According to NATO data on defence expenditure, Germany, Poland, and the Baltic states are leading in defence spending in Europe. Typically, one observes how the European Commission’s Rearm Initiative and Safe highlight Europe’s institutional response. German chancellor Friedrich Merz promised a more European alliance, while the Trump administration has added pressure on Europeans to increase defence budgets and reduce their dependence on US technology.

Notice how the European allies pledged hundreds of billions in new defence commitments across the continent. Secretary General of NATO, Mark Rutte announced new deals and partnerships across allies and industrial bases, unveiling new multinational partnerships in surveillance, space, command and control, air platforms, submarines, and a massive drone and counter-drone marketplace. These are valued at $50 billion. Still, the question remains: is Europe actually building an independent defence industrial base or just paying more for American weapons assembled on European soil?

Let us start by examining what Germany is doing to beef up its arsenal. Its acquisition and deployment of the Israeli Arrow 3 system is the flagship contribution. It was launched on 13 October 2022 by then-chancellor Olaf Scholz in the wake of Russia’s full-scale invasion of Ukraine. Its four main goals comprise:

• Rapidly fill capability gaps in European air and missile defence;
• Enable joint procurement of systems for cost savings and faster delivery;
• Improve interoperability, training, maintenance, and logistics; and
• Strengthen the European contribution to NATO’s Integrated Air and Missile Defence (IAMD).

Moving on, let us discuss the European Sky Shield Initiative (ESSI) concept. This promotes a layered approach using existing or near-term systems. It is a Germany-led multinational framework launched in October 2022 to strengthen Europe’s ground-based air and missile defence capabilities through joint procurement and coordination.

The primary goal is to create a multi-layered, integrated European air defence network that fills capability gaps, enables faster and more cost-effective acquisitions, and reinforces NATO’s Integrated Air and Missile Defence system. By comparison, Israel’s multi-layered Arrow 3 defence concept intercepts intruder missiles outside the atmosphere. Arrow 3 was acquired by Germany as a cornerstone of the initiative’s upper tier. ESSI is complementary to, but distinct from other efforts, such as more recent European discussions on developing indigenous interceptors or broader anti-ballistic coalitions involving Ukraine. It remains primarily a pragmatic procurement and cooperation vehicle rather than a fully integrated single-command system.

Many have praised Germany’s commercial link to Israel, particularly the acquisition of the Arrow 3 system in late 2023, valued at approximately €3.5-4 billion:

1. Shared training, maintenance, and logistics;
2. Integration into broader NATO structures while allowing national flexibility in contributions; and
3. Concrete steps include coordinated Patriot missile purchases, with individual nations ordering IRIS-T SLM units through the framework.

It provides Germany, and by extension parts of Europe, with interception capability against medium- and intermediate-range ballistic missiles. Its sole contractor is Israel Aerospace Industries (IAI), with US involvement through Boeing and Israeli subcontractors, including Elbit and Rafael. Recently, three sites have been planned in Germany for nationwide coverage, with full operational capability targeted around 2030.

As a background note, Germany acquired Arrow 3 as a direct response to the ballistic missile threat demonstrated by Russia’s war against Ukraine and as a major contribution to the European Sky Shield Initiative (ESSI). It sits as the upper layer above medium- and long-range systems such as IRIS-T SLM and Patriot.

In conclusion, the Ankara Summit this year demonstrated beyond doubt that NATO remains resilient despite recent disagreements among its members. Europe is gradually evolving into a stronger and more capable security actor within NATO, contributing to collective defence and thereby reinforcing the Alliance. Rather than pursuing strategic autonomy, most European nations are pursuing greater strategic responsibility, developing their military, industrial, and technological capabilities to shoulder a greater share of regional security while preserving the transatlantic alliance.

This year, the Ankara Forum focused on Allied progress towards reaching NATO’s historic 5% defence investment plan and on how this money is being put into action to generate increased defence production, cooperation, and joint procurement. Private capital providers are being sought to enable non-traditional suppliers, including small and medium-sized enterprises, to scale operations by financing product development and production. Private capital providers can act as force multipliers for Allied defence spending by attracting additional capital to grow defence industrial capacity, increase production across the Alliance, and meet Allied capability requirements.

The post At the Ankara Summit, Europe gears up its defence spending first appeared on The Malta Business Weekly.

The Freeport has faced growing competitive pressure from ports in North Africa, particularly those in Egypt and Morocco, which have significantly expanded their infrastructure and capacity in recent years. The use of these ports automatically avoids paying any ETS charges. Thus, it stands to reason that several shipping services have already shifted operations away from EU ports, resulting in non-EU hubs capturing the majority of new transhipment business. Difficulties of passage due to the Houthis firing on vessels passing through the Red Sea compound the issues. Therefore, the recent revision of the ETS for the Freeports of Malta, Cyprus and Greece did not come a moment too soon.

The key points of the Commission’s latest proposal are certainly highly relevant to us. The revisions aim to cut emissions while addressing industry concerns about competitiveness and carbon leakage, especially by tackling the shift of transhipment business from EU ports to non-EU hubs in North Africa. The Malta Maritime Forum (MMF) and the Maltese authorities have responded positively to these revisions to the ETS while emphasising that further refinement is needed. Much-desired improvements include the removal of ETS charges on certain cargo arriving from non-EU ports that is not destined for the European market. This shall provide direct relief for transhipment hubs such as Malta Freeport.

