In our long history as islanders, we have long cultivated the “insular mindset” as a survival mechanism. For generations, the horizon of the Mediterranean served as both a protective cocoon and a psychological boundary. We tend to focus inward, preoccupied with the immediate politics of our shores and the comforting rhythms of a “business as usual” mindset.
In our collective psyche, the troubles of the distant Middle East often feel like a digital noise, filtered through the blue haze of our surrounding sea.
However, the luxury of distance has evaporated in today’s world as we have experienced even in recent years. The geography of our islands no longer grants immunity from global tremors.
The escalation of the Iran War, from the initial joint strikes on 28 February to the catastrophic closure of the Strait of Hormuz, has proven that while we may live on an island, we do not live in a vacuum. News coming in is not encouraging. The negotiations between the US and Iran in Pakistan have yielded no concrete way forward and Trump is now moving ahead to implement a total blockade in the Strait of Hormuz. This means that things are escalating further and it is very plausible to expect negative economic effects for at least the medium-term as a short-term solution is now rather difficult to envision.
The ripple effects of the conflict are no longer theoretical. They are manifesting in data points that are, or shortly will, directly impact everything and everyone.
The latest developing risk is the Jet Fuel shortage. Industry analysts warn of a systemic jet fuel shortage hitting the EU by May. For a tourism-dependent island, the threat of flight cancellations (already being considered by major carriers like Ryanair) is a direct hit to our connectivity. Without jet fuel, our vital “bridge” to the mainland effectively vanishes, also disrupting the supplies we rely on from air transport.
On the other hand the Maltese government remains the only one in the EU to have frozen fuel and energy prices through subsidised administered pricing, meaning that the fiscal cost is very likely to keep mounting, straining further our public finances. The recent DBRS credit agency report on Malta also highlight this point when saying: “Furthermore, potentially higher-for-longer global energy prices are a risk factor for the government’s fiscal balance given its fixed price energy policy. Maintaining the current freeze on domestic energy prices would necessitate higher energy subsidies, thereby adding to budgetary pressures.”
Malta is an import-dependent economy. The disruption of the Strait of Hormuz and the diversion of shipping routes around the Cape of Good Hope have added weeks to transit times and spiked freight costs. This isn’t just about delays, it affects fertilizer inputs for agriculture and raw materials for our manufacturing sector.
Despite subsidies, “imported inflation” is leaking into the local market. As shipping and production costs rise globally, the price of food and essential commodities in Maltese supermarkets will be felt. The European Central Bank has already revised its 2026 inflation projections upward, warning that a prolonged conflict could tip the overall Eurozone economy in recession.
In my humble view, in a world going from one crisis to another, we can no longer afford the “business as usual” approach where we assume the state will always be the ultimate shock absorber, which is the downside of subsidies beyond the peak time of a crisis.
Beyond dealing with the immediate Iran war induced crisis at hand we need to look ahead and take resilience more seriously. True resilience requires a fundamental shift in how we live, work, and plan for the future.
We must accelerate the transition from “subsidised fossil fuels” to “sovereign renewables”. Resilience means having a grid that isn’t tethered to the volatility of a Middle Eastern strait. Similarly, supporting local vertical farming and boutique agriculture isn’t just a “green” trend; it’s a national security imperative to ensure our food supply is not 100% at the mercy of global shipping lanes.
Malta’s implementation of the EU’s Critical Entities Resilience (CER) Directive must be prioritised. This involves “all-hazards” planning – meaning every major provider of water, digital services, gases and transport must have a redundant strategy for “Black Swan” events, such as a total cessation of shipping for 90 days.
Resilience also starts at home. In a world of volatile prices and “just-in-time” supply chains, the “business as usual” mindset is a liability. We must move from a culture of consumption to one of conservation, treating water and energy as precious, finite assets.
At a national and industrial level, we need to understand if and how we can beef up our dedicated strategic reserves of jet fuel and essential commodities to bridge any supply gaps created by global conflicts.
Our historic insular mindset was about looking inward to stay safe. The resilience mindset is about looking outward to stay prepared. By acknowledging that the smoke over the Persian Gulf eventually reaches our runways and our dinner tables, we can stop reacting to crises and start out-planning for when the next one will hit us. Many times I get the sensation that our baseline is based on the hope that our business-as-usual mindset will somehow carry us through – that by doing nothing, things will resolve themselves while we ride out the storm, hoping that our war chest will be enough to see us through and that nothing will derail our economic growth.
