Fuzzy politics

▪️ Fuzzy politics ▪️ Stable prices ▪️ European single market revamp ▪️ Spot on ▪️ Shooting oneself in the foot

A couple of weeks ago, French President Emmanuel Macron called around 100 journalists to the Elysée palace to announce the themes for his last three years in office, after accusations that he had lost his reforming touch following re-election in 2022.

It came one week after Macron’s appointment of a new government under Gabriel Attal, the youngest prime minister in French history. Mr Attal leads a cabinet whose make-up is decidedly more right-wing than its predecessors.  The President’s language undoubtedly showed that he has refashioned his programme to counter the growing challenge from Marine Le Pen ahead of the European elections.

Left-wing commentators immediately condemned Macron’s apparent shift from the finely-tuned political balance of recent years towards policies that are unmistakably on the political right.   Commentators on the right said they were delighted by his apparent conversion to their views, but suspected it was all a sham.  My reaction: when you change policies just to remain in power, you finish without a shred of credibility.

In addition to promoting uniforms in schools, a crackdown on drugs gangs, the learning of the national anthem, and a compulsory period of civic service for 16-year-olds, Macron also raided the conservative playbook to promise measures to counter France’s falling birth rate.  He was accused of copying the “reactionary” government of Viktor Orbán in Hungary.

First, it was Italy. Then came Finland, Greece, and Sweden. Now it is France.  All over Europe, governments are shifting right. In some places, far-right leaders have taken power. In others, more traditional centre-right parties are wooing right-wing fringes that were once considered untouchable. 

There is no doubt that there has been a convergence of the centre-right and the far-right over the past decade or so which Hans Kundnani, a European political analyst at Chatham House, has traced all the way back to the surge of refugees fleeing the Syrian civil war for Europe. 

The new confidence of the right-wing in the EU was displayed when it opposed a nature restoration law — a key plank of the EU’s plan to become climate neutral by 2050. The EPP successfully stopped the bill in its tracks on the ground that it threatened farmers’ livelihood and accused the European Commission of going too far, too fast on the green agenda.  There are various tell-tale signs of the political turmoil that the European Parliament could unleash on a more left-leaning Commission after this year’s elections.   

In Malta, the Labour Government is no exception, except that it has not shifted right because of a challenge from the moribund Opposition party. It all started with Joseph Muscat’s “movement”, which was no movement at all, as we all found out, but simply a brilliant, calculated move to capture the middle ground previously associated with the PN.  Since then, there has been no turning back.    

I have no doubt that many people will say it was the right move.  To me it sounds more like the death of choice, as both parties compete to be the same.  We are living in a new era of a linguistic fuzzy-set approach to politics which is fraught with vagueness. The ambiguity of party positions makes ideological attributes less salient than they were in Mintoff’s and Fenech Adami’s times, where one knew exactly where they stood.  Instead, we have the trivialisation of concepts and the elevation to prominence of personal differences between leaders who become the source of mobilisation and legitimacy.

Stable prices

Faced with a rather stubborn inflation rate, the government finally took the bull by the horns in October and devised a price-stability assurance scheme which will see the price of 15 categories of imported basic food items reduced by a minimum of 15% below the Recommended Retail Price (RRP) as on 31st October 2023.  The agreement reached with importers and retailers of food products was announced a couple of weeks ago.

Economy Minister Silvio Schembri said that the scheme will run until the next Budget Day, when the government will reconsider and see if further intervention is needed.  If the rate of 2.4% inflation being forecasted by Eurostat is reached, then it would be considered a “normal” rate, and the scheme would no longer be needed, Schembri explained.

The ambitious scheme applies to 15 categories of staple foods which are most commonly consumed by consumers and which have increased the most in price.  The scheme applies to multiple brands ranging across approximately 400 products.  Over 200 outlets will be participating in this initiative.

Photo: Gustavo Fring

Critics of the government, who had lambasted it for “doing nothing”  ̶   in spite of several hundred million euros in subsidies  ̶  have claimed that this is a price-fixing exercise reminiscent of Mintoff’s day.  Having the cake and eating it is, of course, to be expected from certain people, though I would describe it more like hypocrisy.  The government quite rightly insists that it isn’t, but rather a way of bringing some stability to the prices of essential foodstuffs and mitigating the impact of inflation on families.

Confirmation that this is not a price-fixing mechanism was the lack of any legal enforcement provisions or penalties in the scheme.  Instead, prices will be monitored and retailers who deviate from the agreement, or else shops who resort to raising prices of other items to compensate for the reductions in basic foods, will be named and shamed.

Some Opposition critics derided the agreement, claiming that inflation would remain high because importers and retailers could simply recover the reductions in the prices of the staple foods concerned by raising the prices of other items not covered by the agreement.  This risk exists, but the logic of the critics would dictate that the agreement should cover all commodities sold by retailers and this would then become price-fixing on a large scale   ̶   something they oppose.

Even if some price-shifting were to happen, this would affect items in the shopping basket that are not daily staples and carry a lesser weight in the weekly expenditure of the average household.  Therefore, the impact on the retail price index would not necessarily be too negative.    