Malta requested amendments by way of an extension of the “neighbouring ports” clause to cover competing ports across North Africa. Also of beneficial effect is the extension of the ETS scope to certain smaller vessels, thereby lowering the threshold towards 400 GT in selected categories. This shall improve the level playing field, together with the simplification of monitoring, reporting and verification rules, as well as alignment measures with FuelEU Maritime. Readers will learn that new provisions are intended to avoid double carbon pricing if, or when, a global International Maritime Organization (IMO) measure is adopted. In a nutshell, one may explain that a vessel can be fully compliant under the ETS by buying allowances while still facing FuelEU penalties, unless it is generating surplus credits, depending on the fuels it burns.

The Minister for Shipping and Maritime Affairs, Dr Miriam Dalli, appreciated the support mechanisms and revenue allocations that benefit island member states. In some related contexts, these include dedicated ETS revenue allocations for Malta, Cyprus and Greece, applicable until 2038. The Minister for Energy and the Environment welcomed the package, describing it as a reflection of Malta’s long-standing advocacy. She noted that it reinforces protections for the Freeport and air connectivity, while striking a balance between climate goals and the practical challenges faced by island states.

On the other hand, the MMF welcomed the direction of the proposals as a step forward, particularly the transhipment-related relief and the extension of the neighbouring ports clause.

At the same time, consistent with its earlier advocacy throughout 2025 and 2026, the MMF stressed that further reforms remain necessary to fully protect the long-term competitiveness of Malta’s maritime industry. So far, considerable risks have existed with regard to business and carbon leakage to North African ports, higher costs for short-sea and trailer operations, and the need for stronger alignment with, or eventual supersession by, a global IMO framework. Dalli cannot rest on her laurels, given that the proposal is still at an early legislative stage. As can be expected, it will now be negotiated by the European Parliament and the Council. These negotiations are planned to start in autumn with a possible agreement in 2027 and subsequent implementation. Industry stakeholders, including the MMF, are expected to continue pressing for additional safeguards during that process.

While one appreciates that a great deal has been achieved to safeguard the interests of the Freeports of Malta, Cyprus and Greece, one may nevertheless question the taxonomy of the terms used. In this instance, one can elaborate that the ETS and FuelEU Maritime are both complementary EU regulations targeting greenhouse gas emissions from shipping, but they operate on fundamentally different principles, measurement methods and compliance mechanisms. So far, the detailed interaction rules are still being clarified. For instance, if one buys all the required EU Allowances (EUAs) under the ETS, there still remains the obligation to improve the average greenhouse gas intensity of the energy used on board through biofuels, LNG, methanol, ammonia, hydrogen, shore power or other cleaner alternatives. The system rewards lower-carbon fuels and, in fact, many agree that complexity is unlikely to disappear. Consequently, a vessel can be fully compliant under the ETS by buying allowances while still facing FuelEU penalties, depending on the fuels it burns.

Conversely, switching to lower-intensity fuels reduces both the ETS bill and helps meet FuelEU targets. The July Commission review of the EU ETS introduced simplifications and closer alignment between the two regimes, especially in relation to monitoring and reporting, but they remain distinct instruments with different compliance obligations.

In conclusion, Minister Dalli deserves considerable recognition for her efforts to date, while the Freeport should continue engaging in negotiations to secure further improvements to the current arrangements.

The post Freeport – Progress on ETS port charges first appeared on The Malta Business Weekly.

Disastrous local and regional election results in May heaped further pressure on Starmer, which became impossible to withstand after Burnham won a parliamentary by-election on 18 June, allowing him to run for leader. Burnham, regularly seen in his trademark dark T-shirt and casual jacket, has secured the backing of 379 of Labour’s 403 MPs, with no one mustering the 81 nominations required to challenge him.

But he will face the same unenviable challenges that beset Starmer, namely a tepid economy, high government borrowing costs, and irregular migrants arriving in small boats. The crucial reason Sir Keir has left office is that he lost the confidence of his own MPs. The enormous majority he won in the 2024 general election was largely squandered: his attempts to force through contentious policies, such as cuts to benefits, through coercion rather than persuasion resulted in embarrassing climbdowns.

Not to forget, Starmer faced unpredictable energy prices due to the US-Iran war and a volatile American president in Donald Trump. Being a strong doer, Andy openly argues that Britain needs a new economic model, not just tweaks. By contrast, Sir Keir squandered the political capital he had at astonishing speed with a series of U-turns and reinventions that voters hated.

Starmer returned Labour to power after 14 years in opposition in July 2024 with a landslide victory over the Conservatives, who had churned through five prime ministers in the tumult unleashed by the 2016 Brexit referendum.

Back to Andy, his most striking decision is not to make Ed Miliband chancellor but instead to appoint him foreign secretary. Can a stagnant economy now raise its head above the parapet and witness a shift toward devolution and a new economic model, following a 10-year national renewal plan aimed at ending a decade of instability? Britain (like Malta) certainly needs a “circuit breaker” moment, resulting in the biggest changes in 40 years.

