I understand that it is not easy to re enter politics once you exit. I thought it was going to be a short lived experience, given that I ruled it out back in 2024, right after the MEP elections. However, when the PL presented the manifesto, I realised that it would have been a shame to be left out of what I have been campaigning for – inter alia, affordable housing and aid for those in need. The idea of a 25% interest free loan to cover accommodation is indeed commendable. Certainly, the policies that the PL is currently proposing are designed to address some of the anomalies, as well as those pockets that are not reaping the benefits of economic growth.

When people ask me whether these proposals are sustainable and whether they will add to the country’s debt, the answer must be given in relative terms. This means that if the economy keeps growing, and we address these pockets to improve the quality of life of many, then it is sustainable. We always speak of additional economic growth, but we fall short in asking what it comes at the expense of. Seeing the PL’s manifesto addressing these lacunas and pockets is indeed commendable. True, after the MEP elections, I wasn’t keen on re entering politics. However, my passion to aid people and serve the country, as I did in previous posts before joining the private sector, made me reconsider. Surely, what I campaigned for was simply to stand shoulder to shoulder with families, especially those less advantaged. I am not here promoting laziness. I am promoting what we must do as a state to provide the tools to elevate people. I can express this because I grew up in a deprived environment. Material well being wasn’t the norm. We struggled to make it in life, especially in Bormla and Cottonera. The stigma was certainly untoward and unfair to us. However, when given the right opportunities, we exploited them and moved forward.

My vision is wider, and I want to see the PL’s manifesto executed if the electorate gives Prime Minister Robert Abela another chance. Many observers argue that Dr Abela has demonstrated leadership, keeping Malta afloat through economic storms and geopolitical shocks over the past few years. Surely, having a manifesto that offers a well being index tied to all the policies presented is unprecedented. Commentators note that no other political party has ever achieved such a milestone. This aligns with what I have campaigned for in the private industry, in banking and finance. So, I think it is important to keep pushing these ideas against the backdrop of Malta Vision 2050. One of the proposals I pushed for over the past two years was proper remote working, as well as flexi time. I tied this to improving efficiency in terms of time and reducing emissions. The proposal can help alleviate some of the traffic problems. It is also in line with the EU’s direction on decarbonising the continent.

The PL presented several proposals that aim to help families. When you consider these policies in light of what is happening abroad, one might question their feasibility. However, when seen in isolation and relative to economic growth and public finance management, one realises that it is indeed possible to implement the policies presented so far. What we need to ensure is that the PL clearly explains the policies to the public, as they are doing. My role is to aid the PL in promoting such policies. As you all know, I have never had any problem criticising government policies when needed, and I have been quite blunt and explicit. We need to ensure that whatever is promised to the electorate is executable and well thought out.

What is being proposed on the other side is a different story. I have not been convinced by the energy proposal, which many analysts consider crucial for stability. The solar panel proposal seems half-baked. The refuelling hub proposal is to consider LNG, which is seen as a source of clean energy in transition by 2035. Thereafter, we would need to rethink how to do business. An investment that will take years to realise and become outdated before it is even realised in terms of EU policy direction. Some experts would have considered other energy sources in line with EU policy.

To conclude, what I said this week on TV is that if Dom Mintoff were still alive, he would be shoulder to shoulder with us, campaigning for this manifesto. It is a manifesto that promotes socialist leaning policies. And for this, I must thank the Prime Minister and the PL for listening to us, and to the public, when designing it. Thank you. I am happy to be part of the PL’s formidable team. Let’s do this.

The post Re-entering politics first appeared on The Malta Business Weekly.

The PL presented its first set of proposals the following day, including a 25% government loan of the property’s value to first-time buyers, interest-free and repayable over several years at a fixed rate. This measure is intended to support families with initial payments during their early years. Proposals for affordable housing to counter market speculation, such as those from the Foundation for Affordable Housing, may also be introduced. Another closely watched proposal concerns parental and maternal leave, offering additional weeks of leave to parents, a €5,000 birth bonus per child, and other measures targeted at families. Personally, I do not benefit from these proposals as I do not have children, nor do I benefit from the tax benefits announced during last year’s budget. Nonetheless, I appreciate that these measures were presented, as they seem necessary for the country at this time, even though my taxes subsidise such schemes. Furthermore, I welcome the proposal to increase pensions by €50 per week by the end of the next legislature, resulting in an increase of €200 per month over five years.

In addition, prior to this election announcement, the Minister for Transport launched Malta in Motion, a mass transport scheme connecting a rapid transit system along Malta’s Eastern coast, a bus shuttle service, a water transportation system, and cycling and walking lanes. This proposal aims to improve connectivity, ease congestion, and provide more sustainable travel options. I understand that many people were not amused by the proposal. Compared to the metro system proposal, it admittedly could be more ambitious, yet it remains the most feasible option presented so far. For the past four years, I have argued for connecting all transportation modes on our island, which measures 27km by 15km. The Minister for Finance has been clear. Approval depends on solid financial estimates of the costs, which is a prudent stance since we cannot afford mistakes. My position on social media has been that, by including the private sector and leveraging the budget through private capital, we could avoid funding the entire €2.8 billion from public finances. The remaining amount could be distributed over 15 years. This approach would ease pressure on public resources, and with moderate infrastructure adjustments – since further flyovers seem unlikely – the investment could be manageable if the economy grows as forecast by the European Commission and International Monetary Fund. Encouragingly, there is finally a national consensus that the economy is strong.

