On Sunday the Leader of the Opposition Alfred Sant expressed his concern that the government’s strategy for the introduction of the Euro would drive the country into a wall.
Sant’s Sunday sermon contrasted with previous declarations in a more moderate tone made by his finance shadow minister Charles Mangion. But speaking to The Malta Financial and Business Times yesterday Mangion explained that “this is not a question of being partisan.”
Mangion said: “It is a question of timing. One has to consider that the financial and fiscal situation of the country is not the right one for adopting the euro immediately. One-off measures like the privatization of the lotto department cannot be taken as an indication that the country is recovering. The fact that the country lost Lm108 million from its reserves is also indicative of the precarious situation. It is only when the country’s structural problems are addressed that we can start the process of adopting the euro. Joining ERM II now will not solve the country’s economic difficulties. We can join ERM II at a later stage.”
Sant’s was not the party’s first pronouncement on the issue but it was by far the most hard-hitting.
In March speaking to MaltaToday, MLP Deputy Leader Charles Mangion declared that the MLP is “recommending a cautious approach based on objective analysis and assessment of all the aspects of this pending decision. In this respect, the Central Bank of Malta as regulator and advisor of fiscal policy has an important role to play.”
Since than the Central Bank has pronounced itself in favour of tagging the Maltese lira to the Euro through joining ERMII later on this year. Last Sunday Alfred Sant referred to a meeting held last week in the Central Bank during which he found the arguments presented to justify immediate ERM membership “unconvincing”
During an edition of TV programme Int X’Tahseb? MLP Deputy Leader Charles Mangion insisted that “there is no room for political football on this non- ideological issue.” On that occasion Mangion expressed his concern on the impact of rushing in to eurozone on Maltese enterprises that are currently using the dollar to export, mainly ST Microelectorics but he did so without being excessively alarmist.
Since the earliest date for the adoption of the euro coincides with the 2008 general elections, Alfred Sant’s decision to turn the euro in to a political issue has added significance.
Alfred Sant risks confirming his reputation as Dr No. Having been the same leader who said no to the EU and no to VAT, Alfred Sant could end up driving his own party into another brick wall. This could create uncertainty that a new MLP government could end up reversing the decision to adopt the Euro. Yet this would not be the case if Sant commits himself not to reverse the process unleashed by the previous government. It could become convenient for Sant to blame economic woes he could face as Prime Minister on the haste of the previous administration to rush Malta in to Eurozone.
As Prime Minister, Silvio Berlusconi has not refrained from criticising the haste of the previous Prodi administration in adopting the euro. But he has never hinted at reverting back to the Italian lira.
Alfred Sant could also afford to oppose the early adoption of the euro if his party manages to send the right message to pro-EU Labourites and floating voters by voting in favour of the EU’s constitutional treaty. By talking tough on the Euro Alfred Sant could also be sending the message that the party has not sold out to Brussels. This could rein in the euro sceptic wing of the party behind him.
It will be also be more difficult for Nationalists propagandists to corner Sant on this issue. The fact that former finance minister Lino Spiteri is on the same wavelength as Alfred Sant on this issue shows that Sant is not as isolated as he was on the removal of VAT and the EU. The Euro issue does not excite the same enthusiasm as EU membership did in 2003. Most people associate it with price hikes in neighbouring Sicily.
The MLP has nothing much to lose from this issue as long as Sant does not go overboard in his criticism. Much will depend on Sant’s ability to control his words.