Last month, Prime Minister Joseph Muscat promised to step down midway through his second term due to ongoing investigations into the 2017 murder of anti-corruption journalist Daphne Caruana Galizia.
While Muscat is not implicated in Galizia’s death and has denied any wrong-doing regarding the case, his reputation took a hit after the self-confessed middleman in the plot named a number of people close to Muscat as involved in the scheme. During his farewell address on Friday, the former Prime Minister apologised for Caruana Galizia’s killing, saying “I paid the highest price for this case to be solved under my watch.”
Muscat is not disappearing from politics altogether, however, and has said he will stay on in Parliament and promote civil rights reform from there. He also intends to work on a project to promote Malta’s athletes.
Abela Becomes Malta’s New Leader
Stepping into Muscat’s shoes is Robert Abela, who won the election within the Labour party with 58 percent of the votes. Abela was sworn into office this past Monday as Malta’s fourteenth Prime Minister, during a ceremony at the Palace in Valletta before President George Vella.
Abela defeated Chris Fearne, the Deputy Prime Minister and Minister of Health, who had been the favourite to win and was backed by most of the cabinet. The Times of Malta has described it as “one of the biggest upsets in contemporary political history”, After his victory, the new Prime Minister told his supporters “I am humbled…There is only one winner today, the Labour Party.”
“I am determined to keep what is good and change what is bad“, Abela continued. “I promise to work with this parliament to continue to strengthen the rule of law and good governance…The ship is now back on an even keel after the storm. We need to move forward”, he said.
Abela is something of a newcomer, though he comes into Maltese politics as the son of a former president. A lawyer specialising in labour and industry, he first entered parliament in 2017. Muscat appointed him as a legal consultant, which enabled him to attend cabinet meetings.
In a speech given to party members a day before his swearing-in, Abela promised to uphold the rule of law. “We will continue to strengthen rule of law and good governance…Malta is not going through any tragedy, but it is going through a sensitive time from which it will emerge stronger.”
Abela has said that his priority is social justice, that the Labour Party will remain open to everyone, and that all citizens should benefit from Malta’s expanding economy. To that end, he urged the business community to join the government as partners.
“We will continue to work with continuity and stability. We will keep the formula which has given us electoral victories and economic growth, while changing what needs to be changed”, the Prime Minister said. He has also vowed to raise living standards and address pensions, and has also proposed offering free medicine to pensioners.
Scepticism in Malta
Some activists are unhappy with the election’s outcome and see Abela as a continuity of Muscat’s policies. Martina Darmanin, a 24-year old academic with activist group Repubblika said “As a member of the EU we want and we deserve better than this: good governance, rule of law.” Repubblika plans to deliver a manifesto to the new Prime Minister calling for a clean-up of politics and the economy as well as a revamp of the constitution, in the hope of guaranteeing a more thorough separation of powers.
Concerns have been echoed abroad as well. “With a new government, there is hope that Malta can bring an end to the damaging recent tensions and start to rebuild its reputation abroad.” said Dutch MP Pieter Omtzigt. “The international community is profoundly concerned by Malta’s systemic and structural rule of law deficiencies.”
Sven Giegold, a German member of the European Parliament for the Green party, said in an emailed statement that “Abela deserves a chance, but scepticism is appropriate.” Abela was a one-time legal adviser to Muscat. “Malta must finally comply with European rules when it comes to anti-money laundering, the independence of the judiciary and banking supervision.”
On December 18th, the European Parliament passed its “Rule of Law in Malta” resolution. The vote called on the European Commission to discuss the context of its framework on the rule of law with Malta, which came under scrutiny during the ongoing investigation into Caruana Galizia’s murder. The resolution specifically noted that the European Parliament was “highly concerned that numerous other investigations into related cases of money laundering and corruption have not advanced or have not even been launched, especially with regard to the former Chief of Staff of the Prime Minister and the former Minister for Tourism”.
Malta’s Economic Boom
Abela takes office after a decade of explosive economic growth, much of which happened under Muscat’s purview. Malta clocks in as the fastest growing eurozone economy, which has enabled it to all but shrug off the worst effects of the sovereign debt crisis. “Malta was the last European country to enter the recession and the first to exit”, says Jean Paul Fabri, Director of Regulatory and Advisory at Malta’s ARQ Group.
The island nation has encouraged foreign investment, welcoming both foreign and local businesses. This has contributed to the country’s lowest recorded unemployment rate at 3.4 percent, the fourth lowest in the EU. GDP also grew 9 percent in 2019 by comparison to the previous year, in addition to successfully shrinking its deficit.
Film, internet gaming, and casinos have all flourished, as has the tourism and maritime sectors. Malta has also experienced a real estate and construction boom, fuelled by a strong economy, low-interest rates, and the rising number of workers from abroad in need of rental accommodation. However, this growth has also contributed to a rise in rental rates, making it harder for low income Maltese workers and young families to find a home.
Cryptocurrency, blockchain, and other DLT companies have also found a home in Malta, prompting the island nation to pioneer legislation for this cutting edge technology. Malta hosts two major fintech conferences, the Malta Blockchain Summit and Delta Summit, which has earned Malta the nickname “Blockchain Island”.
Credit rating agency Fitch has also affirmed Malta’s rating at ‘A+’ with the outlook being stable. A statement made by the Ministry for Finance said that the rating reflects well on the country’s institutions, “which are considered stronger than the majority of similar rated countries”.
“The positive outlook reflects Fitch’s expectation of sustained high economic growth from diverse sources in the medium term. As a result, it expects Malta’s per capita income to continue converging to the EU average in the coming years”, the statement read.
It’s an incredible success story, but growth like that is difficult to maintain. Right now, Malta is ranked 38th in a Global Competitiveness Index released by the World Economic Forum, down two places from where it ranked in 2018. To revive its competitiveness, economists recommend using Malta’s new wealth to re-invest in society.
“An economy cannot sustain very fast growth rates for a long period, before becoming a victim of its own success. At this juncture, Malta requires a return to sustainable growth which is focused more on achieving a balance and direct approach towards the quality of growth, rather than the quantity of growth”, says ARQ director Jean Paul Fabri. “The economics of well-being with a focus on enhancing social capital through investments in education and the environment need to be a focus going forward.”
Meanwhile, Abela is slated to continue moving the country forward on LGBTQ rights. Malta is a deeply Catholic nation; divorce was only legalised in 2011 and abortion is still outlawed. However, under Muscat’s leadership, Malta became the first European country to ban “conversion therapy”, a psychological treatment which does not work and is often considered deeply traumatic, that is intended to change people’s sexual orientation.
Malta has also changed the language used in legal documents referring to domestic and family relationships to read gender-neutral. In 2016, Malta legalised same-sex marriage. While laws do not necessarily increase social tolerance, they do set the stage for more profound changes going forward and leave Abela immense opportunity to capitalise where Muscat left off.