Another point, which was music to my ears when I listened to the prime minister, is that the PL’s electoral manifesto appears to be costed and provides a well-being index for the proposals presented. Indeed, the well-being index is highly commendable. Which measurements were chosen, as they are subjective and there are many forms, including the OECD, we still need to see. However, we are moving in the right direction, as this aligns with the Malta Vision 2050. The push, from now on, is to explain the well-being index to the public in layman’s terms, as it is quite subjective and intangible. Certainly, there are enough competent candidates, cabinet ministers, and MPs on the list who can articulate this easily to the public. Not to leave out the authors of the manifesto or those involved. Although it would have been interesting to see the reduction in emissions for this plan aligned with Europe’s decarbonisation strategy. Having a well-being index is already a great step in the right direction. Building on this is something we all aspire to, especially economists working in sustainability. The PL’s proposals so far are focused on family well-being. As time passes, we will see additional proposals announced.

By the time I wrote this article, I had not seen any PN proposals. I will write about them in upcoming opinion pieces. I only followed a press conference outlining what the PL failed to deliver during its term. Well, the Malta Flimkien manifesto was written for five years, not four years and two months. I will give a fair economic assessment of what is good and what is best for Malta from both sides. I was a candidate on the PL’s ticket in the last MEP elections. My allegiance is towards the PL, as I grew up within the party structures. Still, if there are good proposals from the other side or other parties, I will discuss them and state my views. I will also analyse PL’s proposals that I do not agree with.

During a general election campaign, our country must show maturity. I’ve already noticed divisive comments from both supporters, but we are all Maltese with mixed political family ties. Don’t let election fever harm family relationships over petty arguments. Support your party and discuss civilly within your family. Avoid political quarrels, especially among relatives. For now, everyone should remain calm as debates intensify. The PL currently leads in proposals. Perhaps next week, we can analyse the PN’s. Meanwhile, enjoy the election slogans, and I wish all candidates success as they meet voters and serve the people. I have been in that position before. Be honest and follow up on cases, as people are paying attention. If you need my help, I am here. Good luck!

The post A snap election has just been called in Malta! first appeared on The Malta Business Weekly.

I have written extensively on the traffic problem over the past years. I proposed building underground car parks in the outskirts of towns and villages. Parking spaces have become scarce due to infrastructure upgrades and population growth. We should use dilapidated, unregulated sites for underground parking. This would provide more parking while keeping the surface green, as seen abroad. Many government offices in Valletta could also be used more efficiently. We could explore using Marsa, in line with Chapman Taylor’s vision, to revitalise rundown areas. Such offices could support Marsa’s regeneration and provide walking access to Valletta, reducing traffic and emissions. Valletta’s palaces must be restored to help avoid rental office cost pressures. We must also preserve our UNESCO World Heritage status from over-exploitation. Teleworking and flexible hours are key to lowering emissions and reducing traffic from private vehicles.

Also, we need a serious discussion about how people should commute through new means of transportation. A water transportation system, connected to a tram system might be ideal on the island’s eastern coast. We do not need to dig up Malta to have this executed, because, firstly, we do not have space to dispose of our construction waste – unless we go for land reclamation – and doing so would be quite costly over a long period of time. We should first explore some low hanging fruit initiatives. Whatever is proposed is obviously welcomed. Besides, we might consider short-term measures and ask whether third country nationals need a driving licence to work and live in Malta, given that public transport is free, and perhaps delve further into data on tourists driving in Malta while on holiday. Eventually, I prefer to cap the number of rental cars for tourists per season to reduce emissions and traffic rather than impose it on locals, as some fringe parties have proposed. Traffic has indeed expanded to every hour of the day and every season.

Besides, the electorate expressed their concerns about over-construction. Indeed, I have also written extensively about the right policies to plan and pause some of the construction for refurbishments. The government did listen, as I saw a bit of a push in this area with grants that aid families to refurbish and green their properties. The Labour Congress last week was a good opportunity to listen to delegates and the public. After the MEP elections, I offered to help the PL draft the manifesto. As you know, I grew up within the Labour Party, so it is only reasonable to offer my services. Well, I would have loved to help, and I am still available should they need my services.

One of the reasons I kept this weekly column was to propose economic policies. And I know that many take note of what I write, and at times they use the ideas. Certainly, a policy which I would be happy to see in the upcoming manifesto is the preservation of residential gardens within our towns and villages. We need to revise our planning policies. Surely, the PL in government must stop contradicting itself on this matter. The government, rightly so, is spending millions to green Malta by restoring nature and refurbishing our existing open spaces for our families by planting hundreds of trees. However, in tandem, residential buildings that host mature trees and serve as green buffers between dwellings are being knocked down to make way for rows of flats.

Well, I understand that the PL is trying, through Project Green, to provide green open spaces within 10 minutes of every locality. However, when you arrive from work, after a busy day, and after spending time in traffic back and forth, the last thing you want is to open the window and see a row of blocks of flats and over-construction. If there is a green patch that can be saved within our highly urbanised areas, hosting gardens and mature trees, please preserve them. This can be tied to mental health problems too as part of an integrated approach, and what I have proposed as the right to adequate green space in highly urbanised areas two years ago. People cannot tolerate over-construction any longer, with roads closed for diversions to upgrade our infrastructure and, in tandem, the construction of rows of flats.

When I look at the electorate’s concerns, Malta’s problems seem largely planning-related, which is an irony given the economic success. However, no party in government was ever changed over traffic or construction issues. While the EU faces rising energy prices and economic challenges such as inflation, unemployment, and stagnating growth, I realise how fortunate we are in Malta to have the right government at the right time, with the right economic policies. Still, the government needs to accelerate road infrastructure upgrades. Currently, there are road closures and upgrades in several localities. Residents are not opposed to these upgrades, but their frustration stems from lengthy completion times caused by a lack of coordination among the various entities involved, including Enemalta (for cable upgrades), Water Services (for drainage and water pipes), and other agencies. It is indeed our malaise. Considering that the Marsa Junction was completed in just two years, it is hard to see why resurfacing and servicing a road should take about a year.

