MALTA'S RESHUFFLED CABINET INCLUDES NEW FM

C O N F I D E N T I A L SECTION 01 OF 03 VALLETTA 000101 SIPDIS NOFORN SIPDIS DEPARTMENT FOR EUR/WE E.O. 12958: DECL: 03/14/2018 TAGS: PGOV PREL MT SUBJECT: MALTA'S RESHUFFLED CABINET INCLUDES NEW FM FRIENDLY TO USG REF: VALLETTA 97 Classified By: PolOff MCummings for reasons 1.4 (b) and (d) ¶1. (C) Summary: On March 12, newly re-elected Prime Minister Gonzi announced his new cabinet. The new cabinet consolidates twelve ministries into eight, with the aim being a leaner and more efficient government. Of particular interest to the US is the fact that the new Foreign Minister is Tonio Borg, with him we worked very closely and effectively in his prior role as Minister for Justice and Home Affairs. End summary. CLEANING THE DECKS ¶2. (SBU) Making good on a campaign pledge, Prime Minister Gonzi announced a smaller and reshuffled cabinet on March 12. Gonzi had promised to bring new faces into the Government, and the electorate ensured he delivered on that promise, since three former ministers were not reelected ) Foreign Minister Michael Frendo, Education Minister Louis Galea and Competitiveness and Communications Minister Censu Galea. By consolidating several ministries, Gonzi's new cabinet is "meaner and leaner" (to quote the Times of Malta). There were six former ministers and parliamentary secretaries that were not appointed in the new government, with Gonzi opting to insert new faces and promote junior ministers, like Tonio Fenech at the Finance Ministry, as full ministers. In the reshuffling, only Giovanna Debono, the Minister for Gozo, remained in the same post. Of particular interest to the US, Deputy Prime Minister Tonio Borg, who was the Minister of Justice and Home Affairs (MJHA),is now Foreign Minister. ¶3. (C) Corruption charges played a major role in the campaign and to prevent any stain on his new government, Gonzi opted not to appoint certain otherwise popular MPs to ministries. For example Jesmond Mugliett, former Minister for Urban Development and Roads, had been accused of funneling business to a construction firm he had set up. Another backbencher MP, Jeffrey Pullicino Orlando, was involved in a land deal that is currently under investigation. Neither was offered a ministry. Due to allegations of mishandling of permits by the planning authority, Gonzi opted to add the Malta Environment and Planning Authority (MEPA) to his own portfolio -- also a campaign pledge. FOREIGN MINISTER: TONIO BORG ¶4. (SBU) The appointment of Tonio Borg as Malta,s new Foreign Minister was welcome news; post has cultivated a positive working relationship with Borg, who also serves as the deputy Prime Minister and leader of the House of Representatives. At MJHA, the Embassy worked with Borg on a number of issues including Malta,s potential entry into the Visa Waiver Program, as well as Refugee Resettlement Program, and the implementation of the USG-funded PISCES Program. ¶5. (SBU) During his tenure at MJHA, Borg was under domestic and international pressure due to an influx of irregular migrants to Malta. Borg lobbied for the establishment of a burden-sharing process among EU members to provide some relief for Malta in managing what it feels to be a disproportionate share of the migrant population. While that initiative garnered a lukewarm response, Borg was more successful in his lobbying for additional Frontex patrols in the central Mediterranean to curb the flow of migrants. ¶6. (SBU) Borg has a fondness for the United States. In 1988, before he was elected to Parliament, Borg participated in an International Visitors Program (IVP) on the US Presidential Elections; to this day, he closely follows US presidential politics. Prior to his term at MJHA which began in 2003, Borg was a practicing lawyer, specializing in human rights cases. Borg was first elected to parliament in 1992 and has been continuously elected ever since; in the recent elections, Borg was actually one of six MPs to be elected in two districts. MINISTER OF FINANCE: TONIO FENECH ¶7. (SBU) While it was not a surprise, Tonio Fenech,s promotion to Minister of Finance, Economy and Investment is very welcome news. Fenech previously served as Junior Minister or Parliamentary Secretary at Finance, where he has overseen talks between the US and Malta on a bilateral Double Taxation Agreement (DTA). The US Department of Treasury recently announced it had entered into formal negotiations with Malta on a DTA, which will commence on March 24. With VALLETTA 00000101 002 OF 003 the same team in place representing Malta, it