At the very heart of the Mediterranean, the small, newly independent country of Malta is making a gallant effort to transform its economy from that of a great naval base and fortress into an economy based on something radically different — a mixture of holiday resort, place of retirement, and center for light industry. This metamorphosis is the price Malta has to pay for the age of nuclear weapons and the diminished military power of Britain. Long sustained by the British Armed Forces, and the Royal Navy in particular, the Maltese are now compelled to rely more and more on their own resources and their own enterprise.

The Royal Navy has had tics with Malta for nearly three hundred years — since Admiral Sir John Narbrough commanded a Mediterranean squadron to deal with the Barbary pirates. Now the Royal Navy has all but vanished from the Grand Harbor. The senior naval officer watching the interests of the North Atlantic Treaty Alliance from Malta is no longer a British but an Italian admiral. And when warships visit the island, more often than not they are ships of the United States Sixth Fleet, whose crews come ashore to spend their dollars on Maltese lace for Moms at home, the local beer, and whatever else sailors spend their money on. Such visits are not strictly necessary, for in these days a navy is most efficient when it stays at sea, but the Americans want to help the local economy, while reminding the Maltese that the U.S. Navy is policing a Mediterranean in which Russian warships are increasingly prominent.

British exodus

The falling off of the British military presence in Malta was foreshadowed in 1957. Withdrawal began in 1961 and will be completed in 1972. A few figures show the size of the problem facing the island. Before withdrawal began, the number of Maltese civilians employed by the British services was nearly 19,000 and service expenditure was running at £20 million ($48 million) a year. Toward the end of 1967, only 7500 Maltese civilians were working for the services, and service expenditure was at the rate of £12,500,000 ($30 million) a year. After the British exodus, according to present plans, there will be fewer than 3000 service jobs for Maltese civilians, and service expenditure will have dropped to £6 million ($14,400,000) a year. Already many Maltese have found work outside the service establishments, in the new tourist and manufacturing industries, and others have emigrated. But if the island is to absorb the withdrawal and lower the rates of unemployment and emigration to healthy levels, 15,000 new jobs must be found within the next three or four years.

By American or British standards the figure of 15,000 new jobs is puny. But Malta is a tiny country

with a total population of only 318,000, and unemployment is chronic. There has always been a necessary flow of young Maltese to Australia, Canada, Britain, and the United States; and the emigration continues, to the sadness of many Maltese girls who are destined to remain unmarried simply because there are not enough young men to go around.

In Britain there is probably more goodwill for Malta than for any other country in the Commonwealth. This is partly because of the dogged behavior of the Maltese during the Second World War, when, bombed and starving, they stood firm amid their ruined homes. Their new national flag of red and white incorporates the George Cross, awarded to the island fortress by King George VI in 1942 “to bear witness to a heroism and a devotion to duty that will long be famous in history.” There is scarcely a British family that has not had a member serving in Malta at one time or another. Indeed, some British servicemen, enchanted with the island, have stayed on in Malta, or returned to live in retirement. In the local telephone book English names are interspersed with the Borges, Grechs, and Micallefs. For the Royal Navy in particular, Malta is the adored partner in an enduring love affair, and British officers and men who served in Malta when the White Ensign had no competitor are hurt and bewildered by the change.

There was a characteristic display of British affection for Malta early in 1967, when Harold Wilson’s Labor government, to the dismay of the Maltese and the fury of British Conservatives, announced an unexpected acceleration of the services’ planned withdrawal from the island. British residents in Malta, headed by a woman leading a dog, staged a march of protest through the capital, Valletta. Alongside retired warriors in tweed jackets and club ties, young service wives pushed prams or clutched at toddlers. The Maltese thronging the sidewalks pelted the demonstrators with flowers; some shed tears of gratitude. The governor-general, Sir Maurice Dorman, an Englishman, announced that he stood foursquare with Malta. (This utterance, by the way, underlined the almost theological complexity of the Commonwealth: the personal representative of Queen Elizabeth II, Queen of Malta, was hurling defiance at Her Majesty’s Government in London, which owes allegiance to the same lady, except that there she is the Queen of Great Britain and Northern Ireland. The governor-general, it seems, was acting with impeccable constitutional propriety.)

Maltese malcontent

While the British in Malta were making their feelings known, the Maltese Parliament and trade unions were not idle. In Parliament a bill was introduced to make the presence of the British Armed Forces illegal unless the British government agreed to delay their departure. The Maltese argued that, if withdrawal were to be accelerated, then all British servicemen might as well go forthwith; it was a matter of national pride. Meanwhile Maltese workers in the service establishments, under orders from the General Workers’ Union, contrived with the utmost courtesy to render the British Forces totally impotent by withholding labor and refusing to unload essential supplies.

All of this was too much for Whitehall, which capitulated with the promise of an eighteen-month breathing space. At the same time, the British government suggested the setting up of a joint AngloMaltese mission to spell out the economic problems facing Malta as a result of the British decision to cut defense expenditure. Under the leadership of Lord Robens, chairman of Britain’s National Coal Board, the mission got to work with commendable speed and made a number of workmanlike proposals for attracting investment to both the manufacturing and the tourist industries. These proposals included the building of an ambitious new industrial estate and a floating dock for the Malta Drydocks, which, with the dearth of naval work, is concentrating on the repair of tankers and other commercial vessels.

The mission also emphasized the urgent need for more electric power and more water for factories and hotels; and it insisted that if all its proposals were put into immediate effect by a vigorous steering committee, the goal of 15,000 new jobs could be reached. Three months later, Lord Robens was chosen to head the steering committee.