Indeed, the PL’s long-standing record and credibility are undeniable. Now, people expect higher-quality services. We must complete infrastructure projects on time, upgrade mass transportation where necessary, and preserve the environment. Over the past 13 years, the PL tripled the economy. We can address these issues today because our economy has grown faster than expected. Without economic growth, we cannot guarantee these services. We have already experienced this process in the 1970s and 1980s. Back then, the PL improved many lives in a very short time, and the electorate demanded higher-quality products. Now, 50 years later, the electorate seeks upgrades not in products, but in services, infrastructure, and the environment. Why? Because the basics are now met, the country is richer, and hence we must address higher-level of needs.

The post Taking note of the electorate’s concerns first appeared on The Malta Business Weekly.

Now that we know Peter Magyar won by a landslide, the answer is clear. You can attempt to manipulate democracy, but the electorate draws the line at alliances that run counter to their values. Let’s not forget Hungary’s history. After World War 2, Hungary became a Soviet‑aligned communist state, which unsettled many. The Hungarian Revolution of 1956 was a nationwide uprising against Soviet control and the communist government. It remains one of the most significant anti-Soviet movements of the Cold War, still shaping Hungarian identity. Back then, Western Europe looked away, becoming complicit in the aftermath when the secret police opened fire and triggered wider revolt. Hungarians demanded Soviet withdrawal, free speech, and a new government. Now, Hungarians demanded better governance in a democratic set-up.

Certainly, with Ukraine invaded by Russia and Orban aligning with Vladimir Putin’s foreign policy, this was a significant factor. Hungarians chose freedom in 2004 and reaffirmed that choice. The path to joining the EU is not easy, as it involves rigorous tests and scrutiny. I was there and witnessed this firsthand. Although the EU Commission may be somewhat lenient, the principles of democracy – especially independence of the judiciary and other institutions – cannot be altered. The sentiment that Hungarians did not want to slide back to regime alignment was clear. History teaches us all a lesson.

Besides, the US interference in Hungary did not go well either. In a period where there is a chaotic situation going on in the Middle East, and the surge of gas prices and oil prices because of a war that has the support of the US, this is reminiscent of the economic hardship that Hungary had to endure during the invasion of Ukraine and might once again need to bear due to the interference in Iran. Now we can argue that there are many economic factors stemming from the Ukrainian war, inflation that eroded people’s pockets, and the wrong economic policies of Orban’s government. However, interference from the EU or the US is still interference. And having Vice President JD Vance endorse Orbán in such a chaotic time certainly did not go down well with the electorate, given that many within the Trump administration don’t look favourably on the EU’s modus operandi. Besides, Magyar managed to convince and onboard Orban’s stronghold base in villages to vote for him.

Indeed, many of my readers may disagree with my position, but I have never and will never support Orbán’s government. Orban, during his tenure, demeaned minorities and implemented non‑Western policies that compromised freedom and liberties, especially in foreign policy. The EU stands apart from the US, and the prevailing US narrative about the EU does not resonate with many educated Europeans. While we have always been US allies, recent years have revealed growing cracks in the relationship – originating not in the EU but across the Atlantic. The EU and US operate differently, and US policies and rhetoric – especially recent discourse against minorities – do not resonate with European voters. Despite the EU’s flaws, the bureaucracy and incompetence at the highest echelons of the EU Commission, I would rather live here than anywhere else. Though I often find the President of the European Commission’s approach lacking due to her incompetence, I still prefer the EU’s way of life. Nevertheless, today, the EU must reassess itself, as the rules‑based order is faltering. I am not suggesting that we abandon rules, but clinging to unchanged policies will not serve a democratic Europe.

Now that Magyar has become Hungary’s Prime Minister, we can fairly say that his government will pursue a pro‑EU approach, or at least I hope he doesn’t descend into Orban’s path. To give my readers some background, Magyar is the leader of the Tisza Party, a centre‑right, pro‑European political movement. He was a Fidesz (Orban’s party) insider who later became a strong critic of Orban’s government. Peter campaigned on anti‑corruption reforms, restoring democratic institutions, and strengthening ties with the European Union. Indeed, his campaign achieved a historic victory in Sunday’s parliamentary elections, reaching a two‑thirds supermajority in Parliament. The turnout was also historical, with 77% of the electorate voting.

The EU’s approach to Hungary remains to be seen, particularly regarding EU funds, the new prime minister’s stance on the war in Ukraine, EU assistance on Cohesion funds to keep him in power for the long term, migration, and foreign policy. The next four years will be challenging, especially in restoring Hungary’s reputation abroad, navigating relationships with other governments, and stabilising the economy in a messy world. In truth, Magyar is no outsider, and that’s probably what augmented the victory and allowed him to beat Orban. He was shaped by the Fidesz party within the same political culture and networks that engineered his predecessor. And the way it looks is that he is still deeply embedded in that neo-patrimonial system. His politics aren’t that different either. However, it won’t be wise to pursue Orban’s policies, the same polices that the electorate just dumped in the trash bin of history.

The post You cannot fiddle with democracy! first appeared on The Malta Business Weekly.

I have seen some numbers and plots that, in truth, are a little worrying from a global economic perspective. Everything was revised downwards, due to this conflict, not least global economic growth. This week, President Trump lost his patience with the Iranians, to the point of asking them to open the ahem, Strait. However, the Iranians seem to be defiant, and they are totally ignoring the USA. To make matters worse, Iranians are telling EU countries that the passage is open to them, but not to the USA. Those allies aiding the USA will be targeted by Iran, and many merchant vessels passing through will be targeted. Under UNCLOS and the Law of the Sea, the passage cannot be blocked. However, no insurance company will cover the trade and the stock carried on those vessels. And this is making the situation even worse. So, besides the oil price spikes, the problem is also one of supply. By the time this article was written, the US and Iran had agreed to a ceasefire brokered by Pakistan. This, though, does not include Lebanon, and Israel seems to be forging ahead with their military interventions.

