03 May 2006

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Business Today

Falling into the No trap again

James Debono takes a critical look at Alfred Sant’s declaration on the changeover to the Euro in 2008

By spelling out his party’s opposition to the early adoption of the euro and expressing his doubts on the euro changeover process, Labour leader Alfred Sant could be striking a chord with those fearing massive inflation or an unfavourable exchange rate denting their investments, but he risks being portrayed by the PN as the perennial Dr No.
The Nationalist Party would cherish adding Sant’s latest no to the early Euro adoption to a list of past ‘No’ s and subsequent u-turns on issues ranging from the participation of political parties in local councils to full membership in the European Union.
Surely it is not in democracy’s best interest if the MLP leader absconds from his constitutional duty to criticise the government’s decisions on such an important issue.
By criticising the decision to introduce dual pricing in 2007, Sant is merely reflecting apprehension felt by small businesses that they could end up paying charges imposed by banks when they transfer their Euros into Maltese liras after January 2007.
He is also in tune with concerns that January 2007 could be a bit premature for dual pricing as the European Commission could subsequently revise the exchange rate at which the Maltese lira is currently pegged to the Euro.
Sant’s line of argumentation that it makes more sense to join the Euro when the economy is strong enough to absorb the shocks contains a grain of truth even if one can argue that by adopting the euro as early as possible economic sectors like tourism and exports would benefit.
But by turning the euro into a divisive political issue, Sant risks re-opening Pandora’s box which he himself had closed by accepting the verdict of the people on the European Union issue as expressed in the 2003 elections.
Surely, the date for the adoption of the Euro is merely a technical issue, which does not impinge in any way on that democratic decision.
Although adopting the euro is compulsory for all new member states: the European Union does not impose a date for Malta to join. Countries like Poland and Hungary will be opting for a later date.
But Sant’s criticism could lead him to a dead end if the European Commission gives a favourable recommendation in June 2007 for Malta to join the Euro and the government opts for an election later on that year before the actual adoption of the Euro on 1 January 2008.
On that occasion Sant will have to state whether a future Labour government will stick to the previous government’s commitment to join the euro or not.
If he opts to stick to his opposition to the early adoption of the Euro he could be accused of being stubborn. He could also end up alienating business leaders on the grounds of fomenting uncertainty. In so doing he could end up resurrecting the anti-EU phantoms which he has so far successfully exorcised.
If he opts to accept the government commitment, Sant risks being accused of committing another u-turn, just a few weeks before the election.
In these circumstances Sant could play the game, avoiding a frontal confrontation on this issue without absconding from his duty to highlight any pit falls in the change over process. The name of the game is political tact. Whether Sant has mastered this art, still has to be seen. Last Monday’s outburst shows otherwise.
One thing is sure, turning the Euro into a divisive political issue does not suite the MLP’s electoral fortunes.


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