is likely that the US will be able to initial an agreement following the upcoming negotiations. As head of the newly consolidated Ministry of Finance, Economy and Investment, Fenech has greatly broadened responsibilities. The new Ministry will manage the budget office, treasury, Inland Revenue, customs, financial regulations, investment promotion and Malta Enterprise. ¶8. (U) As Parliamentary Secretary for Finance, Fenech is credited with the success of bringing Malta in line with the economic and fiscal criteria to adopt the euro as its currency, and ensuring that a smooth transition to the euro. Fenech also ensured that Malta received 855 million euros from the EU for a variety of infrastructure and road projects from 2007-2013. ¶9. (SBU) With such visible successes, Fenech is seen as a rising star in the Nationalist Party, perhaps even a future Prime Minister. Fenech is an accountant by profession and former mayor of Birkirkara, Malta,s largest municipality. Fenech entered Parliament in 2003, and is an extremely popular politician who was elected in two districts. The Embassy has cultivated a strong working relationship with Fenech, who went on an IVP focused on immigration policy and environmental and alternative energy initiatives. MINISTER FOR JUSTICE AND HOME AFFAIRS: CARMELO MIFSUD BONNICI ¶10. (C) The new Minister for Justice and Home Affairs (MJHA) Carmelo Mifsud Bonnici is more of an unknown. Since 2003, Mifsud Bonnici has served as the Parliamentary Secretary at MJHA. He was first elected to Parliament in 1998. Prior to his term at MJHA, Mifsud Bonnici was a practicing lawyer, who handled criminal, civil and commercial cases. The embassy's infrequent contacts with him at MJHA left the impression that he was not especially competent or engaged and unaware of most issues on which the Embassy worked with MJHA, though that may have been partially a function of the job he was in. ROUNDING OUT THE CABINET ¶11. (SBU) Austin Gatt, previously the Minister for Investment, Industry and Information Technology (MIIIT),will lead the new Ministry for Communications and Projects. This is a consolidation of the Ministry of Competitiveness and Communications and MIIIT. Gatt will retain responsibility for the large state owned utilities Enemalta Corporation, and the Water Services Corporation, as well as the Malta Maritime Authority, Malta Freeport Corporation and Malta Shipyards. During his tenure at MIIIT, Gatt closed a deal with Dubai Holdings to develop SmartCity Malta, based on the model of Dubai,s Internet and Media City; the project is expected to generate over 5,600 jobs in the ICT sector and represents the largest real estate development on the island at about USD 300 million. Gatt is sharp and ambitious, a minister we can do business with (despite an abrasive streak that rankles with some European ambassadors, we find his frankness and straightforwardness refreshing.) ¶12. (U) George Pullicino as the new Minister for Resources and Rural Affairs, will manage a portfolio similar to that which he presided over from 2003-2007 as Minister for Rural Affairs and the Environment. Dolores Cristina, a popular politician elected from two districts and formerly Minister for the Family and Social Solidarity, will become Minister of Education and Culture. John Dalli, a former Foreign Minister who resigned from Parliament in 2004, was appointed the Minister for Social Policy. Finally, as noted above, Giovanna Debono retains her position as Minister for Gozo, the second largest island in the Maltese archipelago with around 30,000 inhabitants. ¶13. (U) The new government and cabinet officials were sworn in March 12, but most have yet to assume their posts, with some ministries undergoing extensive reorganization. Ministers are expected to fully assume their duties after the Easter holidays, i.e. around March 24. MFA is the exception to the rule, with new FM Tonio Borg accompanying PM Gonzi to Brussels for an EU summit yesterday. ¶14. (C) Comment: In a conversation with the Ambassador prior to the election, PM Gonzi lamented quite bluntly to the Ambassador that the elected Nationalist Party MPs offered a limited talent pool from which to select ministers that are matched well with their competencies and are able to form an efficient working government. (The PM wished it was possible to draw ministers from business or academia, something that VALLETTA 00000101 003 OF 003 is not possible in Malta.) While the PM's point is well taken, the appointments of Borg and Fenech, in particular, are excellent news. End comment. BORDONARO