The EU has already signalled a move to ration fuel by encouraging carpooling and public transport, reducing air travel, and lowering the speed limit on highways to reduce fuel consumption, especially diesel. All this shows that the economic strain is now inseparable from the political and military escalation. Now that a two-week ceasefire has been agreed, there is a possibility that oil, LNG and other related energy commodities will pass through the Strait as it will be open. However, as I reiterated, it does not guarantee insurance of commodities, and the risk premia may be quite high. This week, the US, or better the President of the United States, resorted to Truth Social, going further in saying that if Iran is not ready to make a deal by the time of the deadline, an entire civilisation will die and will not come back. That threat is an ugly one. As the understanding is one that would go to lengths we haven’t seen since the Second World War. God forbid that something so ugly occurs.

Certainly, if Iran’s nuclear infrastructure has been decimated by the US, the regime is arguing that sanctions imposed on it might as well be lifted. There is no threat anymore. Meanwhile, Israel kept bombing Lebanon, pursuing Hezbollah members. And the entire region is in chaos. And naturally, this chaos is feeding directly into the global economic outlook. The global economic figures are not looking good. The IMF revised the economic growth downward. And if we carry on like this, next month will be crucial for feeling the pressure of the price spike. Inflation will pick up, wreaking havoc on many EU and Western economies. As many want this conflict to end as soon as possible, it doesn’t seem to be the case, even though a ceasefire has been agreed upon.

Even if the war stops, stability will take longer to restore. What I am intrigued to see is the EU at the negotiations and mediation table. The EU is looking conspicuous. By the EU, I do not mean the European Parliament. The latter lacks competence in foreign affairs and defence. They can only issue political statements that, in truth, only fuel further problems, misunderstandings and chaos. Some of the EU parliamentarians do not even know the history of Iran. When they speak, they look idiotic by the verses they write for themselves and the citations they cite from uninformed history books. And while the EU struggles diplomatically, it is also struggling economically.

What will surely hit us here is the increase in oil prices, although after the temporary ceasefire, prices eased. We must make sure to cushion this impact. The EU economy cannot handle such a shock. And the EU must intervene with its budget to look after its citizens. We cannot have a situation where money is spent on defence while people do not have food on their table. It’s becoming even more difficult for the EU to understand the economies. They are just trying to stay within the rules, which were designed years before any conflict or shock and do not make sense in today’s context. When meeting with economic operators in the industry, they tell you that costs are exorbitant, including compliance, green, and sustainability costs. The EU was not ready to issue legislation on reporting requirements amid a pandemic, a war in Europe, and ongoing conflicts. And the latest revisions were neither proportional to the original text nor a travesty of green initiatives. And this brings us to the reality we must face: many companies have incurred costs and uncertainties.

What we must deal with in the coming month, economically and security-wise, is the result of years of postponement of the EU’s problems. Luckily, in Malta, the GDP grew three times as much as it was in 2013. And we can cushion part of the impact and sustain it for a short to medium-term period. If it were not the case, we wouldn’t be able to sustain all the benefits provided by the PL in government since 2013, not least free childcare, increased pensions, and the public sector wage bill. People must realise that we do not live in a bubble. We are part of the world, and any impacts, regional or global, will affect our economy. The choices we make today will shape our future stability and prosperity. It is crucial that we remain vigilant, adaptive, and ready to take responsible decisions, both as individuals and as a country. The cushioning of these impacts depends on the ideologies of those governing the country. You either choose a government that believes in intervention or a party that believes in the free market. The choice is ultimately yours.

The post We do not live in a bubble here in Malta! first appeared on The Malta Business Weekly.

The President of the United States has threatened to withdraw security guarantees to NATO allies if they do not participate in the conflict in Iran and contribute to safeguarding the stability of the Strait of Hormuz. Europe’s security – encompassing both energy and defence – remains heavily dependent on the transatlantic relationship. The President stated that allies must either help maintain the stability of the Strait of Hormuz or purchase energy from the United States, which he claims is abundant in supply. Donald Trump has branded EU allies as “freeloaders”, reiterating his position that the United States should not increase defence spending to protect them unless they support his efforts regarding the Strait of Hormuz. This pressure adds another layer of complexity to Europe’s already fragile energy landscape.

Given the EU’s ongoing conflict with Russia over the war in Ukraine, the sanctions imposed in recent years, and its commitments to Ukraine, the alternative suppliers identified by the European Commission to replace Russian energy have proven problematic due to one route. The crisis in the Persian Gulf further complicates the situation, as even an immediate end to the conflict would leave the region highly unstable. Resolving the war through displays of strength would likely only extend the energy crisis. Commissioner Jorgensen’s recent statements echoed those of Commissioner Kadri Simson in 2022, but also incorporated rhetoric reminiscent of the pandemic era, when citizens were encouraged to work from home, reduce air travel, limit private vehicle use, and adopt renewable energy practices. The European Commission is currently adhering to the International Energy Agency’s (IEA) recommendations, which prioritise remote work to reduce oil demand, particularly diesel. The IEA also identifies jet fuel as a significant concern and thus advocates for reduced air travel to lower demand, ease energy price pressures, and curb emissions.

The IEA has recommended that remote work for at least three days per week can substantially reduce commuting‑related fuel consumption, particularly diesel. Last week, I highlighted on my social media that the energy crises of the 1970s led to a decade of stagflation, drawing on my experience as an economist analysing markets, international trade and geopolitics from my former PSC seat in Brussels. This perspective has provided me with insights into market behaviour, interconnectedness, and the influence of geopolitics. A single event can trigger widespread global economic disruption, as evidenced by the 1970s oil crisis, which caused significant economic hardship despite lower energy intensity in products and services at that time. In contrast, today’s environment is characterised by increased energy demand driven by advances in artificial intelligence, technology adoption, and rising consumerism. This makes the current crisis far more challenging to navigate.

