As Europe bends over backwards to forge ties with Libya, Malta seems to be taking a back seat. Former foreign minister JOHN DALLI talks to Raphael Vassallo about the need to be more pro-active in our dealings with our southern neighbour
Malta is uniquely positioned to make the most of new opportunities as Libya slowly opens up to the West. And few people are better positioned to comment on this than John Dalli: Malta’s former foreign (and finance) minister, as well as co-chairman of the Malta-Libya Joint Commission for 16 years.
“I have always believed that Libya, both because of its geographical position and also because of its unique economic structure, should be Malta’s foremost strategic partner,” he begins in his office at the Social Policy Ministry in Valletta.
“It is true that in the past, the country went through a period of major difficulties – the UN sanctions, for example – but even back then, when I co-chaired the Joint Committee, I always argued it would be a mistake to view this situation as permanent. It was always clear to me that Libya would eventually get over its difficult past and become a country of enormous opportunity...”
But despite the overwhelming changes since the lifting of UN sanctions in 2003, Malta may have somehow failed to sense the wind of change, and even today still lags behind in the international scramble for trade with Libya.
However, before commenting on the state of play in 2009, the Nationalist Cabinet minister finds the time to dispel a popular misconception: that Malta’s traditional closeness to Libya is entirely attributable to the initiatives of Labour administrations of 1971 - 1987.
“From the moment we came into power in 1987, we updated our relations on both a political and economic basis. Many of the existing treaties had to be revised to make them more compatible with the context of the times: namely, the economic trade embargo. In so doing we also broadened existing possibilities for Maltese and Libyans to co-operate more closely in the economic sector...”
It seems, however, that while a certain low-level dialogue still takes place between the two countries, it does not quite match up to the intensity of the collaboration before Malta’s accession to the EU.
“The joint committee was very active in the past, as can be attested by a glance at the minutes of our meetings,” Dalli recalls. “Back then we would meet at least once every three months...”
Dalli points out that the issues discussed were not just political and economic, but also technical.
“For example, in those days we used to buy our oil at discounted prices – not huge discounts, mind you; listening to some people talk today, and you’d think we used to be given oil practically for free – and we also had an arrangement between the two Central Banks in order to guarantee payment to Maltese exporters...”
The purpose of these arrangement was to sidestep Libyan bureaucracy.
“We used to deposit Malta’s payment for Libyan oil into an account in the Central Bank (of Malta), and paid Maltese manufacturers directly from the same account. Naturally, this was done through the banking system itself, with all the necessary authorisation and letters of credit in place...”
But with the lifting of sanctions in 2003, Libya also lifted its previously cumbersome bureaucratic system: one of several recent developments to make the country a more attractive proposition to today’s investor.
“Before, all payments in foreign currency needed to be approved by the Libyan Central Bank, which could take time. Today all this red tape has been removed. For the same reason the above-mentioned agreement is no longer in place...”
But while these changes usher in the possibility of greater dialogue between the two countries, in practice it appears to have had the opposite effect.
“There has been a dilution in our relations since 2004,” Dalli concedes. “At the moment there is simply not enough focus on Libya, not of the kind we used to have before. It’s true that our attention may have been diverted by EU accession; but in my personal opinion, joining the EU should have resulted in more attention paid to Libya, not less. As things stand we can’t expect to seriously engage Libya if we only meet the Libyans once a year, or once every two years, instead of once every three months as used to be the case before...”
The situation assumes greater urgency in the light of certain unresolved issues between the two countries: namely, disputes regarding oil drilling rights, fishing zones, as well as irregular immigration.
“It is important that we engage the Libyans on these issues, in a way that both our cultures are respected,” Dalli claims. “Immigration, for instance, is an issue which affects Libya, too. As for oil, the idea I have always put forward whenever we meet the Libyan government – the last time being June 2008 – is that the solution is joint exploration. I believe this is the sensible way forward: instead of arguing over who owns which part of the Mediterranean, we could both benefit by means of a mutual agreement to explore the continental shelf together...”
Could it be, however, that Libya looks at us as slightly less important, now that the trade embargo has been lifted and we are no longer the vital life-line we used to be in the 1990s?
Dalli shakes his head. “That Libya’s attention is much more spread out today than it was before is a state of fact: the logical result of the developing global situation. Again, it should have placed even greater responsibility on us to forge closer links and safeguard our traditional ties. Strengthening relations is after all in our own interest...”
But it’s not all gloom and doom. For while political links may have cooled, the level of commercial interest and exchange between the two countries is still high.
“Before 1987, the emphasis was all on government investment - especially Libyan investment in Malta, which as a rule came through parastatal companies. But between 1987 and 2004, the focus shifted to personal investments by private companies and individuals,” Dalli points out.
“My own policy has always been that, while government relations should always be on the best possible footing, it is always preferable when there is a closeness between the two countries’ peoples. That’s when you can say you have excellent relations...”
Dalli argues that as a result of this policy, Maltese entrepreneurs are better placed to make inroads into Libya... if, that is, they are capable of recognising and seizing the opportunities.
“There are many Maltese who in their own way, and with their own initiatives, are taking advantage of the opportunities, mainly in the services sector. But I think at political level we have slowed down the rhythm recently.”
As an example of pro-active government involvement, Dalli cites the recent accord struck between Italian PM Silvio Berlusconi and
“Italy’s recent initiative to reach an agreement of reciprocal aid, also gave an added impetus to Italian operators in Libya - Italians are offered structural support to facilitate investment...”
But how can Malta compare itself to Italy when it comes to offering aid packages to a much richer country?
“I’m not saying we should invest €4 billion, like Italy did; or send our own contractors to build roads with those €4b. But I think that where Italy has financial muscle, we had a different kind of strength: the goodwill that was forged between the two countries over the years...”
Making this observation, John Dalli conspicuously lapses into the past tense. Does he feel this “goodwill” has evaporated?
“I think it still can be revitalised and translated into opportunities for business growth: but on their part, our entrepreneurs have to be capable of offering the necessary services. The real issue is that the Maltese need to learn once and for all that they have to get together to form strong consortia in order to make the most of the available opportunities...”
However, Dalli admits this is easier said than done.
“Unfortunately Maltese businesses traditionally have enormous aversion to this idea. This is the misfortune of Malta: we don’t understand that there is strength in unity. If you take a small part of a very large quantity, you will end up with much more than if you took all of something very small...
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