Miliband, as foreign secretary, is seen in Brussels as more open to deeper EU alignment than Starmer, though not to rejoining. By contrast, Andy represents a shift from managerialism to transformation, from centralisation to devolution, and from caution to long-term structural change.

His popularity might be equally short-lived; however, the data suggest that the new Labour leader could build a more enduring electoral base by uniting Britain’s fragmented centre-left voters.

Later this week, he is expected to change the government’s stance on oil and gas exploitation, with a new energy secretary in place. As expected, Andy also promised to do something about the cost of living, with more detail on the “breathing space” he is offering hard-pressed families. By extending Manchester’s £2 bus fare cap, this would be a tangible step, different from the £3 cap under Starmer and Chancellor Rachel Reeves.

With energy prices rising again, there may be action to support commuters facing higher energy costs. Andy is lovingly nicknamed the “King of the North” for winning three successive elections to the Greater Manchester mayoralty, and his flagship idea is devolving powers to other cities to fire up Britain’s economy, including setting up a “Number 10 North” office.

One cannot underestimate his drive for change. In fact, he is reported as saying, “…if we want an economy and a country that works for all people and places… then it requires a new path to the one we’ve been on for the last 40 years”.

But such a monumental task requires boosting the construction of public housing and trying to resolve the homelessness crisis by pumping adequate resources into social care. Other spectacular changes include a new 10-year plan for Britain – to be unveiled later this year – and building a new economy, putting “life’s essentials back under public control”.

But he argues that people need “breathing space now”. Most feel that solutions need to be found to tackle the cost of living.

Other changes he promised included changing the education system to help young people into work, building more council homes, and honouring commitments to fund defence while sticking to the UK’s spending and debt rules.

One of Burnham’s poignant tasks is to instruct Whitehall officials on what to do if the country comes under nuclear attack and the government is incapacitated. That is one reason for the resignation last month of John Healey, the defence secretary, who thought the proposed defence investment plan was inadequate to meet the threats and the loose commitment to spend 3.5% of GDP on defence by 2035.

Finally, let us wish Burnham success as he embarks on the challenging journey of restoring stability and prosperity to his country’s struggling economy.

The post Needed: A fundamental transformation in Labour politics first appeared on The Malta Business Weekly.

There’s a popular narrative that the country doesn’t need the real estate sector. It’s not the engine of the economy, but it’s one of its lubricants. We hold our breath and recall salient electoral pledges sung by Labour influencers in the lead-up to the party’s unprecedented fourth consecutive victory. Among the many pledges made were:

• The €1,000 annual “super bonus” for workers (minimum €500 for part-timers); next, more family/parental support, such as extending maternity leave to 26 weeks; introducing six months of government-paid parental leave (shared); additional paid leave for new parents; and a €5,000 birth bonus per child.
• More exciting freebies include extended housing help – the “My First Home” scheme: an interest-free government loan of up to 25% of the property value for first-time buyers. Added to these incentives were a range of youth-focused measures, including a commitment to exempt the first €30,000 of income from tax for three years for young people entering the workforce or starting a business. An even bigger incentive was reserved for pensioners, who were promised a €50 weekly increase over five years, on top of COLA adjustments.
• The Chamber of Commerce applauded promises for their members, such as €250 million for economic shocks; a target of 4% annual GDP growth; keeping the deficit under 3%; and more high-quality jobs. Nothing pleases the sans-culottes more than the promise to freeze construction during appeals; revise local plans; build two Gozo Channel boats; and protect green spaces (for example, Manoel Island and White Rocks as national parks).

Some pledges are expensive or complex (for example, major infrastructure, large pension increases, extensive school modernisations) and may face delivery challenges. The government is likely to prioritise the most visible ones (bonuses, family benefits, first-time buyer help) early on, but full delivery on the broader manifesto will depend on economic conditions and execution – areas where previous Labour governments have shown both strengths and delays.

The Central Bank has taken a bullish stance towards Malta’s economy, revising its GDP growth forecasts upwards and saying overall risks to economic growth in 2026 are tilted to the upside. It expects Malta’s economic growth to be largely fuelled by an increase in domestic demand and a gradual recovery in private investment. Net exports will also contribute to growth, though less than domestic demand.

Inflation risks are also slightly tilted to the upside, the Central Bank said: geopolitical and global trade issues could all create supply-side bottlenecks that fuel inflation; wage pressures could be stronger than expected; and unfavourable weather conditions, as well as some policies supporting the green transition, could also push up inflation.

Growth is projected at 3.7% in 2026, 3.6% in 2027, and around 3.8% in 2028 (Central Bank). The IMF expects Malta to lead Europe with ~4% average annual growth through 2031. All the while, there is a healthy prognosis that we did exceed EU economic targets, with GDP growth reaching 4.9% at constant prices in 2024.

One congratulates Clyde Caruana, Finance Minister, as a dignified economist announcing a generous budget for 2026 which, inter alia, aims to help a low-income stratum of society, nurture young families, and lift up pensioners’ lot in fighting the cost of living. In his budget speech, he stressed that Malta’s economy aims for its next leap forward in terms of quality, to start producing more clean energy by harnessing natural resources like wind and solar power.