The outlook for Europe is concerning. Historically, Europe has relied on external energy sources. The core issue is that the EU delayed investment in renewable energy for three decades. Now, the geopolitical context has shifted, and the EU has severed ties with Russia, a major supplier of liquefied natural gas and other energy products. In my view, it is imperative for the EU to invest in renewable energy or nuclear energy and pursue energy independence. Without substantial investment in renewables or nuclear energy, this issue will persist.

However, the challenge extends beyond energy security to encompass defence. The EU is currently economically ill‑equipped to address multiple crises simultaneously due to high public debt levels. Additionally, the new Multiannual Financial Framework (MFF) has adopted a different approach to defence investment. Prioritising energy security is essential before increasing defence spending. While concurrent investment in both areas is necessary, NATO and the United States remain irreplaceable in terms of defence capabilities. The United States is the primary provider of defence resources, and without its support, the EU would face significant difficulties. The bill is costly to replace the USA. This reality underscores the strategic imbalance Europe must confront.

Certainly, it is important to recognise that the President of the United States is fully aware that the EU cannot manage these challenges independently. Consequently, the EU requires stronger ties with the United States to maintain and advance its defence and security. Realistically, the EU cannot simultaneously invest heavily in defence and accelerate its transition to renewable energy. The economic situation in the EU is precarious, particularly debt to GDP ratio in major economies such as France and Italy. Surely, any significant economic instability in these countries could trigger a crisis for the euro, the currency used to purchase energy against the US dollar. A weakened euro would increase the cost of energy imports, compounding the effects of the current energy shock with a potential currency shock. This combination would be highly problematic.

Since Israel and the United States initiated attacks on Iran less than a month ago, oil and gas prices have surged by over 70%, as around one‑fifth of the world’s crude oil and liquefied natural gas supply is now obstructed in the Persian Gulf. Russia cannot serve as an alternative supplier, due to the EU’s intentional efforts to lessen reliance on Russian gas  – a milestone the EU has publicly celebrated. Reversing this policy is not feasible, particularly given the ongoing need to support Ukraine. Recent informal EU energy discussions have reportedly examined the necessity for state aid and greater investment in renewables or nuclear energy. It now appears that nuclear energy is being considered as the next step in the EU Commission’s strategy to strengthen energy security.

Malta’s political parties should consider the recommendations of the IEA and the EU Commission. Indeed, the Maltese government, along with the public sector should implement a teleworking schedule. Specifically, they should enable remote work and reinstate teleworking at pandemic levels, as I have previously advocated, to reduce CO2 emissions and ease traffic congestion. Nevertheless, policy in Malta is slow to implement, and by the time these measures are enacted, the Persian Gulf crisis may have subsided. Yet the global structural vulnerabilities will remain, and Malta cannot afford to ignore them.

The post If it is not Russian gas, it is the crisis in the Persian Gulf first appeared on The Malta Business Weekly.

To understand this, consider how, during periods of rapid economic growth, benefits are felt across all groups. Yet those at the upper end of the income percentiles typically do best compared to lower- and middle-income earners. I explained this in my preceding articles tackling the K‑Shaped economy. Top earners have more opportunities to benefit from economic expansion, often possessing dormant capital and better liquidity to invest. To illustrate, let’s look at what happened over the past decade in Malta.

For instance, those who owned land that could be developed, much of it included in the 2006 rationalisation under a Nationalist government, saw an opportunity in 2013 to develop and earn money. The push was for development because the country needed investment to boost the economy. This helped landowners increase their income and generate more wealth by developing, building, and selling or renting their properties. This situation has a cascading effect, or what economists call a multiplier effect. Additional foreign direct investment increased GDP and helped sustain such developments. Over the past decade, the increase in foreign workers has further boosted rental income for many, who are using it as an additional pension for those now retired.

At the same time, digitalisation changed the way we live, especially in flight and hotel bookings. Many took advantage of increased tourism and invested in properties to rent, using platforms like Airbnb and Booking.com. They are earning a good income, even though it comes with additional infrastructural costs. Still, it remains a good business for many, and over the past decade, people have managed to invest and earn money. I mention property because it is topical, and when things get bad, especially during global inflation shocks, the property market is highly affected as prices rise again. When the economy struggles, and inflation hits hard, the lower- and middle-income percentiles are hit the hardest. The higher income percentiles hedge for future risks and have additional income from rents or interest on other investments. The impact is cushioned more smoothly, and those at the upper income percentiles can weather the storm better than the rest of the population.

Given these realities, my point is that, considering what is happening now, neither the government nor the Opposition can promise much to the electorate, since the priority is to cushion the impact of energy prices and maintain current tax cuts. However, the PL government – particularly under Dr Abela – has greater credibility, having managed three unprecedented events with minimal negative impact on our economy, without increasing taxes or adding a fuel surcharge, unlike in 2009.

Malta’s economy has tripled in growth since 2013, and the PL has enough fiscal space to navigate what lies ahead. However, promising the impossible is not credible, and even Prime Minister Robert Abela knows this from experience. For instance, when we talk about lowering VAT to 7%, we need to examine the industry’s structural problems first. This is not about keeping 11% of the difference between 18% and 7% as liquidity to invest in training and retraining. I understand the industry needs some breathing space because liquidity may have been hit, just as consumers’ liquidity was hit by inflation. We were all affected. However, we need to be careful and first examine structural costs unrelated to the VAT rate, including BCRS, waste management, and rental costs.