Ambitions

When the first warning of the military withdrawal came, the diversification of the economy began. But it did not go ahead with dizzying speed. Perhaps most Maltese found it hard to believe that their island, coveted for so long, had lost some of its strategic importance with the advent of Intercontinental Ballistic Missiles and nuclear submarines. In any case, dizzying speed is uncomfortable for a Mediterranean people whose government officials quit work for the day at lunchtime during the hot summer months. In spite of a complicated question of legal ownership and the dislocation of shipping in the Mediterranean after the Arab-Israeli war, the management of the Malta Drydocks scraped together enough business to keep their labor force intact. But this success encouraged elements of the General Workers’ Union to make demands that drove customers from the dockyard in the first weeks of 1968. All the same, there has been some notable progress. New small industries are well under way. They range from car-assembly plants to a factory processing synthetic fibers. Their output includes furniture, office equipment, clothing, electrical goods, and fiberglass boats.

Even though all raw materials must be imported, the island’s manufacturers are finding small but lucrative overseas markets, especially in North Africa and the Middle East. But they are looking to the Continent also; and the government is convinced that Malta must join the major economic group in Europe, the European Common Market, with its 200 million customers.

Two ambitious projects are under consideration. One is the building of a large new yacht center to hold 1200 boats and to augment the existing marina, which is already attracting yachtsmen from as far away as California. The other is the establishment of a free-trade zone, fully equipped to handle bulkcarrier and container-ship traffic, and with a hinterland for industries with air-traffic facilities. This zone would be a nonresidential area, essentially separate from Malta.

Stimulus

All of these undertakings, actual or prospective, have had the stimulus of the Maltese government’s aids-to-industries program, which in turn has been made possible by British financial help. Linked to the ten-year defense agreement entered into by Britain and Malta at the time of Malta’s independence is a financial agreement under which Britain is providing Malta with grants and loans amounting to £51 million (about $122 million). By drawing on this money, the government of Malta is able to offer hoteliers, industrialists, and others a tempting range of concessions — capital grants, large loans, exemption from customs duty, and the waiving of income tax for ten years. For manufacturers there is also the offer of factories ready-built.

It is on tourism, however — the enticing of the sun-starved troglodytes from Britain and other parts of Northern Europe — that the Maltese are making their most spectacular effort. Everywhere there are new government-aided hotels (including a Hilton and a Sheraton), new restaurants, new nightclubs, new discotheques.

Perhaps nowhere else on earth is so much history and prehistory visible in so small a compass. Malta, only seventeen miles long, and at its widest, nine miles across, is the principal island of a tiny archipelago, of which the other, even smaller, islands arc Gozo and Comino.

Land bridge

The archipelago is the remnant of a land bridge that linked Europe and Africa when the Mediterranean was a freshwater lake; and in Ghar Dalam, the Cave of Darkness, there are fossil remains of hippopotamuses and elephants, which became trapped as they tried to move to the African warmth from a Europe threatened by the Ice Age. Majestic stone temples record a megalithic civilization that flourished between 3000 and 2000 B.C. From Homeric times Malta has been “the navel of the Inland Sea,” and its capacious harbors have always attracted seafarers and adventurers. After the Phoenicians came the Carthaginians; then the Romans, Arabs, Normans, Angevins, Aragonese, and Castilians. For two and a half centuries, from 1530 on, the aristocratic and chivalrous Order of St. John of Jerusalem, better known as the Knights of Malta, were the sovereign rulers of the island. When Napoleon Bonaparte landed in 1798, the Order, now become flabby, capitulated and fled.

All who have paraded through the Malta story have left their traces in artifacts, temples, tombs, Roman baths, paintings, tapestries, fortifications. The British contribution has not been untypical: an Anglican cathedral in rather self-conscious juxtaposition to the more than three hundred Roman Catholic churches; vistas of barracks, wardrooms, and airfields; and a proliferation of bars and eating places from whose sausages-and-mash the new touristconscious Malta is struggling to release itself.

Immutable

It would be misleading to suggest that the Maltese are Englishmen with a Mediterranean veneer. They have an immutable national identity that has kept them separate and distinct over all the centuries of diverse occupation. They are one of

the few peoples in the world who do not really mind if foreign residents make no attempt to learn the native language. The Maltese language, Punic in origin, became fused with Arabic during the Arab occupation and has since acquired garnishings of Sicilian, French, Italian, and English. This language, the refuge and privacy of the Maltese, is a powerful factor in holding them together. It is the secret weapon with which they have always scored off the foreigner, whenever their interests have required it. They are bargainers and businessmen of epic shrewdness.

The Maltese, under a succession of foreign overlords, have always had to live by their wits; and it is understandable that they have never allowed themselves to become indissolubly attached to the master of the moment. There was a time in the fifties when the Malta Labor Party, then in office, put signs outside every Labor Party club saying “Englishman, pay up or go home!” Earlier, this party had pul forward a plan to make Malta a part of metropolitan Britain, with three Maltese members in the House of Commons. Today the party feels that Malta’s best interests could best be served if the island were something like a Mediterranean Switzerland aloof from commitments to any of the big powers but ready to receive help from all. The party now in office, the Nationalist Party, never favored the idea of integration with Britain. It strongly supports the Western alliance, but not all of its members would put Britain at the head of a list of nations drawn up in order of popularity; for the Nationalist Party includes a strong element emotionally inclined toward Italy, in preference to Britain.

Robert Stimson

REPORT CONTRIBUTORS

Elizabeth B. Drew writes regularly from Washington for the ATLANTIC. Stephen Shepard is a London correspondent for the McGraw-Hill World News service; he previously covered SST developments for BUSINESS WEEK. Arthur C. Miller is a freelance journalist based in Hong Kong. Robert Stimson, a former BBC and Associated Press correspondent, manages Malta’s television station.