Thursday, October 8, 2015

The Demise of Schengen

One consequence of the mass immigration of refugees that Europe is experiencing is the demise of the Schengen treaty. The Schengen treaty is one of the most effective instruments in realising the concept of the Single Market. It is important as it puts into practice one of the basic principles on which the Single Market is based – the free movement of people and products. It is because of Schengen that we do not need passports as long as we travel inside the Schengen Area. Moreover, transportation of goods is also without hassle.

The first is advantageous to people as they would not need to experience the long queues to have their passport checked. This is particularly an advantage when one is travelling for a holiday as such delays are very irritating and tend to be viewed negatively as it is another administrative hurdle to your holiday. For businesses it is also advantageous as cross border trade is usually much simpler, thus less costly both in terms of money and also in terms of time. Time is particularly important as good planning would enable a just-in-time system to be put in place saving large storage expenses of goods.

The present crisis that Europe is facing re immigration is nowadays many a time also attributed to the Schengen treaty by countries that are facing large inflows of immigrants through their country. But is this a fair assessment?

I believe that the crisis is not due to Schengen but to the lack of preparation on the part of the EU to face large inflows of immigrants. One need not have a long memory to remember that as long as these immigrants were only affecting a small number of countries – the countries of the Mediterranean – the other countries were not much interested in this issue as they used to view it as a sub regional problem.

Once it hit the Central European countries, suddenly the same problem became a European one. For example, the Hungarians are blaming Schengen as the problem whereas the free movement provided by Schengen provided the means for the inflow to be spread easily. One only needs to imagine if the same shameful attitude that the Hungarians are taking were to be adopted. The whole downpour of immigrants would have not only hit Greece but Greece would have had to deal with the whole problem by itself.

Personally, I find the attitude of the ex-communist bloc countries to this problem disgraceful. Hungary, for example, should know better as one only has to remember the 50s when thousands flew to Austria to escape the Soviet tanks. Would they have been happy and understanding if during that time Austria took the same attitude and built up a wall to prevent the Hungarians from entering Austria? The same applies to Poland and the other Baltic region states. These, apart from the UK, are the countries who are opposing fervently the allocation of these migrants through a quota system.

One point that is also being missed out in the discussion of this problem is the involvement of the Arab states. One question that needs to be asked is why these immigrants are not seeking asylum in the Arab countries? But this question leads to others which for many are more vexatious to answer especially since these are considered as pro Western. The answer is simply that these Arab states are more radical in their attitude and endeavour to implement the Sharia in their country similar to what ISIS is doing.

The problem that Europe is facing today is not the Schengen treaty but the lack of preparedness of the European Union, extreme nationalism (See Facebook), the abandonment of the peace process (see inews), continuous supply of arms and the abandonment of the peace process in the Middle East.

Tuesday, September 1, 2015

Pharmacies and competition

Will we ever see a Single Market in this sector and thus more competition in Europe? Basically, I do not think that this would happen soon as the Pharmacies’ lobby is very strong both in the EU and in most EU countries. Just as the Single Market has not been achieved in other areas, it is still a very long way off in this sector. On the other hand, are consumers to simply accept this as a fact and accept the status quo as their destiny?

Again, I do not think so. The reason is that there are other forces at work which cannot be stopped. Globalisation of trade and the permeability of this phenomenon down to the single individual consumer through online shopping are forces which no single national lobby, even one as strong as the Pharmacies' (inews blog ), would be able to stand against for a long time.

The writing has been on the wall for a long time, even in Malta. I still remember when the GRTU tried to stop consumers from buying books at a cheap price from visiting vessels. Its lobby against change also extended to online shopping but it knows that this position will not stand the test of time and they will have to change their position just as they did on Sunday shopping. Presently, the number of online shopping of medicines is small but it is increasing as it deals, even in an indirect way, to the problems consumers are facing in this sector (Facebook).

Taking the average consumer, I believe there is still quite a lot of hesitation to buy medicines and other health care products online. The reason for this reluctance is that this area concerns their health. Consumers are still cautious though people feel the need for a wider choice and lower prices of medicines.

The prices of medicines for a time was a hot issue especially since Maltese were realizing that the prices that they had to pay in Malta were high. A regulatory process was introduced to control prices. The process introduced, surveys medicines’ prices and where it is found that these are disproportionately high, through this mechanism, prices are reduced. This mechanism started during the last legislature and is still operational. It is operated by the MCCAA. Though this mechanism has been successful in reducing medicines’ prices, it is bureaucratic by its very nature and only aims at pressuring prices towards the average European price.

Online shopping is the answer and several European markets are opening up. Just as Uber has caused an earthquake in the taxi sector of most European markets, two firms have shaken the two most conservative countries in this area – Germany and France. Doc Morris had shaken the German market some years ago while 1001Pharmacies has started shaking the French pharmacies sector. Their business model is similar to and the transfer of this business model to the pharmacies’ sector looks very promising both to consumers and the business sector.