When considering these proposals, it’s important to understand that the industry is characterised by monopolistic competition. This market structure drives improvements in products and services. Competition breeds healthier products, and whatever the impact of the VAT reduction, it is competition that has improved our restaurants’ products under a VAT rate of 18%, which was introduced by a Nationalist administration. Restaurateurs and caterers are hardworking, and this is evident in the products they offer to consumers. My understanding is that the VAT decrease will not lower prices, so in the end, consumers will not benefit. As I reiterated in my previous article, the difference is intended to be invested in other areas. However, these areas must not be overlooked, as training and other costs have increased over time, indicating that the root of the problem lies in other unrelated costs, not the VAT rate.

With the general election approaching, we will see many hawkish proposals. We must pay attention to detail and not overlook what is being promised. If it is possible to lower VAT to 7% – if the European Commission allows it – and consumers ultimately benefit, then so be it. But the money lost from the VAT reduction is an opportunity cost of funds that could be invested elsewhere, including energy subsidies to maintain economic stability. Normally, if there are too many restaurants, the market adjusts itself. The invisible hand of Adam Smith takes over, profits balance out, and the least cost-effective go out of business. The struggle in the catering sector to work harder for better earnings is not only about reducing VAT rates but also about keeping costs low, as I outlined in my article last November. Sadly, the political class in this country lacks economists at the helm.

When you look at our Parliament, aside from a few parliamentarians, I am not sure whether the problem is chronic or acute. However, we need experienced economists and financiers in Parliament to have proper discussions. When Clyde Caruana and Silvio Schembri speak about finances and the economy, you can tell they are competent. There are others from the Opposition benches, but their performance is sometimes poor because, even if the arguments are good, their technicalities lack the depth of intellect seen in government. I appreciate these discussions, but they must be informed and supported by proper economics. What we need are not just a few numbers thrown at the electorate’s face to win an argument but economically backed arguments that most of us can process, digest, and decide on when the time comes.

This article was inspired by loyalty. Loyalty to colleagues and the electorate is essential in a democracy. People are tired of populist promises. Voters want truth, bold decisions for Malta, and consistent integrity. Sadly, many see politics as a celebrity show. I believe competence will guide voter choices in the next election. And this is why I chose the title. Because, in truth, when global economic shocks affect our economies, they do not align with the local political narrative!

The post When global economic shocks do not meet local political narratives! first appeared on The Malta Business Weekly.

As things evolve, the conflict is likely to topple a regime, which in turn could further signal global economic disruption. I have no sympathy with the regime’s modus operandi, and it is indeed a ruthless regime. However, these potential global and regional instabilities were visible from the outset, suggesting that early signs can predict wider impacts. Iran occupies a strategically significant geographic position due to its proximity to key neighbours and control over the Strait of Hormuz. Because of this, any military action against Iran would have likely escalated into a broader regional conflict. Surely, recent developments have shown Iran engaging in hostilities with several neighbouring states and threatening retaliation in more distant countries, potentially through covert means.

Since the Strait of Hormuz is critical for global commerce, instability – already in question when the Houthis in Yemen targeted merchant vessels a few years back – directly impacts energy suppliers and indirectly financial markets due to the war sentiment. The prospect of a regional conflict, along with threats to close the Strait, is generating considerable concern among these markets. Surely, this concern prompted action, and the G7 sought authorisation to release 400 million barrels of oil reserves to ease pressure on prices. Additionally, the United States has taken measures to alleviate supply constraints resulting from sanctions on Russia. The Strait of Hormuz is quite important for the shipping of oil, LPG, LNG, and fertilisers needed to grow crops for several countries. Russia and Belarus hold a good market share of the latter. With the West at loggerheads with Russia, Belarus and Iran, it shows how vulnerable the world is in cooperating with each other.

In my view, there is going to be a trade-shifting pattern, exactly or perhaps the equivalent of what happened when the EU weaned or tried to wean itself off Russia, LNG and other commodities from its export market. If the Strait of Hormuz stays closed, irrespective of what the Iranians are saying, that it is closed only for the USA and Israel, it is going to send the world into another global energy shock. The Strait of Hormuz is unstable, and paramilitary or militias can continue to attack merchant vessels without Iran being directly involved. Such proxies are visible in the region. We already witnessed this with the Houthis in Yemen. Only the presence of a Western military can ensure the Strait of Hormuz’s safety, which is why the Trump administration is calling on NATO allies to aid and provide military assets.

Indeed, insurance risk premia rose, with some insurers not even insuring commercial commodities, which is detrimental to their shipment. The increase in prices is compounded by rising energy prices, squeezing consumers. Iran knows that further economic instability exerts pressure on Western economies due to oil price hikes. The double pinch of inflation is going to be bad, after two preceding supply chain and energy shocks as a result of the COVID19 pandemic and the invasion of Ukraine. Sincerely, the prolongation of this war will wreak havoc on many Western economies. The impact is imminent, not distant, because prolonged conflict disrupts supply chains and market confidence.

This situation mirrors 2022, when Russia invaded Ukraine. In my view, the start of this war was a little mishandled. Flawed military calculations led to decisions that had far-reaching economic consequences. This military miscalculation is the equivalent of that economic miscalculation under the Biden administration, which assumed only limited inflation would result from involvement in Ukraine. History demonstrated otherwise and the conflict caused a massive global energy shock and astronomical inflation in Europe, with lasting effects – particularly in housing and property markets – that are still being felt. Higher raw material and energy costs, as a direct result of shifting trade patterns, created feedback loops across markets, especially the property market. The shocks were amplified, and the impact affected several first-time and single buyers.

Besides, many actors are at play in this war. We have the USA and Israel attacking Iran. Israel is attacking Lebanon to eliminate Hezbollah. Iran is attacking all its surrounding neighbours, including Bahrain, the UAE, Oman, Saudi Arabia and Kuwait, thereby disrupting their economies. Besides, Iran is threatening to push for further instability, while the EU is completely absent. I understand the EU’s worries about not getting involved in the regional war. However, it’s going to cost the EU further in the coming months, not because they didn’t involve themselves, but because the European economy is economically exposed. Besides, the EU is highly dependent on NATO for its security. The security architecture of the EU is highly dependent on the transatlantic relations. And President Trump is already sending strong messages to those who are not supporting him in this war.