Many sustain a common perception that commercial banks are brimming with idle cash yet, as a general rule, give a hard time when approached to lend depositors’ money. This is true, however, as a result of Malta’s FATF grey-listing in 2021; banks had taken a cautionary approach and decreased their risk appetite, particularly in areas where they lacked sufficient knowledge of proposed business lines or activities. Malta’s swift removal from the Grey List in 2022 has since leveraged expectations that banks return to their previous stance and become more approachable.

Moving on, one notes with satisfaction a projected compilation by foreign experts of a Malta Vision 2050. Naturally, no discussion is complete without mentioning the exemplary tourism revival since the two ugly years of the pandemic.

On a sore note, we cannot omit to mention a drawback in our educational system, with only one in five students passing Matsec exams. Realistically, given the millions invested in education, the dismal maintenance of a low scholastic level each year carries deep economic and social implications for Malta’s both present and future AI digital industry.

In summary, many hope that 2026 will augur well for our leaders to stand tall, forget the political divide, and try to boost exports by lifting their heads above the parapet.

The post Middle East burns yet Malta’s prospects are bright first appeared on The Malta Business Weekly.

Iran’s 2026 World Cup campaign was marked by resilience amid difficult circumstances, narrow elimination, and a strong narrative surrounding a lack of good fortune. Iran competed in Group G of the expanded 48-team tournament. Their results were a 2-2 draw against New Zealand (15 June), a 0-0 draw against Belgium (21 June), and a 1-1 draw against Egypt. They earned three points from three draws and finished third in the group. Despite the expanded format, Iran missed the Round of 32 on tiebreakers and other results. Still, one congratulates them for showing defensive solidity, although they were hampered by what many observers called poor luck. One remembers multiple VAR-overturned goals, with Iran having three disallowed goals, reportedly the highest number in the tournament, as well as marginal offside decisions.

Iran (team Melli) competed in Group G of the expanded 48-team tournament. Head coach Amir Ghalenoei publicly stated that it sometimes felt like “God was at odds with us” because of the lack of good fortune. Despite the exit, they earned praise for a resilient campaign, as the team certainly achieved an unexpectedly strong showing. On 21 June, they held Belgium, ranked ninth in the world, to a draw in Los Angeles, leaving them within reach of the knockout stages.

Meanwhile, in Switzerland, Iranian diplomats were negotiating the thorny Hormuz issues. Many agree they were achieving significant successes. There were further positive developments as the US Treasury Department issued a sanctions waiver permitting the production, sale, and delivery of Iranian petroleum for 60 days. The move will bring immediate relief to the Iranian regime and could, over time, make Iran a prosperous nation once again.

The team enjoyed a hero’s welcome upon returning to Iran at Mehrabad Airport in Tehran, with huge crowds, emotional scenes, children wearing jerseys, and players embracing fans. Captain Mehdi Taremi and stars such as Ramin Rezaeian tearfully apologised for not advancing but vowed success at the Asia Cup. The reception at home highlighted national pride and unity despite the disappointment of failing to progress. The team also thanked the people of Tijuana, Mexico, for their hospitality, calling Mexico a “second home”. Overall, Iran’s story was one of fighting hard but ultimately being undone by a combination of draws, bad luck, and external factors. It was not a triumphant success in terms of advancing, but rather a heroic campaign that resonated emotionally back home.

One cannot overlook the saga of the Strait of Hormuz, which has now resulted in the gradual liberation of oil tankers and provided some relief from ongoing geopolitical tensions. These tensions included Iranian regulatory and assertive actions, vessel seizures, warnings, and the gradual easing or release of tanker traffic amid a complex oil crisis. Readers are aware that the Strait of Hormuz is the world’s most critical oil chokepoint, with roughly 20-30% of global seaborne oil trade passing through it.

During this year, Iran established a Persian Gulf Strait Authority and demanded that vessels use approved routes, cooperate with Iranian authorities, and, in some cases, pay fees or tolls. There were incidents involving attacks or strikes on vessels, with drones and projectiles reported in some cases, although Iran and other parties attributed responsibility differently. This led to periods of slowed or disrupted tanker traffic, hesitancy among shippers, and, at times, effective restrictions or “virtual blockades”. Traffic flows declined following warnings or incidents before gradually recovering. Some vessels were released after periods of detention, negotiations, or compliance with Iranian conditions.

Following the slowdowns caused by Iranian warnings and the reassertion of control, tanker traffic has begun to increase again. Shipping reports describe traffic as “slowly picking up”, with normal flows gradually resuming. More encouraging news followed around mid-June, when an interim US-Iran understanding culminated in ships being allowed to pass without immediate charges for a 60-day period. As of late June, Iran reiterated that tankers must use designated Iranian-approved routes or face consequences, while rejecting proposals to waive tolls in exchange for the release of some frozen Iranian funds.