As I already indicated the most important factor holding back development in this sector has been consumers’ reluctance into diving into this sector. The reason is that the shadow of online pharmacies’ unsavoury beginnings still hangs over the business due to the chance of consumers receiving counterfeits which at one extreme can be ineffective while on the other, could be fatal.

However, there is hope on the way. Many countries are rising to this challenge and are providing websites where consumers can check the reliability of the supplier. Most are making it mandatory that websites providing online shopping for pharmaceuticals should also have their registration showing so as consumers can be sure that those supplying the medicines are reliable.

On the European level, things are also moving in this direction. As from this July, online pharmacies in the EU should have a special logo. Unfortunately though mandatory it is still missing from most online pharmacies websites. The logo will have the national banner and once clicked on it will direct you to the national website where one can check whether the site is registered and thus reaches mandatory standards. For Maltese online pharmacies there are two such logos – one in Maltese and the other in English since the two languages are both Malta’s official languages.

Thus the way is open to offer such a service by local pharmacies. Till present there are no local pharmacies. Will the local business sector rise to the occasion or shall Maltese consumers continue to rely on overseas online pharmacies as we do rely in most other sectors?

Tuesday, August 4, 2015

The United States and Russia are still at it. The cold war may have ended with the end of the Soviet Union and the emergence of Russia. However, certain factors are still important and both countries have the will and the power to safeguard their interests.

The Greek Saga re Bailout (inewsmalta) presented an opportunity not only for Germany (Facebook ) but also for Russia to get a better balance of the situation in the Balkans. One of the main concerns of Russia is its defence. Russia has got the longest border with other countries and its defensive strategy which was evolved in 1945 collapsed with the foundering of the Soviet Union. The policy was to have buffer states throughout this border and thus ensure a certain amount of security at the expense of others.

However, with the internal turmoil which it experienced with the collapse of the Soviet Union, Russia could not ensure its strategic defence policy. It was only with the emergence of Putin that Russia attained a certain internal stability and thus could give the importance that was due to defence. Russia, up to a certain extent, could tolerate that the Baltic States would change their role from Russia’s buffer states to the Western European Powers’ buffer states against Russia. But it could not tolerate that it would lose its only secure port for its Mediterranean Navy. Russia made that point clear with the annexation of Crimea from Ukraine. Russia gave a warning signal that it was not going to tolerate any other strategic changes some years ago when Georgia created troubles on Russia’s border.

Greece offered an opportunity to Russia. Greece was the only country in the Balkan states where Russian influence was at a minimum. The visit of Tsipras to Russia when Greece was still hoping of a better deal with its creditors provided that opportunity. Both Tsipras and Putin were very careful to indicate that a Russian bailout to Greece was not on the table indicating that it was.

The United States countered this move by officially insisting that there will be no Grexit. Officially the USA took the position that this was a European internal affair. But pressure was exerted especially on Merkel to find a solution. So much so that the German Finance Minister is quoted to have said that Europe was ready to exchange with the USA the Greek problem with the Costa Rica problem. In fact the way the USA handled the Costa Rica bailout problem contrasted very much with how the EU tackled Greece. Very few know that the USA had a similar problem with Costa Rica whereas very few if any, have not heard of the Greek bailout and Grexit.

The USA has a vital interest in the EU as the EU is acting as a proxy for the USA’s interests. With the EU there is no need of USA military presence in Europe – note the great reduction of US military basis in Europe. As already noted above, the USA through the EU already succeeded in turning the Baltic States and Poland as a buffer zone for the Western powers. One has to note how the EU membership card was played in Ukraine in an attempt to turn Ukraine into a buffer zone for the West while denying Russia of a strategic naval port. The geopolitical interests in this area are great and I am convinced that the cards are already on the table to have the EU accept, in spite of all problems, Turkey – an essential chip in the geopolitical USA-Russia chess game.

Friday, July 24, 2015


The Danish village (see facebook and Zvilupp Sostenibbli)   In the late 70’s the unions were at their heyday in most countries.  They were the main force behind social change and they wanted to establish the welfare state as a permanent structure and were forming the idea that the man is holistic and one cannot see the worker as extraneous to the same worker when s/he is part of the family.  This concept was underpinning the concept of a sustainable workforce.  They were a strong social force that could oust a government.  This occurred in many countries. 
In the UK, after the winter of discontent they ousted the Labour government.  Little did they realize that their apex of power was also their ‘eve of their destruction’.  With the advent of Margaret Thatcher the Right in many countries took control and the first thing they did was to curb the powers of trade unions and castrate them. 

