In a year replete with important anniversaries, the 35th one of Freedom Day came and went on Monday. As usual it was celebrated mostly as a political event. That it was. But more so it was an economic development, commemorating the day when Malta’s dependence on British military expenditure had ended once and for all with the departure of the last British warship in Malta, which had harboured the fleet for decades on end.
The British rule of Malta had also started off as a military affair and ended up with a political outcome when Britain turned Malta into a British colony at the start of the 19th century. Soon and inevitably enough, that outcome translated into the world of economics.
Britain stationed troop ships in Malta according to her leading role in the Mediterranean. Gradually the Maltese economy changed, from one dependent on agriculture and trade to one dominated by the opportunities of employment with the British military establishments. Maltese men left the countryside in droves. Their number and fortunes fluctuated alongside the state of tension in the Mediterranean and Britain’s involvement in the wars fought there.
As tension rose and war approached, the number of Maltese in the British establishments swelled. It dropped as war receded but thousands of permanent jobs were created in the British establishments, particularly so in the naval shipyards. The direct and indirect dependency on British military expenditure in Malta was, therefore, massive.
It was still that in the mid-1950s, when the first Mintoff Labour government was in power. He bent over backwards to revise and if possible break that dependency. He did so with another political ploy: proposed integration with Britain.
When that failed Mintoff came up with his favourite dream, a neutral Malta in the middle of the Mediterranean. It was not to be. Labour left office in 1958, after having taken strong initiatives to plan for the industrialisation of the islands. After four years of direct colonial rule, constitutional government of sorts was restored. When Borg Olivier won the 1962 general election, the Maltese economy was still hugely dependent on British military expenditure.
That was still the case when Malta became formally independent in 1964. Part of the independence agreement secured the British government longer tenure for its base in Malta. Soon enough, however, the British government embarked on a wide review of its expenditure abroad. Part of that review included a rundown of its forces in Malta. The naval dockyard was privatised and unemployment took its toll, converting into a very high level of emigration, mostly to Australia, which denuded Malta of thousands of her skilled workers.
In parallel the Maltese administration embarked on a programme to refashion the Maltese economy, to make it dependent on exports, tourism and commercial shiprepair and thereby reduce its dependency on British expenditure.
When Labour won the 1971 general election, however, the economy was still dependent to a considerable extent on such expenditure. Prime Minister Mintoff wanted to put an end to all that and opened negotiations with Britain to set up a timeline for their departure from Malta, in the meantime paying a lot more for their use of the base than they had been doing until then. A period of brinkmanship brought Britain to the point of starting to dismantle the base facilities in order to leave.
It was not simply political freedom – much of that had been achieved through independence in 1964
Intervention by a group of countries from Nato, mostly Italy, saved the day. Agreement was reached whereby Britain could continue to use the military base until March 31, 1979. Mintoff used the intervening seven years to achieve very considerable development in manufacturing, tourism and shiprepair, the latter boosted by the construction of a large drydock with Chinese resources input.
That transformation was the real meaning of Freedom Day. It was not simply political freedom – much of that had been achieved through independence in 1964.
It was freedom from dependency on the means of war to concentrate on earning our keep by the means of peace. It was economic liberation which frightened a lot of people at the time, particularly Herbert Ganado and a number of businessmen. But it worked. The economy was transformed. The mentality of passive dependency was broken once and for all. Instead a new mentality of dependency was crafted, but one resting on our own efforts and decisions, as constrained by a global economy in which we were pricetakers.
That is the pertinent outcome of Freedom Day. Once the Nationalists won office again in 1987 they continued with Mintoff’s restructuring plans. In fact they had to do more than that. Economic development is dynamic and is changing all the time. In the early nineties the manufacturing base, largely dependent on the textiles industry, began losing competitiveness. A new era of restructuring had to begin. It was based on financial services, masterminded by John Dalli in a bipartisan policy worked out with the Labour Party, with early input by me.
The plan to turn Malta into a financial services centre worked, all the more so when Eddie Fenech Adami fulfilled his dream of leading Malta into the European Union.
We are now at another crossroads. What is left of the traditional economy is in decline, with construction leading the way. Financial services, abetted by penetration of the digital gaming industry, are still at the centre of economic activities. Yet, much more is needed. The pharmaceutical industry, another success story, has to be shored up and expanded. New activities have to and are being tapped by Malta Enterprise, probably the most important of the government’s units.
It is doing good work, though probably facing problems which need to be tackled quickly, like that of space for state-of-the-art companies. We are back to attracting small to medium-sized activities, unlike the labour-intensive factories of the seventies and early eighties. That is what we need and must go after.
One hopes that Monday’s Cabinet changes, particularly those in the economic sector, will keep Malta on the right track.