SIG ON MALTA/NSDD

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87R00529R000100030061-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 42
• Document Creation Date: December 23, 2016
• Document Release Date: May 9, 2011
• Sequence Number: 61
• Publication Date: July 31, 1985
• Content Type: MEMO

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STAT
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852122f-"
Interagency Group No. 51
OVP
NSC
CIA
Defense
JCS
USIA
AID
United States Department of State
Washington, D.C. 20520
July 23, 1985
- Mr. Donald Gregg
- Mr. William F-. Martin
-
COL
David R. Brown
-
LTC
Thomas O'Connell
-
Mr.
C. William La Salle
-
Mr.
Malcom Butler
Executive Registry
85- 2927
SUBJECT: U.S. Policy Toward Malta
Attached for agency concurrence are an updated study of
U.S. Policy toward Malta and a draft NSDD prescribing a U.S.
policy response, prepared under the auspices of the Malta
Interagency Group (IG). We have updated the study to mention
events that have occurred since it was completed in February.
CIA has revised its dissenting footnote, and the Executive
Summary now includes mention of this dissent. The study is
otherwise unchanged.
The draft NSDD, based on the draft circulated in June, has
been revised to reflect the comments of agencies. There are no
outstanding differences on policy.
With due allowance for CIA's dissent to the analytical
study, we believe that the study and the NSDD constitute an
interagency. consensus appropriate for delivery to the NSC.
Agencies are requested to review these two documents and to
indicate concurrence to W. Gregory Perett, tel. [phone]. They
should also indicate whether there are any issues of a
magnitude that would require a formal meeting of a Senior
Interagency Group. au JS~ 2nA
Agencies should respond by COB J, 4. If we have not
received any sustantive dissent or request for a formal SIG
meeting by that date, we propose to forward the study and draft
NSDD to the NSC as the final product of the Interagency Group.
Nicholas Platt
Executive Secretary
Attachments:
1.. Interagency study on Malta
2. Draft NSDD on Malta
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Platt-Gregg, et. al. Malta IG Study and Draft NSDD.
Drafted: EUR/WE: WGPerett"
7/16/85 x8210 (W1775S) 313
Cleared: EUR/WE: MvanHeuven'
EUR: JHKell K
P: DCurran
C: RNeitzke
S/P: BLowenkron 4/)
PM/SAS: DTennant 40
INR/WEA: HFergusson'3
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11,
a 0
U.S. POLICY TOWARD MALTA
EXECUTIVE SUMMARY
The National Security Council, in a National Security Study
Directive of December 10, 1984, called for an analysis of U.S.
policy toward Malta. This study examines U.S. interests in
Malta.,*describes trends in Maltese foreign and domestic
policies that may affect those interests, and outlines the
various policy options available to the U.S. Following are the
study's key judgments:
--Longterm trends in Malta do not appear to be moving in
directions that we would like..
--Malta, while declaring itself neutral and nonaligned,
attempts to use its historic strategic position as a bargaining
tool to extract economic benefits from its neighbors and from
competing power blocs.
--Malta's strategic importance has declined with the
development of modern, long-range weapons. A Soviet or Libyan
base on Malta would not play a ,crucial role in a war involving
U.S. or NATO participation. Such a base would be useful,
however, for logistic support and would accord some desired
redundancy in Soviet assets. Beyond its strictly military
ramifications, establishment of a significant Soviet military
base on Malta could have a damaging psychological impact on
Western public perception of Mediterranean security interests.
--The U.S. has several interests of consequence in Malta.
The most important is to deny the use of Malta for terrorism or
military purposes by the Soviets or other adversaries. Our
bedrock objective therefore meshes with Malta's declared policy
of nonalignment.
--The Soviets.have undertaken a longterm campaign to
counter. Western influence in Malta and to gain the support of a
nonaligned state. Soviet-Maltese contacts have intensified
over the past few years, including high-level visits. If given
an opportunity, the Soviets would find it useful and convenient
to exploit Maltese facilities for military transit and logistic
support.
--The Soviet effort has experienced only limited success.
It has been prey to the same blackmail. tactics which the
Maltese have used toward the West. Moreover, important
constraints--Western cultural ties, economic dependence on the
West, and the influence of the Roman Catholic Church--stand in
SECRET/SENSITIVE
Decl: OADR
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the way of Soviet efforts to develop their presence into
extracting political or military concessions.
--There is also a recent upsurge in Libyan contacts with
Malta. Libya is more active than the Soviets and, in the short
term, Qadhafi is likely to cause more trouble. Malta is useful
to Libya primarily as a political symbol of Libyan influence.
It has only marginal value as a base.
--Libya has used Malta once as a staging area for terrorist
operations. The Libyans might, if permitted by the Maltese,
make heavier use of Malta in the future.
--Libya faces the same constraints as do the Soviets. In
addition, the Maltese dislike the Libyans, and a falling-out
between them is likely.
--Malta shows a trend toward authoritarian government and a
more centralized economy. These trends make a Nationalist
Party return to power more difficult, and also tend to
discourage Western business firms from investing in Malta.