Certainly, the EU must continue to maintain its diplomatic position with Iran, as its credibility makes it well-placed to help resolve the crisis. Disappointingly, the EU has not even positioned itself as a diplomatic actor in this conflict, which limits options for de-escalation. They kept themselves distant. To make matters worse, recently, the President of the European Commission stated that we cannot rely on the global rules-based order any longer. Well, such statements weaken the foundation of democracy and undermine the purpose of a treaty-based order. When leaders express scepticism during turbulent times, it encourages instability rather than providing reassurance. In summary, von der Leyen’s endorsement of instability during chaos does not bode well for the EU or its democracies. Definitely, I understand her Chef de Cabinet’s script, because ultimately, he studied at the Fletcher School of Law and Diplomacy at Tufts University in the USA. However, the script for such media appearances must not fall into the hands of Bjorn Seibert. Au contraire, her Chef de Cabinet must stay a little removed, both as a penholder of her scripts or narrative, and as a decision-maker at this point in time. And the EU must talk to the Trump Administration to de-escalate.

Alas, current developments indicate that the conflict is expanding beyond a regional scope. The EU’s active engagement as a global diplomatic actor would contribute significantly to de-escalation and stability. It would be beneficial for leaders such as Ursula von der Leyen and HRVP Kaja Kallas to collaborate in formulating a unified and effective response. Hitherto, their efforts have not met expectations, and the European Council has been reduced to a spectator rather than a diplomatic leader.

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The Iranian regime has maintained power since 1979, following the overthrow of the Shah during the Iranian Revolution. Since then, Iran has contributed to regional unrest through its support of proxy groups targeting Israel and neighbouring states. In Lebanon, Iran established and supported Hezbollah, in Gaza, it has funded and aided Hamas, in Yemen, it has backed the Houthis, and in Iraq, it supports several organisations. Iranian Shahed drones have also been deployed in Ukraine, where Russia has used them to target civilian infrastructure since the onset of the conflict. Approximately 60,000 of these inexpensive drones, often referred to as the AK-47 of the skies, have been used in Ukraine. Consequently, President Zelensky has offered to share expertise on countering these drones with Middle Eastern countries, given Ukraine’s extensive experience in this area.

If the regime’s actions were limited to Iran’s own affairs, the world might pay less attention. Most Iranians are Shia, and Iran leads what is known as the Shia Axis, which is organised under a clerical system where the Imam is seen as the main interpreter of divine will. This system includes Ayatollahs and Grand Ayatollahs, like the Supreme Leader, who was recently killed in a targeted attack. Soon after, the new interim Supreme Leader, Ayatollah Arafi, was reportedly killed – although still unverified – in another airstrike just hours after taking the position. On the military side, Chief of Army Staff General Abdulrahim Mousavi and IRGC Ground Forces Commander Mohammad Pakpour, a key figure in Iran’s military strategy, were also reportedly killed. Other high-ranking officials were eliminated as well, including Defence Minister Aziz Nasirzadeh, former Supreme National Security Council head Ali Shamkhani, Saleh Asadi (head of the Intelligence Directorate of Khatam al-Anbiya emergency command), Mohammad Shirazi (head of the Military Bureau of the Supreme Leader since 1989), Hossein Jabal Amelian (chair of advanced weapons programmes), and Reza Mozaffari-Nia (former head of the same weapons programme).

Beyond the individuals and internal hierarchy, it is necessary to examine the tension between legal norms and perceived legitimacy in these events. Article 2(4) of the United Nations Charter requires member states to refrain from the threat or use of force against the territorial integrity or political independence of any state, except in cases of self-defence or with Security Council authorisation. Legally, the attack on Iran lacked explicit authorisation and is therefore considered illegal. Nevertheless, proponents of intervention sometimes cite the Responsibility to Protect doctrine, which advocates for international action when governments perpetrate grave abuses against their populations. Although not codified in binding law, this principle has influenced debates regarding “just cause” versus legal prohibition. This circumstance poses a critical question. Should legality always take precedence over legitimacy, or can breaching the law be justified to prevent greater harm? However, it is important to consider the consequences of such reasoning.

This operation represents one of the most significant setbacks for the Iranian regime. The United States and Israel have indicated that the conflict may be prolonged. In response, Iran launched missile and drone attacks against Arab states aligned with the United States, including the UAE, Kuwait, Iraq, Jordan, Bahrain, Qatar, Saudi Arabia, Oman, and Israel. Iran also targeted British military bases in Cyprus, asserting that these bases supported US logistics. The Strait of Hormuz, a critical maritime chokepoint between Iran and Oman, has reportedly been closed. This strait is vital for global energy transit, with approximately 20% of the world’s seaborne crude oil and 25% of global liquified natural gas passing through it, primarily from Qatar. Oil exports from Saudi Arabia, Iraq, Kuwait, the UAE, Qatar, and Iran rely on this corridor. The closure or restriction of the Strait of Hormuz has immediate global repercussions, including energy price spikes and supply disruptions. Energy prices have already increased, and the duration of this circumstance remains uncertain. It is plausible that the resulting economic impact may rival that of the Russia-Ukraine conflict four years ago. This scenario constitutes significant challenges for the European economy, which remains highly dependent on external energy sources. Having diminished reliance on Russian gas, the European Union is now dependent on alternative suppliers and faces considerable vulnerability.