It is ironic that, while Iran’s team was playing its group-stage matches, US and Iranian negotiators were meeting in Switzerland and Pakistan to finalise the Islamabad Memorandum, a 14-point framework aimed at ending hostilities and reopening the Strait of Hormuz. The timing of the World Cup also meant that Iran’s football team became a symbol of soft power, national resilience, and international engagement. In short, football did not cause diplomacy – but it strengthened it at a critical moment.

The post World Cup diplomacy helped Iran gain openness from US first appeared on The Malta Business Weekly.

As oil trading resumed after a brief pause in fighting, the price of Brent crude, the global benchmark, reached nearly $120 a barrel. It is up by 42% since hostilities began. The Iranian regime, despite more than 120 days of being bombed and blockaded by the world’s top military superpower and its Israeli ally, is emboldened.

Claiming that talks with Iran had been “brought to the highest level of Iranian leadership and approved,” Trump said he had “cancelled the planned strikes and bombings against Iran last week.” In response to the US strikes, Iran’s Islamic Revolutionary Guard Corps struck US targets on bases in Kuwait and Bahrain and hit and partially destroyed Sheikh Isa Air Base. Nothing is stopping the Iranian state from retaliating against its Western invaders.

Only recently, Iranian media said the army had conducted drone strikes targeting communications antennas and radar facilities belonging to the US Fifth Fleet in Bahrain. Add to this a recent air raid alert issued in Bahrain, where residents were urged to head to the nearest safe place. Notice how Kuwait temporarily closed its airspace as its military said its air defence systems were working to intercept hostile aerial targets.

In response to the US strikes, Iran partially destroyed Sheikh Isa Air Base. Readers may ask: what was the effect of the effective closure or minimal traffic in the Strait of Hormuz since early 2026? The short answer is that it has forced production curtailments and highlighted vulnerabilities.

Yet, the flow of oil out of the Gulf needs alternate routes, so many attempts are underway to dig and lay new delivery pipelines that circumvent the export of crude through the Strait of Hormuz. One such project, code-named ADNOC, was approved in mid-May 2026 by Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed. This is not a walk in the park, since construction in a tense region carries security and logistical risks, though parallel routing leverages existing rights-of-way for faster build times.

Long-term, this re-routing of crude encourages diversification but does not fully eliminate global market expectations. One cannot omit mentioning Saudi Arabia’s East-West Pipeline (Petroline). This is a mature, high-capacity bypass system that has been rapidly ramped up and proven resilient during the 2026 Hormuz disruptions, contrasting with the UAE’s ongoing expansion of its smaller-scale Fujairah route.

Saudi Arabia’s system is much larger (7 mb/d versus the UAE’s current 1.5–1.8 mb/d, growing to a future 3.6 mb/d). Naturally, this reflects Saudi Arabia’s vastly higher production base. It provides immediate, battle-tested relief. Together, both pipelines, when fully operational, mitigate but do not fully replace Hormuz volumes (about 20 mb/d pre-crisis). Saudi Arabia benefits more from short-term export continuity, yet the UAE’s expansion aligns with its capacity ambitions.

These efforts build on existing infrastructure but have been accelerated due to the ongoing Strait of Hormuz disruptions. Pressure is mounting on Trump to solve the dispute, particularly from American motorists now paying over $5.10 for a gallon of petrol on average.

Let us look for an alternative crude supply away from the troublesome Gulf area. Can the eastern and central Mediterranean basin prove to be an alternative source? The answer is not in the next decade. In fact, there is a low and declining share of oil produced from the central Mediterranean area (offshore around Sicily and the Sicily Channel). This represents a relatively small part of overall crude-oil output.

Most of Italy’s domestic oil production in recent years has been onshore (notably Basilicata – e.g., Tempa Rossa) and in the Adriatic Sea. One can deduce that the central Mediterranean offshore plays a minor role by volume compared with Gulf areas. Eni is the major Italian player in offshore hydrocarbon activity, including exploration and production around Sicily. Other companies and operators may hold smaller stakes or operate onshore and in the Adriatic; however, Italy is a substantial net importer of crude and petroleum products.

There has been ongoing exploration interest, including licence rounds and seismic surveys such as those in Malta, in the central Mediterranean. However, successful large oil discoveries and subsequent high-volume production in the central Mediterranean have been limited. Much of the recent investment has focused on gas rather than crude extraction. Regulatory sensitivities and public opposition surrounding offshore drilling – particularly concerning coastal tourism, fisheries, and environmental concerns – limit easy expansion in nearshore zones.

Back to the fragile situation of crude deliveries out of Hormuz, one expects that a short-term solution is to bypass it via pipeline installations, yet this takes time. In a post-resolution scenario, these would complement the reopening of the Strait by providing redundant and secure export routes.

In summary, can we conclude that oil riches have once again spurred a second turbulent Gulf war?

The post Oil again is the cause of global turbulence first appeared on The Malta Business Weekly.

For many years, the University of Malta has conducted scientific studies on vehicle emissions, including hydrocarbons, volatile organic compounds, carbon monoxide, carbon dioxide, nitrogen oxides, particulate matter and sulphur oxides. Since the 1950s and 1960s, regulatory agencies worldwide have studied vehicle emissions and their effects on human health and the environment. As understanding improved, so did the technologies used to reduce emissions. In the United States, amendments to the Clean Air Act introduced increasingly strict pollution limits.