--At present, our relationship with Malta is sound, insofar
as Malta remains nonaligned and has not given military access
to our potential adversaries.
--We have good political access with the Maltese
government. We have encouraged Maltese economic and commercial
ties with the U.S., but have had little success, due in part to
the commercial policies of the Maltese government.
--Economic assistance is a high priority item for the
Maltese government. Increased U.S. aid might lead to increased
influence, but the erratic and opportunistic nature of Maltese
policy makes it difficult to evaluate the extent and duration
of such influence.
--Malta would probably not be interested in security
assistance in the form of equipment. The government wants
money and jobs.
--Our allies, particularly Italy, are better placed than we
to influence events in Malta. We have already enhanced
contacts with them concerning Malta.
--The opposition Nationalist Party, more popular than the
ruling Malta Labor Party, hopes to regain power via the 1987
elections. There is a serious threat, however, that the MLP
will thwart the democratic process and cling to power.
SECRET/SENSITIVE
Decl: OADR
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--A Nationalist government would remain nonaligned. Still,
an NP government would be more open to cooperation with the
West, would reopen the economy to free enterprise, and would be
suspicious of Libya and the Soviet bloc.
--The Nationalists seek sympathy from the U.S. and Western
Europe. Malta is a case in which our human rights interest and
national security interest coincide.
--Former prime minister Mintoff probably will continue to
dominate policy as long as he is on the scene and the Malta
Labor Party is in power. On Mintoff's death, no one seems
immediately able to assume Mintoff's dominant role. Thus, the
MLP will divide into factions until a new leader asserts
control.
--The foreign policy outlook for Malta and for Soviet or
Libyan influence involves three possible circumstances: (a)
continued domination by Mintoff; (b) a Nationalist government;
or (c) a post-Mintoff MLP government.
--(a) Mintoff's rule is a known quantity which, however
troublesome, does not threaten important U.S.-interests. The
continuing erosion of democratic norms is of concern, however,
and creates the danger that a later authoritarian government
might be less subject to public pressure against abandoning
Maltese neutrality in favor of close alignment with the USSR
and Libya.
--(b).A Nationalist government would still seek economic
benefits, but would improve prospects for cooperation with the
West and would discourage ties with Libya or the Soviet union.
--(c) A post-Mintoff MLP government is difficult to
characterize, since we cannot predict who will be its leader.
In this situation, we can imagine a scenario in which an
unpopular MLP leader, desperate to retain control, might seek
Soviet or Libyan support, even to the extent of seeking troops
to quell the opposition.
--This worst-case scenario is, however, unlikely. While
the degree of opportunity afforded the Soviets and Libyans
depends on the scenario that unfolds, many constraints will
apply, no matter who is at the Maltese helm. Nationalism,
economic links, and cultural ties are among the factors
impinging on any Maltese government's attempt to invite Soviet
or Libyan encroachment.
SECRET/SENSITIVE
Decl: OADR
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(CIA states the following dissent:
--We believe that the NSSD underplays the benefits that the'
Soviet Union and Libya could gain from military access to
Malta. The Soviets would value military access because it
would give them the redundancy they covet in the region, and
the Libyans could increase the operational range of their
aircraft with longrange radar on Malta. We are also concerned
that the Executive Summary does not adequately represent recent
Soviet propaganda inroads and the potential threat they pose to
Western interests.
--We also believe that the possibilities of political
instability on Malta are greater than indicated in the NSSD,
mainly because we are not confident that Mintoff will continue
to dominate Malta and control its erratic foreign policy.
Although he appears to retain at least a peripheral hold on the
levers of power, there are signs that the struggle for
post-Mintoffian leadership within the MLP is already well
underway. This scramble for power could lead to a number of
challenges to parliamentary democracy that would fall.short of
the worst-case scenario outlined in the NSSD, but nonetheless
could jeopardize stability and threaten to undermine U.S. goals
in Malta. End of CIA dissent.)
SECRET/SENSITIVE
Decl'? OADR
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U.S. POLICY TOWARD MALTA
THE PROBLEM
Malta under its mercurial leader Dom Mintoff has long
pursued a foreign policy of blackmail, playing each neighbor or
power bloc against its rival. Mintoff's demand for economic
benefits--coupled with threats to look elsewhere if aid is not
forthcoming--have frustrated all who deal with him. At the
same time, his erratic shifts in policy create opportunities
for those who are willing to.play his game. In the past few
years, the Soviets and their allies have exploited this
situation to bolster their position in Malta without making a
major economic commitment. More recently, Libya has used some
of its resources to reestablish stronger ties following several
years of cool relations. These twin developments, accompanied
by bursts of Maltese invective toward the West, have prompted
some concern that longterm trends in Maltese policy favor our
potential adversaries.
