Brexit, Trump are the result of abnormal feelings – Finance Minister Edward Scicluna
Finance Minister Edward Scicluna said today that Brexit and President Donald Trump are the result of abnormal feelings.
He was addressing the 20th European Corporate Governance Conference held at Le Meridien. The Malta Independent was a media partner.
In Malta, “we see these as abnormal expressions of opinion, referendums, etc. They are a result of abnormal feelings of the people. People are fearful and in Europe, the three main fears are terrorism, migration and austerity. These fears drive people to extreme views.”
“They drive people to give up on normal governments. In the UK they went for Brexit, In the USA they went for unconventional views about international trade, taxation and similar policies. In mainland Europe, extreme parties are becoming more popular.”
“The reactions of governments are that we are aware of them, but we are not yet changing our policies to address these fears.”
“We are the smallest, most southern EU member state, very close to North Africa. We cannot avoid the spill-over effects from that region. I am referring to economic migration which is a problem Europeans have to deal with. I am not referring to refugees fleeing from war, but to a permanent imbalance of wealth and income between north and south. As long as these differences remain wide, you can expect the push-pull effect of economic migration to continue.”
“You pre-empt this by addressing the need to boost private investment on a larger scale to Africa, and on a lesser scale to North Africa. There are three important banks – the EIB, EBRD and the World Bank – and we want them to better cooperate and have a solid programme there as they had for central and eastern European countries.”
Turning to the Euro, he said that it is not the perfect common currency and that the current environment is not ideal from an economic point of view. “But politically, the eurozone countries want the euro to stay. We are aware that unless the eurozone is strengthened, we will continue to having crises from time to time.”
He spoke of banking regulations which were introduced in reaction to the financial crisis. He said that the effect of so many regulations introduced into the cocktail of regulations is that banks are not helping investment. “Some small countries like Malta are losing correspondent banking services. Our banks refuse to open accounts and close accounts whenever there is a whiff of being seen by regulators as a risk. We are pushing past account holders into the black economy which is where we don’t want them. It is ironic that we are concerned with anti-money laundering while we push people into the street and close accounts.”
Turning to tax-competitive countries, the minister asked why big countries don’t lower their rates of taxation instead of pressuring smaller countries.
He mentioned that some newspapers try to paint some countries as tax havens. Tax havens have three characteristics – lack of transparency, money laundering activity and low taxation.
“We are very strong on transparency, but Malta is against publishing a list of companies with the names of the ultimate beneficial owners in the media. We believe these should be available to the relevant authorities, like the FIAU and there should be a common database. We are not there to splurge on the papers, however, which hurts companies as far as competition is concerned.”
The minister mentioned that Moneyval will be coming to Malta later this year for its routine visit.