Air pollution is estimated to cause between seven and eight million deaths worldwide each year. Numerous studies have identified particulate matter as one of the most dangerous pollutants. Malta faces particular challenges because of the large number of private vehicles using its narrow streets. This contributes to greenhouse gas emissions, fossil fuel consumption, traffic congestion and a shortage of parking spaces in many towns and villages.

Following its re-election, the Labour government has preferred not to burden commuters with parking charges in urban centres. However, the licensing authority continues to increase the number of registered vehicles, with a net average growth of 37 vehicles per day. The majority of newly-licensed vehicles, 4,737 or 59.8%, were passenger cars, followed by motorcycles, e-bikes and PA-bikes, which accounted for 1,989 or 25.1%.

Petrol-powered vehicles represented 58.1% of the total stock of licensed vehicles, followed by diesel-powered vehicles at 34.6%. Electric and plug-in hybrid vehicles accounted for only 4.3%. Compared with the first quarter of 2025, plug-in hybrid diesel-electric vehicles increased by 7.2%, electric vehicles by 6%, and mild hybrid petrol-electric vehicles by 5.1%.

Only a radical rethink of Malta’s transport system, moving away from heavy dependence on private vehicles, will reduce road deaths and allow transport to function more efficiently. However, with the country facing moderate national debt, efforts are being made to contain recurrent expenditure and reduce capital investment. The Opposition argues that this approach prioritises today’s comfort over tomorrow’s well-being.

During the second quarter of 2025, the stock of licensed vehicles increased by a further 3,339. Outdoor air pollution continues to result primarily from the burning of fossil fuels, including LNG used by the BWSC and Electrogas power plants, as well as diesel-powered generators and transport. Unless stricter measures are introduced to reduce internal combustion engine vehicles and replace them with electric alternatives, the problem will persist.

One possible solution lies in shared mobility. The concept of passenger transport based on shared vehicles rather than privately-owned cars originates from sustainable mobility research. Fewer vehicles on the road would reduce energy consumption and emissions, although the energy required to reposition empty vehicles must also be considered.

Robo-taxis offer a promising alternative, particularly if powered by electricity or hydrogen fuel cells. Once fully tested and deployed, they could reduce operating costs by eliminating the need for a human driver, making transport more affordable and increasing the popularity of transportation as a service. Studies indicate that robo-taxis have fewer accidents than human drivers and therefore have the potential to save lives. Unlike private cars, they can operate almost continuously, freeing urban space and improving quality of life.

The rise of robo-taxis raises important questions for Malta. What happens to the thousands of licensed “Y-plate” taxis if autonomous vehicles become widespread? One possible solution would be for Transport Malta to introduce a scheme allowing existing Y-plate vehicles to be retrofitted with sensors and autonomous technologies, supported through partial public funding.

Some may fear that taxi drivers and TCN operators are doomed. However, experience elsewhere suggests otherwise. In San Francisco, the rise of autonomous vehicles has increased overall demand for taxi services and created opportunities in specialised market segments. Official data shows that in 2024 employment in taxi and limousine services increased by 7% compared with the previous year, while total industry pay rose by 14%. Traditional taxi trips also remained broadly stable.

As more self-driving vehicles enter the market, they may expand rather than shrink the transportation sector. Europe has adopted a cautious approach, prioritising safety through extensive testing. While concerns about the impact on taxi drivers are understandable, these must be balanced against wider societal benefits. Evidence from San Francisco suggests that robo-taxis are replacing private car journeys rather than traditional taxi services.

This raises an important question for Malta. Could a pilot project in Gozo test whether autonomous shared mobility can reduce private car usage and village congestion? If successful, such a scheme could provide valuable evidence for a more sustainable, efficient and environmentally-friendly transport future.

The post Welcome a metaCCAZE testing for autonomous vans first appeared on The Malta Business Weekly.

In the mid-1970s, fears of mass unemployment were real, with predictions reaching up to 25% in some scenarios. Given the island’s small size, limited natural resources, and lack of economic diversification, a strong push for job creation became sine qua non. This began with export-oriented manufacturing in textiles, electronics, tobacco products and footwear. The state played a major role through nationalisations, public works, harbour investments and Freeport infrastructure, while private-sector investment also proved essential.

Services eventually became the dominant sector, including financial services, iGaming, aviation, information technology, professional services and tuna ranching for export. Tourism, leveraging Malta’s Mediterranean climate and rich heritage, has over the past sixty-five years contributed significantly to economic growth, attracting more than four million visitors annually.

The fly in the ointment is modern AI technology.

AI can eliminate certain jobs, but it also raises productivity, increases incomes for other groups and stimulates new demand. That demand creates new industries, occupations and employment opportunities. Foreign workers now account for approximately 28–30% of the workforce. By 2024–25, more than 135,000 foreign workers, many in low-wage and unskilled occupations, were on payrolls, with thousands of work permits issued annually through licensed private employment agencies.

On a positive note, Malta has experienced technological disruption since the early 1980s that has created entirely new job categories. Yet, with the advent of increasingly dominant AI technologies, surveys suggest that nearly one in five American workers believe AI or automation is likely to replace them.