But Rightists governments were not the only force.  There were other forces at work.  The main one was that the world had changed under their feet without them realising it. 
There were two main forces at work.  The first was globalisation which at that time, due to technological advancement, created one global labour market.  A national union can fight successfully in a closed national labour market but could never have any effect on a globalised labour market unless ‘the workers of the world unite’.

The second factor was labour itself.  Education changed labour itself.  Whereas before, workers could only identify themselves through groups, with their higher educational status could identify themselves on their own.  They believed that they could make it on their own without the help of others and thus solidarity dwindled.  This was the case of certain occupations especially highly technical and professional.  Little did they realise that globalisation affects all.  Whereas in previous times, these workers could use their political power to corner a market and thus ensure high wages and superb conditions of work, the opening to globalisation increased supply.

This reminds me of Niemöller, a German pastor who after being imprisoned for eight years in concentration camps, he penned these infamous words:

First they came for the Socialists,
and I did not speak out –
because I was not a Socialist.

Then they came for the Trade Unionist,
and I did not speak out –
because I was not a Trade Unionist.

Then they came for the Jews,
and I did not speak out –
because I was not a Jew.

And then they came for me –
and there was no one left to speak for me.”

It is still too early for people to realize the great limitations of individualism.  Hopefully, the times of solidarity among people will again be considered as a vital social value.

Wednesday, October 8, 2014

Shop Opening Hours – public consultation

Recently the Government issued a public consultation document on the Shop Opening Hours proposing a reform.  I have already dealt with some issues in my blog (BBBinews blog) particularly regarding the proposed opening hours. However, there are other aspects that caught my attention.

Though the suggestions take only one page, the document’s structure facilitates analysis as it has got a background of the current legislation, the exemptions, the shortcomings of the current legislation and annexes, the most interesting of which is the list pointing to 25 different licenses.

Going through the document one is amazed by the hoch poch approach this issue was tackled over the years and the bureaucracy it created. 
The main principle behind all the legislation was that of restricting the shop opening hours.  This shows that this legislation took only in consideration the business interests.  The idea behind the restriction of shop hours was to restrict business to those hours which most suited certain business and restrict competition.  The main principle was that if it does not suit me to work on a particular hour, nobody should.  It should be remembered that most of this legislation developed before the 1990’s when parallel importation was restricted and thus up to a certain extent each product had a monopolistic market. 

I like to emphasise that the interests of the employees in this sector were not considered as otherwise this would have dictated the number of hours that employees should have.  As I had pointed out in my inewsmalta article, the opening hours of a business entity does not influence the conditions of work.  The fact that a factory operates on a 24/7 basis does not mean that the workers operate on the same basis.  The employees of such an entity work on a shift basis where the work/rest balance is respected.

Neither were the interests of consumers the basis of this legislation as otherwise the principle would have been the minimum closing time and not the maximum opening hours permitted.  The consumer is concerned when shops are closed and not when they are open.  One example is pharmacies.  Consumers are concerned that most pharmacies do not open on Sunday.  The present system is one where not all localities have a pharmacy open on Sunday and even those which open on this day do not open all day as if there aren’t consumers who need to buy medicines during hours where pharmacies are closed.  The interest of consumers is to have the maximum number of hours of pharmacy service. 

Bureaucracy or red tape
The document gives an overview of the present regulation and points at the differentiation that the legislation makes regarding shop opening hours.  There seems to be two main parameters which form the basis of this differentiation – locality and the items predominantly sold.  Through these two factors it lists not less than 14 differentiations which permit shops to have their opening hours from total closure to 24hrs service on Sundays and Public holidays. 

This legislation does not recognize the convergence that had occurred throughout time regarding the ware that shops sell and the localities.  If we take the first factor, one notices that all shop owners today realize that specialisation in what they sell can be detrimental to their turnover because of the restricted market size that Malta can provide.  Thus the way forward for most is to try to create a one stop shop for most.  This can be seen in the case of pharmacies where nowadays all pharmacies have only a part of the pharmacy which specialises in medicine.  The rest is dedicated to cosmetics, perfumes and you name it.  Once this is recognized, then all shops should be treated the same. 

The same goes with locality.  Previously one could identify the main shopping centres around the Island.  However, today, retail outlets have mushroomed everywhere with the spread of the population to previously mainly agricultural land in either new localities or newly built outskirts of existing localities.  Thus whereas previously it may have made sense to differentiate between localities, nowadays such differentiation brings only confusion and bureaucracy. 

As I had already pointed out, one is amazed by the maze of legislation in this sector.  One understands that this set of legislation really is a disincentive to the setting up of new retail outlets.  Simplification through less bureaucracy is not only essential but possible.

This document for many does not have any meaning as they know that reality has already decided what the shop opening hours are.  They depend on the market of the particular sector and locality and no legislation will be able to arrest this development. 

