Freeport sellout

In the year we have celebrated the 40th anniversary of our birth as a sovereign state, the PN government has taken yet another step to turn these islands into colonies where the strategic heights of the economy: banks, port, airport are handed over to overseas operators who see Malta only as a small part of their operations and run the local operation according to their overall interests and not that of Malta.

After running up the worst structural deficit and public debt in Malta's history, the PN government is selling off the family silver. In fact it is selling it very cheaply.

Government has always tried to present its privatisation programme as having two strategic objectives:

¤ getting money to lower the public debt and structural deficit it has built in an unsustainable way over the last 10 years;

¤ introducing international players in our economy to overcome our insularity and be better equipped for globalisation.

How far does the selling off of Malta Freeport to CMA-CGM achieve these two strategic objectives? By doing so Government has cut a very bad deal with the country ending up making a loss and also losing strategic control over its major port that handles its trade with the rest of the world.

After selling off for 30 years Terminal 1 and 2 and the Administrative Centre of the Freeport to French company CMA-CGM, represented in Malta by the Hili family, Government declared that the venture was not just about money "although $421 million is not a figure to be sneezed at". What is Malta getting out of this deal?

Government's boast that over a 30-year period Malta will get $421 million from the deal is deceptive, as it gives only a nice glossy part of the picture. Over the same 30-year period Government still has to pay annual interest on bullet loan for Terminal 2 of e200.7 million. Government will have a negative cash flow and will have to dig into its coffers, thus putting more pressure on the public deficit and debt. Over 30 years this will amount to €6.9 million (Lm2.9 million) a year in extra financing by Government. Maltese taxpayers will have to carry this burden, and not CMA-CGM. Instead of improving Malta's structural deficit and public debt problems, the Freeport's privatization to CMA-CGM will make them worse.

Forward to the past as a colony

There are other more serious disadvantages resulting from this deal. Government's decision to hand over Malta's only deep draft port exclusively to CMA-CGM for 30 years makes our country virtually dependent on CMA-CGM. The Freeport handles all our transhipment business and over 80 per cent of the local trade. Our imports and exports are now in the hands of CMA-CGM.

Government has ignored all the demands made by the Federation of Industries and the Chamber of Commerce on behalf of local exporters and importers. They see no economic logic in ceding our major port to one operator, the more so when that operator is a shipping line with an obvious conflict of interest with that of a terminal operator.

Other countries have not ceded their major ports exclusively to any one shipping line. When the operators of Gioia Tauro in Italy negotiated a deal with the biggest shipping line in the world, the Danish Maersk lines, they only ceded part of the terminal and retained the other part for different shipping lines to use.

Shipping lines will only take that part of the terminal that they need and no more. Their role as a shipping line is incompatible with that of a terminal operator. They cannot attract competitors to their terminal. That part of Gioia Tauro that is used by different lines is under the control of Eurokai, and not Maersk. It is Eurokai that does the marketing and sales, operates the terminals and finally signs Terminal Contracts with each shipping line.

If the Italians, with several ports at their disposal (Genoa, La Spezia, Salerno, Venice) were wise enough to cede only part of Gioia Tauro to a major shipping line, why did the PN government tie our economy in such a huge knot giving CMA-CGM exclusivity that can strangle our economy?

Time will tell whether CMA-CGM will treat all shipping lines using Malta Freeport without discrimination. Will common user berths be fairly allocated for both mother ships and feeders, according to the principle of first come first served and arriving according to the windows stipulated in the terminal contracts? Will it be in CMA-CGM's interests to attract rival shipping lines to the Freeport which in turn will mean better shipping links for importers and exporters to a wider coverage of ports around the world?

New shipping lines will not use Freeport, as they now have to deal with CMA-CGM, their competitor. They will have now no incentive to obtain favourable rates and conditions under a terminal contract and will not have a ready service by third party feeders, as they do in other hub ports. Fewer lines using Freeport will translate into less job opportunities for its workers.

It also means Maltese importers and exporters will have their coverage of shipping connections to their foreign markets severely restricted. This has already occurred when three shipping lines in EPIC service left Malta in June for Cagliari and were not replaced.

Our industry will become more dependent on CMA-CGM shipping services for their needs. Job opportunities in Maltese factories will also be affected. Fewer lines and ships using Freeport mens less income secured by pilots, tugs, shipping agents and other service providers. Rather than putting us in a better position to trade with the rest of the world, the deal with CMA-CGM is making our country virtually dependent on one private overseas company.

evaristbartolo@hotmail.com