European single market revamp

A couple of weeks ago ex-Italian prime minister Enrico Letta, who was appointed by the European Commission to review Europe’s single market and map out the future of the freedoms it has always promised, visited Malta and met the Prime Minister and the MCESD to discuss Malta’s views on the matter.

The Single Market is universally acclaimed as having been a key driver of economic growth, jobs, innovation, and competitiveness over 30 years, delivering higher living standards for EU citizens.  However, it is now also acknowledged that market integration has stagnated in spite of a mass of legislation designed to remove existing barriers.  This is evident from the fact that intra-EU trade has increased by a mere 3.5% in relation to the EU economy since 2006, while intra-EU services account for just 6% of European GDP.

It is obvious that if the EU wants to be a frontrunner and play a major role in geo-political affairs, the current trends must be reversed.  As it is, the EU’s share of the world economy is predicted to steadily decrease from nearly 15% today to 9% by 2050.  A major reason for this reduced role is that EU investment is less attractive than it was three years ago.

What to do?  Various Member states, committees, research institutes, stakeholders, and other experts have produced innumerable reports and made many recommendations as to the way forward.  In its submissions to the EU’s Council of Ministers, Malta is contributing to the dialogue and discussion on which various stakeholders have weighed in.  Its ideas were discussed with Mr Letta.

Premier Abela raised the perennial issue of small states on the periphery of the Union which have to cope with their isolation within the one-size-fits-all approach of the Union. Letta responded by acknowledging that islands are more at risk.  He is “very optimistic” that European countries can deve­lop policies that do not place countries on Europe’s periphery at a disadvantage, particularly when it comes to issues such as essential supplies, communications, and state aid.

Needless to say, the Union’s past streamlining of economic integration at the expense of social Europe is definitely not the way forward.  On the contrary, it would reinforce the feeling of the majority of its citizens that the Single Market exists only for the benefit of businesses and employers, leading to disenchantment with the project.

Spot on

The PL’s new parliamentary whip, Dr Naomi Cachia, recently spoke with The Journal on the importance of mindful and informed policymaking. When interviewed by the Times of Malta, she said that she has worked hard on her listening and observation skills   ̶ characteristics that “are not particularly associated with your run-of-the-mill politician”.  You can say that again.  Most politicians are highly-opinionated people who think the world revolves around them, that everybody should listen attentively to the many inanities they utter, and that they have the solution for everything.  Of course, we all know that is bs.  Cachia said that her listening approach will come in handy when dealing with the primadonnas (that’s my word, not hers). 

Naturally, I wish her all the luck in the world.   

P.S.  By the way, seeing that the name Naomi means “pleasant and gentle”, I hope this will not deter her from using the whip frequently when challenged by wayward MPs!

Shooting oneself in the foot

While the whole of the EU is concerned about the bloc’s competitiveness in the world (see above), the European Commission imposed further misery on the European economy with its hasty introduction of the Emissions Trading System (ETS) tax on shipping. The ETS is part of the EU’s policy to combat climate change and its key tool for reducing greenhouse gas emissions. It is the world’s first major carbon market and remains the biggest one.

The Commission has often called the ETS a “cornerstone” of its “cost-effective” climate change policy.  The use of these two signature appellations is just not the case of the way in which the scheme has been extended to shipping.  It threatens to become the “death-knell” and “efficiency-killer” of the EU’s cargo shipping industry.

Now, even the European Parliament has joined the chorus of disapproval of the new tax which came into effect on 1st January, saying in a new report that it has only served to move cargo ships to ports with lower emission costs.  The report  ̶   approved with 584 votes in favour and 21 against   ̶   underlines the risks of delocalisation of container transhipment activities to non-EU ports with the aim of evading the requirements of the ETS. 

Maltese MEP Josianne Cutajar, who is on the EP’s transport committee, said that container ships that typically opted for EU ports like the Malta Freeport are instead relocating to other ports, namely those in North Africa.  She added that “it is essential to continue pressuring the (European) Commission towards a fair and effective solution to the issues raised by ETS.”  Quite rightly, Cutajar included an amendment in the report that highlights how ports are especially important for islands where “ports often serve as the only social and economic connection lifeline to the rest of the Union”.

The ETS has been a hot-button issue for Maltese industry, which social partners raised with the government late last year as the true potential implication of the new EU rule came to light.  Express Trailers, one of Malta’s largest logistics companies, has already said it is forced to increase its prices because of the EU tax.  Other maritime experts have warned that the tax could also mean that Malta’s access to international shipping will suffer a significant blow. 

The Malta Maritime Forum has appealed to the two major political parties in Malta to join forces in a campaign to persuade the Commission to change course.  Typical of the two parties’ profound love for the country, the appeal fell on deaf ears.

Main photo: Italian far-right Prime Minister Giorgia Meloni argues on stage with an activist holding a rainbow flag during an election rally. Photo by Emanuele Perrone/Getty Images.

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