It is not only ordinary workers who are concerned. Dario Amodei of Anthropic has warned that AI could push unemployment rates to between 10% and 20%. Bill Gates, co-founder of Microsoft, has stated that in an AI-driven world people will not be needed for “most things”. Sam Altman of OpenAI, while increasingly emphasising AI as a tool to augment rather than replace people, still acknowledges the likelihood of disruption and significant job transitions.

Economists, however, are far less pessimistic. They are generally sceptical of the “lump of labour fallacy”, which assumes that the labour market is static and that jobs lost to technology are permanently lost. This remains one of the central ideas underpinning technological change and creative destruction in economics. The theory suggests that total employment can recover over time, although not everyone benefits equally.

Technological change reallocates labour rather than eliminating it. While automation displaces workers in certain occupations, it simultaneously raises productivity and incomes elsewhere. Through wider economic adjustments, employment can potentially be redistributed across the economy.

A typical example from the mid-1970s was the emergence of CMT (Cut, Make and Trim) textile factories. These employed thousands of unskilled women operating sewing machines to manufacture garments for export to Europe. More recently, the introduction of gaming companies attracted a rapidly expanding cluster of businesses and vacancies that today offer highly competitive salaries.

The digital revolution also reduced traditional clerical jobs in the private sector, although many workers found employment in the public sector, which today employs approximately 56,180 people. The aviation sector represents another success story. More recently, Malta established the MDIA, a public-sector agency specialising in emerging fields such as artificial intelligence, blockchain technology and cryptocurrencies.

The argument that AI will disrupt employment prospects by 2035 is theoretically valid. However, this does not mean that every displaced worker will easily find alternative employment, nor that the transition will be painless. Some redundancies could potentially be absorbed through compressed working-week arrangements. Furthermore, particularly in a small island state, not all new jobs are equal in terms of pay, security or quality.

Malta has weathered numerous business cycles, yet experience teaches us that technological change tends to reallocate labour rather than eliminate it. While automation displaces workers in some occupations, it can also create opportunities elsewhere. The closure of the drydocks, which at their peak employed around 13,000 highly trained technical workers, remains a reminder of the social costs that can accompany structural change. Yet during almost a century of naval and maritime operations, productivity gains also translated into higher incomes for dock workers, who were nostalgically referred to as the “aristocracy of the proletariat”.

In conclusion, the past decade has witnessed not only job restructuring but also growing social pressures. These include housing affordability challenges, pollution from internal combustion engine vehicles, infrastructure strain, marine pollution, weak social integration of third-country nationals, daily traffic congestion, summer blackouts and a spiralling cost of living, partly mitigated through state subsidies.

Against the backdrop of recent conflicts in Ukraine, the Middle East and tensions involving Iran, these disruptions contribute to an atmosphere of growing uncertainty. The recently elected Labour government has promised policies aimed at easing these pressures, including annual bonuses to help households cope with rising living costs, lower personal taxation, improved pensions, the proposed construction of a light rail system, additional green spaces for families and measures intended to address Malta’s persistently low fertility rate.

George M Mangion is a Senior Partner at PKF Malta

The post Floating in mid-air on an AI trajectory of disruption first appeared on The Malta Business Weekly.

Now, the latest calculations by several academic and independent institutes estimate the figure to be even higher.  Benefits include cultural exchange, career opportunities (especially for young people), and simplified travel (e.g. no roaming charges, easier paperwork).  Significantly, this shift has been gradual but relentless.  It is driven partly by demographic factors: the age profile of how people voted in 2016 was such that, 10 years later, even if nobody had changed their mind, there would be a majority in favour of EU membership.  Furthermore, it is also driven by those “Leave” voters who were not gung-ho Brexiteers realising that Brexit bears no resemblance to what was promised.  

They were told that it would be easy, save lots of money (that billions would go to the NHS) and keep access to Europe while securing wonderful new trade deals across the planet.   It is true that UK increased trade with non-EU countries (e.g. US, China, India, Australia via new FTAs), partially offsetting EU declines.  However, new deals have had minimal GDP impact so far (e.g. ~0.1% each for Japan/Australia).

A significant number of “Leave” voters have therefore changed their view, especially if they work in a sector that has been particularly affected, or if they have been irritated by the multiple little things that Brexit has made more difficult, starting from ordering small packages abroad to joining the longer non-EU queue at border checkpoints if they travel. 

Neither of these two drivers of the shift in opinion – demography and changing minds – is going to go in reverse. Such an economic loss has tangible consequences.  It would have produced an extra £80 or £90 billion every year in tax revenue.  

The government is seeking to attenuate the economic damage of Brexit by aligning with the EU single market standards and rules in various sectors, to cut red tape, paperwork and border inspections.  It is starting with agriculture and energy, hoping to move on to other sectors such as chemicals and pharmaceuticals.  

This is sensible.  But it is slow, won’t change the economic dial for years, and if it succeeds will align Britain with EU rules on which it has no say when the EU wants to change them, virtually turning the UK into a non-voting member of the EU.  

Many are beginning to ask why not go the whole way and get Britain’s seat back at the table where decisions are taken that will in any case affect it.   With Putin on one side and Trump on the other, it is becoming more obvious by the day that the interests and values of Britain and its EU neighbours converge.  

