happy to read the latest bit of Arriva news. €35 million loss. Flimkien kollox possibbli.

Palla lunga e pedalare.

See also: Jurgen Balzan on the subject of Oily Deals, Michael Briguglio on the subject of how the whole liberal facade was a lie, Arriva’s 35 million losses.

Categories
Constitutional Development Mediawatch

Crash, Boom, Bang.

The appointment of the legal consultant of the Malta Pyrotechnics Association to the chair of a working group tasked to devise a new policy on fireworks factories is the last in a long string of “inappropriate” appointments being made under the current Labour government. The philosophy of the Tagħna Lkoll government seems to favour appeasement over and above regulation. If we were to impute goodwill to most of the moves made by this government within the ambit of appointments to official and semi-official posts the most glaring danger is not, as many would think, the “iced bun” distribution itself.

Granted, the very concept of the “iced bun” is an ugly wart that already blemishes substantially any remaining credibility that this government might have had in the field of meritocracy but there could be a scientific explanation to what may be termed as a wide retweaking of the power system that had prevailed over the last twenty years. What J’accuse calls a result of “same, same but different” – the product of weak alternation that produces a race to mediocrity is fed by what Fukuyama calls “patrimonialism or the natural human propensity to favour family and friends”.

According to Fukuyama this natural propensity “constantly reasserts itself in the absence of strong countervailing incentives. Organized groups – most of the rich and powerful – entrench themselves over time and begin demanding privileges from the state.” Better still here is Fukuyama’s extended explanation on the development of this kind of propensity over time:

In its early stages, human political organization is similar to the band-level society observed in higher primates like chimpanzees. This may be regarded as a default form of social organization. The tendency to favour family and friends may be overridden by new rules and incentives that mandate, for example, hiring a qualified individual, rather than a family member. But the higher-level institutions are in some sense quite unnatural, and when they break down, humans revert to an earlier form of sociability. This is the basis for what I label patrimonialism.” (Francis Fukuyama, The Origins of Political Order).

I find that the key words in this quote are “break down” – referring to the break down of higher-level institutions. The utopic state of perfect meritocracy is in fact a sophisticated form of democracy that is achieved gradually through the build up of “rules and incentives” and the acknowledgement thereof. In its complex form democratic society combines respect for institutions and the rules (rule of law, separation of powers) with levels of specialisation.

The previous nationalist government segued in and out of this form of higher-level institutional development without however managing to completely detach itself from the primary level of patrimonialism. Much of our political system – what J’accuse insists on calling “The PLPN Philosophy” is  deeply entrenched in a primitive form of patrimonial politics. There is no incentive to improve, just the type of incentive that Orwell describes as “power as an end”. There is no politics of service but politics that aims to please an ever wider circle of “interest groups” that can be roped in for the  votes then appeased with Quangos once the heads are counted.

So what is worse than the iced buns? It is the erosion of the institutions. The complete lack of awareness that the very fabric of democratic society that keeps us together is being gradually broken down in the name of Taghna Lkoll madness. Ironically this government does not stop reminding us that it wants to embark on a monumental reappraisal of our Constitution – at this stage it would be like giving a three year old kid the task of renovating the Sistine Chapel ceiling.

“There is in fact a curious blindness to the importance of political institutions that has affected many people over the years…”

 

Categories
Arts

On the shame of being poorly educated

“For over twenty-five centuries we’ve been bearing the weight of superb and heterogeneous civilizations, all from outside, none made by ourselves, none that we could call our own. This violence of landscape, this cruelty of climate, this continual tension in everything, and even these monuments of the past, magnificent yet incomprehensible because not built by us and yet standing round us like lovely mute ghosts; all those rulers who landed by main force from every direction who were at once obeyed, soon detested, and always misunderstood, their only expressions works of art we couldn’t understand and taxes which we understood only too well and which they spent elsewhere: all these things have formed our character, which is thus conditioned by events outside our control as well as by a terrifying insularity of mind.”