Also, if the Strait of Hormuz remains closed, China, as the world’s largest energy importer, will be significantly affected. China relies on the Strait for approximately 40 to 50% of its oil imports from Gulf states such as Saudi Arabia, Kuwait, Iraq, and Iran. Nearly all Gulf oil exports transit through this chokepoint, so its closure would jeopardise China’s energy security. In response, Beijing could pursue an urgent diplomatic initiative by dispatching envoys to Gulf capitals to advocate for restraint and a negotiated reopening. Alternatively, China might propose international naval escorts for energy tankers, though this approach could give rise to complex interactions with regional navies. A third option is to draw on China’s strategic petroleum reserves to resolve immediate shortages, but this would only deliver temporary relief. Each of these strategies highlights China’s dependence on stable maritime routes. Most countries would likely seek assistance from the United States to increase oil and gas supplies. The European Union is particularly vulnerable, having shifted away from Russian gas and now relying on alternative suppliers.

The EU’s previous diplomatic initiative, notably through the Joint Comprehensive Plan of Action (JCPOA) negotiated with the Obama Administration, established its credibility as a diplomatic bloc. However, current EU leadership appears largely absent from the crisis, prompting doubts about its capacity to respond effectively. Indeed, President von der Leyen seems to have gone AWOL. It remains to be seen whether this operation was genuinely intended to liberate Iranians from an oppressive regime. The central question is a moral one. Under international law, the operation is illegal because it lacks a United Nations Security Council mandate. However, if the intervention was aimed to free Iranians from a government responsible for violent repression, it is for the people to determine whether such action is justified.

Before reaching a conclusion, each of us must consider whether we would support an unlawful strike if it promised to end violent repression. Is it ever justified to violate international law to save lives, or does this approach risk greater harm? I encourage readers to reflect on these dilemmas. If the removal of the regime ultimately brings stability to the region, some may argue that Western intervention deserves recognition.

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Against the backdrop of the EU’s push for sustainability, we cannot expect that technology, on its own, will solve the traffic problem when applied to road network upgrades and flyover construction. It will help us, but it won’t solve all the problems. I reiterate that the road network upgrades were desperately needed. Prior to the PL taking over the administration of the country, our road network was in a real dilapidated state. I still remember the Santa Venera tunnels wrapped in Perspex to redirect water dripping out. In 2017, the upgrades started, and I can tell you that they were desperately needed. Surely, we need to have such upgrades and complement them with a continuous process of behavioural and institutional adjustments. This never happened since the 1990s. Change does not happen overnight, especially when it comes to changing the behaviour of using our vehicles. We would have been better off had we started this in the 1990s. However, there were other priorities back then, including our application to join the EU, and GDP was low.

The Jevons Paradox describes how, in economic theory, increasing efficiency – such as upgrading road networks – ultimately raises demand rather than lowering it. If we build a new road, it is only to be used. And more vehicles will use it. In the long run, the improved efficiency attracts more users, leading to heavier traffic and bottlenecks. Short-term benefits from these upgrades are quickly eroded, as rising demand offsets the initial gains, a phenomenon known as the rebound effect. I analysed this back in October 2024 in this weekly column, termed “The Jevons Paradox and the traffic problem”. Even mass transportation improvements face the same pattern. Increased efficiency boosts demand, reducing marginal benefits over time, especially if we give everything away or do not apply price discrimination as we do with the bus transportation system. It is simple economics.

It can be difficult to measure how efficiency improvements compare with changes in demand because of varying assumptions. Nevertheless, the Jevons Paradox is evident both locally and in the EU. If traffic persists after network upgrades, it’s because demand outpaces efficiency gains. It was always clear that Malta’s road upgrades would only offer short-term relief, especially in the south. In the long-term, sustained investment in alternative transport and a shift in user behaviour are vital. Currently, we often drive even for short errand trips. And this is where the problem lies.

It is irrelevant to propose a mass transport system if we do not change our behaviour. True, the Opposition might have engineers working on a quick-fix solution. Or perhaps a short-term solution for the 2027 election campaign, but the reality is different. Although the discussion is welcome, placing this issue high on the national agenda is not equivalent to the PL’s proposal to reduce utility bills or shift from Heavy Fuel Oil to Liquefied Natural Gas. In my honest opinion, the Nationalist Party cannot make this its main campaign promise because as much as time wasted in traffic is measured in money, in tangible terms people do not feel its direct effect, that is, the pinch in their pockets, as much as when they used to receive a utility bill. The bimonthly surcharge differing from one bill to another forced households to cut back on electricity use and rush to fuel stations simply to make ends meet by the end of the month.

From my experience in politics, whether direct or indirect, people do not change a government because of traffic, as they know the problem won’t be solved immediately. If that were the case, the PN wouldn’t have survived 25 years in government, because traffic has been around that long, coupled with a poor infrastructure system. And please, this requires a bipartisan agreement to start thinking differently, also for the next 25 years. This mass transportation system must complement the Malta Vision 2050. We cannot keep taking the electorate for a ride. The Opposition and government must sit down with maturity and talk to each other civilly about such problems. We need to tackle them as a country, not as individual political parties. Can’t you all realise that people have had enough of petty politics?

A complete behavioural shift toward mass transportation will not happen quickly. My idea of using the sea as a transport corridor for the urbanised eastern coast offers an alternative, and EU support may be available. However, successful implementation demands infrastructure investment and policies that motivate people to shift from private vehicles. And let’s be honest: who are those politicians, on either side, truly prepared to risk political suicide without a bipartisan agreement, so that voters know exactly what they are getting if they choose the PN or the PL? Politics should prioritise public service, not short-term image.

In summary, I support developing a mass transportation system, but real progress requires realistic timelines, cost transparency, and honest discussion of challenges. While a Manchester overground-style system could work if connected to the sea, technology or infrastructure upgrades alone won’t solve traffic. The key takeaway is that lasting solutions depend on behavioural change and a bipartisan, long-term approach, not just quick fixes on the eve of a general election.

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