Issue link: https://maltatoday.uberflip.com/i/1386209
OPINION 12 maltatoday | WEDNESDAY • 23 JUNE 2021 IS it possible to be optimistic and pes- simistic at the same time? And, what's more, about the outcome of a single de- cision…? Up until yesterday, I would have re- plied: no, of course not. Those words are antonyms: logically, one sentiment should preclude the other… Today, however, I'm not so sure. But before explaining (sorry, 'mansplaining') why… here are a few small disclaimers. As you've probably already worked out for yourselves: I'm not exactly an econo- mist… still less, an expert in banking, fi- nancial services, manufacturing, tourism, the property market, and all the rest. So if I go on to describe the possible FATF 'greylisting' of Malta – a decision to be announced today - in terms that are truly (and frighteningly) Apocalyptic, for all those sectors (and more)… it is not on the basis of any personal, in-depth as- sessment of the situation on the ground. Nor, for that matter, am I much of a be- liever in 'Doomsday Prophecies' to begin with. So I don't even necessarily share the intrinsic pessimism of everything I am about to write (even if just out of re- spect for the classic Jurassic Park maxim, 'Life always finds a way'…) All the same, however: my job (such that it is) does put me into contact with a wide variety of people who are far better placed than myself to make that sort of assessment… and (perhaps because their own livelihoods are invested in the de- cision) they tend to be a good deal less susceptible to the 'feel-good' factor of a typical Spielberg movie. And when I turned to my usual list of 'go-to' contacts, for their own opinion of how grey-listing would actually im- pact this country, and all that lives and breathes upon it… …ooh, let's just say their doomsday prophecies would make even Michael Bay's 'Armageddon' look like a single hailstone in a minor drizzle…. To give a couple of examples: one per- son I spoke to – involved in the financial services sector – candidly informed me that his company was already consider- ing its relocation options, even now: i.e., before the decision has even been taken. And because that sector (and, even more so, I-gaming) depends almost ex- clusively on the ability to 'shop around' different jurisdictions, FAST… he pre- dicted that the near-total withdrawal of all foreign companies, involved in both those sectors, would be accomplished "in a matter of months, if not weeks". As for the rest of the consequences, you don't even need to be an economist to work some of them out. In the space of a few months, thousands of (previously highly-paid) employees would suddenly be out of a job… and thus unable to pay their monthly rent. Property rental prices would… um… have to 'readjust accordingly' (because apparently, there's a law against 'pub- licly predicting a property market crash in Malta')… and as more companies pull out of Malta, and the demand for local residence grows less and less… it follows that the same 'readjustment' will happen to property prices across the board. Considering how much has actually been invested in property here, over the years – not just by the big development companies, but by pretty much every- body on the property ladder (including your grandparents) – that's a substantial chunk of Malta's entire life-savings, de- valued at the simple stroke of a pen… Even that, I am told, would just be the start. Apart from losing most, if not all, of the foreign direct investment we have succeeded in attracting over the years – and with it, of course, the ability to ever repeat that economic miracle again – be- ing grey-listed would also change the way business is conducted in Malta, across the full spectrum of economic activity. Never mind I-gaming companies and foreign banks: starting up any business at all will, from one day to the next, sud- denly become just that much more cum- bersome and difficult than it was before. Opening bank accounts, conducting everyday financial transactions… im- porting, exporting…. in a nutshell, any- thing that is remotely involved in 'doing business', of any kind, in Malta… … it would be only a matter of time before even local companies start real- ising thatL oh, it would be so much less of a hassle to just 'pack up and leave' (so much so, that my nameless informant even quoted that infamous Sun head- line: "will the last person to leave [Malta] please turn out the lights?") In any case, I could go on: another ac- quaintance, this time employed within the tourism sector, painted an equally bleak picture of that industry's prospects (even if just because 'paying by card' – or 'making reservations online', etc. – will all become slightly harder, too…) But I think the general point has been made. Today we will know which way the axe has fallen; right now, however, our country's neck is still lying helpless- ly on the block… anxiously awaiting a last-minute reprieve, even as the heads- man readies himself for the fatal blow… …ah, but that brings me directly back to the question I asked earlier. We all know that 'being grey-listed by the FATF' would be catastrophic for Malta (though whether we realise the full implications or not, is another question)… and we all equally know that it is a decision that ultimately rests with others: over whom we have (let's face it) very little influence, and absolutely no control whatsoever… But… how likely is it to happen in prac- tice? This is where things get a little… trick- ier. Once again, all my 'usual suspects' returned pretty much the same answer: all differently-worded variations of, 'It depends'. To put it as succinctly as possible: all of them were firmly convinced that – if the decision itself were really taken on the basis of Malta's compliance with inter- national money-laundering regulations – we should have no difficult avoiding the above-mentioned Apocalypse at all. For all the reasons already pointed out by the Moneyval report – which was ulti- mately making the same evaluation, albe- it at a different international level – Mal- ta's actual state of compliance, in terms of nuts and bolts, isn't even all that bad, really. Certainly, we are far more compli- ant today (and I stress, 'today') than other countries already on the grey-list…. and in some areas, we even out-comply a few of the countries that now have a say in the final decision itself. And yes: admittedly, most of this 'com- pliance' was only achieved in just the last few months, of all the time we've been under intense pressure to pass this flip- ping test, once and for all… …but – always assuming that the pur- pose of the test is, in fact, to gauge the actual state of compliance, as it stands to- day – that, in itself, does not add up to a reason for 'failing' Malta at FATF level… when Moneyval so recently 'passed' us on more or less exactly the same criteria. Likewise, there can be no valid justifi- cation to add Malta to that grey-list, that doesn't also apply to at least one of the two countries reportedly pushing for that decision: Germany, and the Unit- ed States (both of which – Germany in particular – happens to have compliance issues of its own). So on that level, at least, the experts all seem to agree. It is, quite frankly, a no-brainer: all things considered, today we should be receiving the news that Malta passed its test with ease (if not ex- actly 'with flying colours')… and that Ar- mageddon has been at least postponed, for now. And yet… not one of the people I spoke expressed any real 'optimism' that this is what will actually happen. And one of them put the reason for his pessimism quite bluntly, too: "If this turns out to be a political game, whereby the bigger coun- tries get together to wipe out their com- petition, or 'punish' smaller countries for being more successful than them… we're f*cked, basically…" So I guess that… yes, you can be both optimistic and pessimistic at the same time. You can always live in the hope that international institutions like the FATF (perhaps simply because they are 'inter- national' institutions) really do always take their decisions for purely unbiased, disinterested reasons… … and you can also instinctively under- stand that the world we live in is not, ulti- mately, governed by such naïve, idealistic expectations; and that… well… maybe life doesn't always 'find a way', in the end… 'If grey-listing is a political game… we're f*cked' Raphael Vassallo Right now, our country's neck is still lying helplessly on the block… anxiously awaiting a last-minute reprieve, even as the headsman readies himself for the fatal blow