There are two reasons for this.  First, this new reality serves the interests of both business and consumers and thus both together constitute a very strong force.  The second reason is enforcement or the lack of it.  One characteristic of our administration is the lack of enforcement.  All authorities prefer a softer and less troublesome approach of ‘education’.  This approach not only leads to a more peaceful life to our public officers but gives also more publicity.  Another benefit is that there are no quantifiable results that are expected especially in the short run.  Thus there is no accountability or transparency.

The problem with enforcement is that it tries to change the behaviour of people.  Many studies today show that enforcement is a very difficult process and many a time it is bound to fail.  However, it does not mean that we should not enforce legislation.  The reasons for this are explained above.

What this reality leads us to is that legislation should be designed so as to be simple and also use behavioural forces of those concerned to lead to more conformity with what is being sought to be achieved.  In fact that is why many governments nowadays use behavioural experts to help design legislation which is more effective and less burdensome both on the actors and on the administration.  This is because this type of legislation is more in line with people’s behaviour and thus needs less enforcement.

One possible way out, especially when a piece of legislation has been amended several times over time is to go back to the basics and ask the question of what is trying to be achieved for the benefit of society. In this respect we need to know what such legislation is intended to achieve.  The document points to this as it argues that if all regulation were to be removed, ‘there will be those who abuse, to the detriment, mainly, of the employees and those living in the proximity of the shops’.

Thus the legislation is intended to control these abuses.  But will it do so?  Will this aim be achieved through controlling shop opening hours?  I seriously doubt it.  If controlling opening hours will do it, then at present there are no abuses in these areas.  Everybody knows there is because there is no enforcement and it is impossible to ensure conformity on all retail outlets. 

As I wrote, conditions of work will only be achieved once the workers are organised while protecting those in proximity of shops can be achieved through controlling the hours of distributions as they presently are in Valletta. 

Licenses had a purpose in the old days.  One could not open a shop without a license and one would not obtain a license unless his shop is in conformity with all the legislation.  Thus it was justified that the government would cover some of the costs involved.  It was a long process and one open to abuse especially in restricting new entrants in the market.  With the changes that occurred once Malta joined the EU, it became the responsibility of the owner to ensure conformity with the legislation.  Thus at present, the license serves nothing but as a source of government revenue. 

If one considers the above, then one finds no justification in restricting shop opening hours.

Wednesday, May 7, 2014

Election Holiday

The European Parliament’s election is just round the corner.  Votes are already being distributed while arrangements are being made for Maltese living abroad to come to vote in Malta.

The later arrangement makes me sick as this is nothing but giving a cheap holiday in Malta to those Maltese who are living abroad.  The problem is that indirectly it is you and me who are subsidizing this holiday.  I do not know who is paying for this subsidy, whether it is the government of Malta or Air Malta.  For me it is just the same as the Government of Malta pays out of the taxation I pay while if it is Air Malta, I will be paying this subsidy through higher prices Air Malta charges.

But does this mean that we should deny those Maltese living abroad the right to vote?  Definitely not.  A simple arrangement would be to provide voting facilities to these Maltese in the Malta Embassies.  If the political parties feel that they should monitor the voting in these locations there would be nothing to stop the political parties to have representatives as long as they pay for their stay. 

In this way, the rights of all – local taxpayers, Maltese living abroad and the political parties – would have their right secured.

Thursday, April 24, 2014

Business Hours

The discussion regarding business hours for retail outlets have been going on for years.  I do not think that there is anything new to be told.  So, why raise the issue?

Really the issue has been raised by a statement by the GRTU, during a visit by the Minister responsible for the Economy, Investment and Small Businesses, that most of the retail owners believe that business hours should be regulated by them directly.  

This statement shows the time lag that it takes small businesses to realize that change is needed and that the business environment has radically changed.  The GRTU is to be remembered of its campaign against liberal shopping hours when Bay Street shopping centre opened at St Julians.  At that time the owners of this shopping centre started opening also on Sunday.  The GRTU brought about all sorts of arguments including the argument that it goes against the Catholic religion to work on Sunday etc. etc.  Then the situation was diffused especially when Bay Street started collecting signatures to push for a referendum on shopping hours by granting exception to Bay Street.  

The government then started to turn a blind eye on those who contravened the existing regulations by opening whenever they thought to do so. 
One may ask why the government sought to appease the GRTU.  The reason is the affinity that exists between the business sector and the political class in Malta.  Though political parties depend on ‘donations’ of big business, the election candidates depend on small business especially through ‘donations’ in kind.  Though there have been quite a lot of rhetoric regarding the need for new legislation on political parties funding, we are still waiting to see the Bill come to light.   I sincerely hope that it would be a breakthrough.