Obviously, Britain can certainly no longer rely on a supposed “Special Relationship” with the United States, a notion given its last rites by Trump.  Many economists seem to be reaching the same conclusion. As an example, Iceland is to hold a referendum in August on applying to join the EU.  

In Norway a debate has started.  Every country in the western Balkans wants to join (some are already deep into their accession negotiations), as do Ukraine and Moldova.  If, Britain insists to stay out it will look isolated and irrelevant on the world stage.  Contrarily to Neville Farage’s political creed in favour of Brexit, this has turned out to be even more costly than anticipated.   

Recalling major analyses from economists at Stanford, NBER, and others; they conclude that by 2025, Brexit reduced UK GDP by 6–8% compared to a no-Brexit scenario.  Many now see Brexit as having failed to deliver promised gains, with regret increasing over time.  Will the blushing bride step forward?

George M Mangion is a Senior Partner at PKF Malta 

The post Is Britain wooing EU as a bride? first appeared on The Malta Business Weekly.

It also drives a “blue economy” with jobs, investment, and energy diversification. Launched around late 2024/early 2025 for Malta’s inaugural floating wind farm (target ~280–320 MW, reference 300 MW) beyond 12 nautical miles in the future EEZ. It uses a competitive dialogue process: Pre-Qualification Questionnaire (PQQ), dialogue, and best and final offer. Three applications were submitted by mid-2025 (consortia like Code Zero (a Malta applicant), Atlas Med. Wind (an Italian applicant), and MCKEDRIK Sole Member Ltd (a Greece-based sole applicant).

A typical large offshore Trapani application in the Straits of Sicily is the Med. Wind (Renexia). It is an ambitious 2.8 GW floating project (~190 turbines, up to 18 MW each from Mingyang). As can be expected a useful analysis is to indicate the future growth of offshore renewable (wind and panels) power in the Mediterranean. As can be expected the speed of growth will be driven by two main factors such as:

a) The cost competitiveness of energy production by the offshore wind industry; and

b) The level of policy support for the development of renewable energy. At no stage does the consultation document issued by Malta mention the generation and use of green Hydrogen using electrolysis. The possibility of looking at solar PV technology offshore is also an area of interest as a considerable number of installation projects using floating photovoltaic systems (FPVs) technology can potentially be operated in water bodies such as shallow seas, such as Hurd’s Bank, lakes and dams/reservoirs. However, deployment of FPVs offshore is still limited because of the existing characteristics of marine/sea environments which are different from onshore conditions, such as wind loads and wave loads. These challenges lead to higher costs than projects in the North Sea, particularly when compared with the central Mediterranean, due to moderate wind conditions, deep waters, supply chain limitations, and grid connection constraints.

A crowded sea (fishing, shipping, environment) in the Mediterranean creates fresh problems in locating the wind farm sites. All applications face resistance not to upset marine protected areas, biodiversity (seabirds, Posidonia), and multi-use conflicts. The good news for investors is that the Malta government has established a one-stop-shop that will act as a single point of reference for project developers to be guided through the permitting process necessary to construct and operate the offshore project. A single administrative unit will be responsible for this procedure, and it may act independently or involve other administrative authorities in the process.

This design increases the transparency of the process and ultimately saves time and resources. The inference is that the shallow waters around Hurd’s Bank, which cover an area three times the size of Malta, could logically be utilised more extensively. The government therefore prefers that the chosen developer is responsible for all planning exercises, project developments and actual implementation. There will be an open bid session and investors chosen based on technical and financial competence and the value of the option fee proposed.

The government expects that the cost of connection with the transmission to the grid has to be financed by the chosen developer. All this is in the light of the European Green deal, which is a transformative agenda to combine policies necessary to tackle climate change, to reverse biodiversity loss, and eliminate pollution by moving to a circular economy. Once there, the government pledged to reduce emissions by at least 55% by 2030, compared to 1990 levels.

Another potential is to develop a steady supply of green hydrogen. Readers may ask, how can industrial quantities of green hydrogen be generated? The straightforward answer is through electrolysis, where surplus renewable electricity is used to split water into hydrogen and oxygen.

Hydrogen is collected and stored in pressured canisters. It is used primarily in industry (in the case of Malta to run power stations or propel ships), while oxygen is released as a by-product for export. For example, the University of Malta’s HydroGenEration project (funded by the Energy and Water Agency) is a desk-based study on integrating floating wind with hydro-pneumatic energy storage and offshore green hydrogen production.

The storage potential of hydrogen is particularly beneficial for power grids, as it allows for renewable energy to be kept not only in large quantities but any excess to requirements can also be exported to Europe.

In conclusion, due to scale, land, and water constraints, Malta considers domestic green hydrogen production to be a challenging prospect. Instead, it is pursuing a hydrogen-ready gas pipeline to Sicily through Melita TransGas, enabling the potential import of renewable hydrogen or hydrogen blends with bi-directional capability.

George M. Mangion is a senior partner at PKF Malta 

The post Malta is not active in its quest for Green hydrogen first appeared on The Malta Business Weekly.