When European Commission President Jean-Claude Juncker yesterday announced a proposal for a new EU framework for investment screening when non-EU foreign or state-owned companies purchase European energy infrastructure, the hearts of at least several members of the Maltese government must have skipped a beat or two.
That is because some of the present government’s biggest deals in the energy sector of which Juncker speaks involve extra-European Union countries that tend to raise eyebrows wherever they strike deals on foreign soil
Juncker’s proposed investment screening framework would pertain to instances in which a foreign or state-owned company purchases a European harbour, energy infrastructure or a defence technology firm. When this happens, Juncker said yesterday, ‘this should only happen in transparency, with scrutiny and debate’.
He added, ‘It is a political responsibility to know what is going on in our own backyard so that we can protect our collective security if needed.’
While not many details were unveiled yesterday on the new initiative during Juncker’s State of the Union speech, which, by definition, touched upon a wide array of subjects, it does not appear as though any such framework would be retroactive in nature.
That means that, in all likelihood, the two energy sector deals that that the Maltese government brokered with non-EU state-owned entities would not necessarily come in for the kind of scrutiny that Juncker is proposing.
Those two deals – the one-third sale of Enemalta to the Chinese state-owned Shanghai Electric, and the involvement of the Azerbaijani state-owned SOCAR in the new Delimara power station, as well as the government’s contractual commitment to purchase natural gas from that company for 18 years – have been among the most contentious deal struck by the current government.
Those deals, apart from fitting Juncker’s bill, have also been plagued by non-transparency, secrecy, documents that have been redacted because of ‘commercial sensitivities’ and allegations of kickbacks.
The deals were anything but transparent, scrutinised or debated on a local level, let alone on an EU level. Moreover, reports drawn up by the Financial Intelligence Analysis Unit had also alleged kickbacks from the sale of Enemalta as well as from the purchase of the Delimara power station’s LNG tanker.
As an example of the veil of secrecy over the deals, the government is even still refusing, as of last July, to publish the names of those involved in the 2013 Enemalta selection process resulting in Electrogas, of which Azerbaijan’s SOCAR is the lead partner, having been named as the project’s preferred bidder.
Even that information, according to the present energy minister, is too commercially sensitive for public consumption.
The issue at stake also extends to the sphere of influence that can be leveraged by countries such as China and Azerbaijan – both of which have more than dubious human rights records and which are continuously being taken to task at EU level.
But with Malta partnering up with China and Azerbaijan, those countries’ interests could be at least partially represented around the EU table, where unanimity among the EU’s member states is required for such decisions.
In both 2009 and in 2011, under a previous Nationalist administration and well before any such energy sectors investments had been conceived, reports by European Council on Foreign Relations, an influential pan-European think tank, had already placed Malta in a group of 11 EU members states which it labelled as “accommodating mercantilists” when it comes to China. These countries, according to the report, shun political confrontation with China in favour of commercial interests and, through their refusal to bring pressure to bear on China on political issues, have “often kept the EU from developing a more assertive stance on issues like Tibet or human rights”.
In 2011, another ECFR report concluded that China can always depend on some of the European Union’s smaller member states – particularly Malta, Cyprus and Greece – to block any unanimous decision at EU level against its interests. The report also found that China is “taking over Europe” by stealth bond purchases and strategic investments, and by exploiting internal divisions arising from the financial crisis.
But that was then and this is now and Malta’s relationship with China, and Azerbaijan for that matter, has grown by leaps and bounds since. There is always much more than meets the eye when it comes to governments engaging in horse trading, and one should always look these kinds of gift horses in the mouth. And Juncker appears to be on the verge of forcing the EU to do just that – although it may be just a little too late in the case of Malta.