Malta: Out of the frying pan into the fire. (1 of 2)

Malta: Out of the frying pan into the fire. (1 of 2) - For Malta, membership of the European Community could lead to the identity which it fought so hard for being swallowed up yet again by its more powerful neighbours, writes Daniel Butler.

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Last Updated: 31 Aug 2010

For Malta, membership of the European Community could lead to the identity which it fought so hard for being swallowed up yet again by its more powerful neighbours, writes Daniel Butler.

Europe is a frightening place for small countries. They used to be threatened by the territorial designs of their neighbours, fought over through the ages by a succession of conquerors, their independence constantly under threat. But now things are different. With 1992 approaching and borders opening to the east, Europe's smaller independent states face an ironic dilemma: should they keep their newly secured identity or join with those states that until recently were their occupiers and conquerors?

Malta is a typical example. Located on Europe's most southerly frontier, 60 miles south of Sicily, the tiny island regained its sovereignty in 1964 for the first time since prehistoric days. Ruled in turn by the Phoenicians, Greeks, Etruscans, Carthaginians, Romans, Arabs, Normans, the Knights of St John and, finally, the British, the island has fought to become constitutionally neutral. So it seems a little cruel that it now has to opt to join the European Community and to risk being lost among the economic giants of the new Europe. The decision was not an easy one to take - it has polarised even further the country's two political parties - for there may well be a high economic price to pay if and when the bid succeeds.

At present Malta's economy revolves around tourism, light industry and shipping. And the islanders are all too well aware of its fragility. With a working population of only 140,000, the slightest downturn in any of these crucial sectors hits hard. Malta has few natural resources, but the workforce is an attractive one to the industrialist. Educational standards are high, and the population is multilingual. But their numbers are limited, so while the island has to keep foreign currency and goods pumping through its economy simply to survive, it cannot stretch itself too far.

To encourage the flow of trade through its ports and airport, Malta has opted for the tax-haven approach. This and its history have done much to keep the tourist trade comparatively healthy, but the Maltese are all too aware that they have little leeway left. Last year the island had 850,000 visitors, stretching its infrastructure almost to the limit. So the island is turning to finance, shipping and manufacturing to solve the problems. The attractions of very low taxation and rents coupled with a skilled workforce have begun to reap rewards. Along with cheap wages this has had some success in encouraging investment, mainly from Germany and Britain.

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