Executive Summary

EU accession triggered broad liberalization; migrant integration taking strides forward
Malta’s 2004 accession to the European Union (EU) acted as a catalyst for social, economic and political transformation. The EU’s liberal ethos propelled the 2011 introduction of divorce to one of the last bastions of catholic zealotry. Since 2013, the Maltese government has fueled this liberal current. Malta has considerably relaxed its censorship laws and extended rights to people with diverse gender identities and sexual orientations, including civil marriage. Recent legislation on domestic violence and reproductive rights have given practical expression to women’s right. The right to employment for disabled persons has also been codified, with employers penalized with fines for ignoring equality of opportunity laws. Since accession, Malta has extended maternity benefits and provided free childcare centers, enhanced pension rights and increased assistance for the elderly, upgraded health services, and embarked on a €50 million social housing project. The government has implemented migrant-integration policy recommendations by introducing reception centers, allowing migrants to register for work and setting up an integration program. Since 2017, including in the 2020 budget, the government has continued to increase pension and other social-benefit levels with the aim of redressing social inequalities.
Difficult year may lead to change, growth; two-party system undermines governance
In some senses, 2019 was an “annus terribilis” for Malta. However, it will also be marked as a defining year, and as one that may lead to change and growth. For this year like no other has solidified the conviction among the majority that the island’s governing structures need to be overhauled. Malta’s political system was crafted under suboptimal conditions when the island was transitioning from colonial rule in the 1960s. Its constitutional development was therefore constrained by the interests of the ruling elites, including external elites. Some constitutional changes have taken place in the intervening decades; however, the governing structures inherited from the British have largely remained unchanged. Indeed, during the long period under center-right government rule from 1987 – 1996, and again from 1998 – 2013, they were deemed to be adequate, a view was supported by the EU Commission in its assessments of the island’s institutions prior to its accession in 2004. However, the separation of powers has long been weakened by an entrenched two-party system, which has resulted in a parliament that rubber-stamps the decisions of the executive, and a judiciary that is wholly selected by the prime minister. Further capture of state institutions by such practices as placing back-bench legislators on government boards, and expanding the numbers and remit of persons of trust has weakened the system further. Electoral changes in the 1990s further entrenched the position of the two main parties, which have long tended to view their election to government as an opportunity to gather the spoils of war. The pillaging of state resources by both the political and administrative elite, with the support of key economic elites, has long been seen as maintaining the status quo. The failure to address this situation once the rot set in reflects a massive failure of the political class to take action.
Growth outpaces institutions; labor party cements dominance
This state of affairs was exacerbated by changing circumstances in the post-2013 period. Malta’s economy was now fully incorporated into the international domain, resulting in annual growth rates of up to 6% and producing huge injections of cash into the local economy. At the same time, Malta was still updating its financial and security institutions, which had not kept pace with changing circumstances and ultimately proved inadequate to deal with rapid change. The Labor party (MLP) came to power with the largest majority since independence, and has continued to increase this majority at every local, national and EU-level election since. In tandem, the opposition party has become increasingly fragmented, irrelevant and unelectable. No other party has surfaced to challenge the dominance of the Socialist party. A thriving economy and successful social and liberal reforms cemented the position of the MLP as unassailable, and allowed it to survive decisions such as retaining ties to politicians sullied by the Panama papers as well as other allegations of corrupt practices.
Budget shows
successive surpluses
Malta’s economy has recorded growth rates of between 4% and 6% annually – among the highest in the EU – while obtaining generally positive ratings from credit agencies. The result is an economy that has shifted from a significant public deficit to one of successive surpluses. The debt-to-GDP ratio continues to be meaningfully reduced. Many economic sectors such as tourism, aircraft maintenance and registration, and service industries continue to expand. The country’s sole energy provider, Enemalta, is no longer a millstone on the island’s finances, and the transition to use of a gas-fired power station has proved beneficial.
Reforms improve institutional environment
A number of recent reforms have improved the institutional environment. including legislation intended to regulate and improve the transparency of political-party funding; a new rule making ministers, members of parliament and senior officials accused of breaching codes of ethics accountable to a Public Standards Office; the removal of statutes of limitations in cases of alleged corruption by politicians and senior officials; legislation introduced to increase judicial-system efficiency; a new procedure in which heads of regulatory bodies and politically appointed representatives abroad are to be scrutinized by a new consultative parliamentary committee before taking office. These institutions, in conjunction with the utilization of the Freedom of Information act and the work of the audit and ombuds office, have ensured greater scrutiny of the government. This has enabled the rot to surface, but has not extirpated it.
State shaken by
journalist’s murder;
elites tied to
Civil society and the media have stepped in to fill the void left by a weak opposition, challenging examples of government graft. However, these efforts proved ineffective until the assassination of Daphne Caruana Galizia, a journalist who was covering a number of allegations of corruption at the political level, including connections to the Panama papers. Like no other event before it, her October 2017 murder proved able to destroy the previously precarious balance of power and destabilize the state. Unease spread within an electorate demanding answers as to who was responsible for the murder. Civil society organizations increasingly made their voices heard, appealing in particular to the federal government. Calls from local and international institutions for a reform of government institutions multiplied. In November 2019, the alleged mastermind of the murder, a family member of a powerful business group, was exposed. It subsequently became clear that Caruana Galizia had been murdered In order to prevent the exposure of alleged illicit business dealings being carried out by a member of this powerful business group, and of potential links with the political class. Moreover, the close relations that turned out to exist between alleged mastermind Jurgen Fenech and the prime minister’s chief of staff, Keith Schembri, shook the government to its foundations. Protesters across the political spectrum took to the streets, and several ministers including the prime minister resigned from government
Crisis generates reform momentum; new good-government measures
As a result of this political crisis, the island’s reputation suffered internationally, and in 2020 the country was relegated to the status of flawed democracy in the Economist Intelligence Unit’s Democracy Index. However, the crisis has also generated a new consensus on the urgency of constitutional reform and the need to shore up good-governance practices. The new prime minster enjoys widespread support, and has made good governance a key plank of his new administration. Reforms of the office of the Attorney General have taken place, and reforms of the appointment process for the commissioner of police are currently being discussed in parliament. Judicial-appointment reforms are said to be imminent. The minister of environment is committed to establishing a register of lobbyists, and financial institutions are being shored up as Malta implements the fifth anti-money-laundering directive. Controversial government contracts are being reviewed, and investigations are ongoing to weed out maladministration in the civil service. If these and other initiatives bear fruit, 2020 may well prove to be an annus mirabilis for the island.
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