MALTA UPDATE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00287R000101320002-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: June 11, 2010
• Sequence Number: 2
• Publication Date: June 9, 1980
• Content Type: MEMO

Sanitized Copy Approved for Release 2010/06/11: CIA-RDP85T00287R000101320002-5
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP85T00287R000101320002-5
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP85T00287R000101320002-5
MEMORANDUM
Fourteen months after the British withdrawal from Malta, Prime Minister
Dom Mintoff remains very much in control of a country enjoying considerable
economic prosperity and relative political tranquillity. However, the Prime
Minister's failure to make much progress toward arranging with his European
neighbors security guarantees and foreign economic assistance, combined with
large uncertainties about access to oil supplies, leaves these strategically
located islands open to pressures that could threaten their long-term stability
and independence.
Mintoff's firm grip on nearly all aspects of Maltese life has kept the
country on a fairly even keel since the British departure, The Prime Minister
has become something of a folk hero for his role in ridding the country of a
foreign military presence. His forceful and charismatic personality, his widely
acknowledged skill as a political organizer, and his tight grip on the dominant
Labor Party put him at a distinct advantage over his strorgly pro-West but largely
ineffective Nationalist Party opposition, Under his leadership Malta's economy
has remained relatively healthy: unemployment is low, monetary reserves are
rather high, and the inflation rate is respectable.
There are domestic -issues on which Mintoff is vulnerable. Both his
educational and health policies have been widely criticized. His scheme for
purchasing basic commodities in bulk as a budget-cutting device has resulted in
shortages and higher prices, and military morale has dropred to new lows as a
result of Mintoff's recent efforts to reorganize and politicize the armed forces.
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Nationalist Party leader Eddie Fenecn Adami has so far been unable, however, to
sustain any consistent, constituency-building opposition to Mintoff's policies.
Although Nationalist Party discipline is probably stronger today than it has been
for years, the organization still seems unable to compete on an equal footing with
the Labor Party.
Malta's next parliamentary election will probably be held in the fall
of 1981 but in any case must take place no later than February 1982. We see
little reason now to believe that the Nationalists are any likelier to pull
themselves together by then than they have been during almost ten years of
Mintoff's rule to date. Barring a foreign policy debacle or a sudden, severe
economic downturn, Mintoff seems a virtual shoo-in for another term.
With respect to Malta's international position, we--along with many
Maltese--remain uneasy about what we see as the country's overdependence on Libya.
Our unease is only underscored by a suspicion that Mintoff may not have a full
appreciation of the potential for danger.
Malta's dependence on Libya is primarily economic at this point. Malta
has obtained a large proportion of its oil from Libya at concessionary prices for
a number of years. For 1980 Libyan oil is meeting somewhere between 70 and 80
percent of Malta's needs. The bargain prices and regular supply have been a boon
to an economy as heavily reliant as ;Malta's on its oil-dependent tourist sector.
More recently there has been a steady growth in the amount of Libyan financial
aid, to a point where it plays a significant--if in the main indirect--role in the
Maltese budget. Further, Libya and Malta have entered into several jointly owned
and operated para-statal enterprises that employ large numbers of Maltese both in
Malta and Libya. In another sphere, Libya has provided Malta with limited military
assistance,
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It is not inconceivable that tha extent of Maltese-Libyan ties could lead 25X1
Qadhafi to believe that he is in a position to make demands on Malta that would
undercut both Malta's independence and Western interests in the area.
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Almost as worrisome as Qadhafi's disruptive potential are hints that
Mintoff may not have a clear understanding of how tenuous Malta's position is
with respect to its unpredictable Arab neighbor. To be sure, Mintoff has on
occasion expressed concern about his country's dependence on Libya for oil, and
has taken several trips to the Middle East during the past year or so to try to
diversify Malta's sources of supply.
The Prime
Minister, moreover, has given little public indication of concern about the
extent of Libyan influence elsewhere in the life of his country, and if he persists
in his seeming unwariness, we feel tnat the odds favoring a major miscalculation
on his part with respect to his soutnern neighbor will continue to grow.
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Taking a bit of the edge off of our concerns about the Malta-Libya 25X1
nexus are recent signs of life in the long moribund dialogue on security guarantees
and economic aid between Malta and some of its closest European neighbors. The
French, German and Italian governments have offered a technical aid package
designed to upgrade Malta's inadequate water system, and Valletta has initiated
discussions with the Italians on a bilateral security and aid package. But while
we are not prepared to rule out the possibility that these developments could lead
to closer Maltese-European relations, we are not inclined to read too much into them
at this point. The water project has no strings attached, and Mintoff could easily
take -it and run. And Malta's demarche to the Italians may end up having more to
do with domestic politics than with international concerns. With an election on
the horizon, Mintoff will be looking for ways--if only symbolic--to undercut the
Nationalists by giving his foreign policy at least the appearance of being more
balanced.
In the end we are left with the conviction that Mintoff's conduct of
Maltese affairs for the past decade as made the country over into something of
a ticking bomb in terms of Western interests. The British presence provided a
buffer against some of the more unse'tling consequences of Mintoff's foreign
policy decisions, but with the British gone and no European security guarantees to
serve as an anchor, Malta's position with respect to larger international security
matters remains up in the air. The unpredictability of the situation is only
underscored by the mercurial temperments of the two men--Mintoff and Qadhafi--who
are likely to have the most to say about where Malta ends up on the issues before
it, and we are very much inclined to keep Malta on the list of those spots in the
world where Western interests could come Under siege.
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Distribution: Malta Update
Orig. - I(for the DCI)
1 - D/NFAC (7E44)
1 - NFAC Registry (7E47)
1 - NFAC/Action Staff (7E47)
1 - NI0/WE - Zaring (7E48)
1 - Secretary of Production Board (7G31)
1 - OER/Registry (4F21)
1 - NFAC Senior Review Panel (Amb. Wm. Leonhart - 5G00)
1 - NFAC Coordination Staff (2F42)
1 - Presidential Briefing CoordinatorH I(7E23)
1 - PDB Staff (7F30)
2 - D/OPA (6G00)
2 - OPA Production Staff (6G00)
3 - P&PG (7G07)
1 - CD/WE (6G35)
1 - Central Mediterranean Branch
1 - Author
NFAC/0PA/WE/CM/WG~ ~9Jun80)
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP85T00287R000101320002-5