A new prime minister, Karmenu Mifsud Bonnici, succeeded
Mintoff in December 1984, but Mintoff remains the power behind
the throne. Mintoff has a predeliction to taunt the West, but
he is fundamentally a strong nationalist who will not
compromise his or Malta's independence. The situation is less
reassuring, however, with regard to his successors, who may
lack the leadership skills and the nationalism which have thus
far constrained Malta's foreign policy. The Soviets or Libyans
might then attempt to expand their influence to the point of
obtaining-political or military concessions.
We need to assess trends in Maltese foreign and domestic
policy to-determine whether these pose any significant threat
to U.S. interests, and, if so,,what measures we should take to
arrest this tendency. This study examines:
--U.S. interests in Malta;
--Soviet and Libyan efforts to acquire influence;
--military implications for the U.S. and NATO of Soviet or
Libyan access to Maltese military facilities;
--.constraints on Soviet or Libyan influence in Malta; and
-means of encouraging Malta's continued Western
orientation and political neutrality.
SECRET/SENSITIVE
Decl: ' OADR
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I. BACKGROUND
A. Political Profile
Located in the narrows of the Mediterranean, some 200
nautical miles from Libya and 50 from Sicily, Malta has long
derived importance from its location astride communications
routes. Independent from the United Kingdom since 1964, the
island republic severed its ties with NATO on the departure of
the last foreign military forces in 1979. Since then, while
remaining a member of the Commonwealth, the Maltese government
has pursued a policy of neutrality. One of its main goals has
been to obtain public endorsement or a formal guarantee of that
status from the major powers.
. Malta has a parliamentary government devised originally by
the British colonial administration. Headed since 1974 by a
President intended to be a ceremonial leader, it has a Prime
Minister as head of government and a unicameral, 65-seat
parliament known as the House of Representatives. The ruling
Malta Labor Party (MLP), a vaguely socialist party with
working-class roots, has 34 of these seats. The opposition
Nationalist Party (NP), a more pro-Western, business-oriented
party with connections to the international Christian
Democratic movement, has the remaining 31.
Elections for a new Parliament are constitutionally
required to be held by March,.1987. The opposition NP has at
least an even chance of winning an honestly-run electoral
contest, but the threat exists that the Labor government may
rig the elections or not hold them at all. The Constitution
gives the Prime Minister the authority to postpone elections in
case of emergency. A claim of 'foreign interference,' often
charged in the past by the MLP, could be used to justify such a
finding. The government's sensitivity toward foreign support
of the opposition is codified in the Foreign Interference Act,
which the regime unsuccessfully tried to use to prohibit
Embassy contact with the Nationalists.
Domestic politics have been unusually turbulent since the
December, 1981 elections for the House of Representatives. The
MLP gained slightly less and the opposition slightly more than
50 percent of the vote. But through clever gerrymandering, the
MLP maintained its majority in the Parliament, taking 34 of the
65 seats. In protest, the NP members boycotted Parliament for
several months thereafter. Since 1981, there has been an
erosion of human rights and democracy, exemplified by
intimidation of the press and judiciary, as well as some
violence against the NP. In the summer and fall of 1984, a
SECRET/SENSITIVE
Decl: OADR
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SECRET/SENSITIVE
dispute between the government and the Catholic Church over
student fees paid to Church-operated schools resulted in
sporadic bombings and the sacking of the Archbishop's palace on
September 28. The Government stated that the Church schools
had to offer free education. The Church reacted strongly and
was supported by much of the population, which is
overwhelmingly practicing Catholic. Towards the end of the
controversy, then Prime Minister Mintoff took the issue away
from then Education Minister Mifsud Bonnici and reached a
temporary compromise settlement. The Maltese government and
the Vatican eventually reached longterm agreement on the issue
in April 1985. Nevertheless, this incident illustrates the
fragile nature of the domestic political situation.
Dom Mintoff, 68, resigned as Prime Minister on December 22,
1984, after governing Malta with an iron hand for 13 years.
His officially-designated successor, Karmenu Mifsud Bonnici,
Senior Deputy Prime Minister and Minister of Education, then
took office. A relative newcomer to political life, Mifsud
Bonnici is widely believed to defer to Mintoff's wishes. AS
Education Minister during the Church school controversy, he was
widely considered to have failed his first test in handling a
major problem. Mintoff retained his seat in the House. He
retains, as well, an overridingly powerful influence on
government policy. His long range plans are unclear, but he
may aim at a much-strengthened Presidency, transforming that
now-ceremonial office via constitutional amendment.
Mifsud
Bonnici's survivability as a leader is unsure. Two
potential
MLP
leaders--Foreign Minister Alex Sceberras Trigona
and Works
and
Housing Minister Lorry Sant--are stronger in
character
and
more politically astute than he, and could take
control in
the
future. Sceberras Trigona is a proven
vote-getter, and the venal Sant was once Mintoff's designated
successor. Both have shown willingness to deal with Libya and
the Soviet Union.
The future of Maltese domestic politics is therefore
uncertain, particularly in a post-Mintoff period. None of his
three lieutenants has displayed the charisma or independent
political clout that would permit him to fill Mintoff's shoes.
If such a strong leader does not emerge quickly, Malta could
fracture into warring groups and become temporarily unstable.
Logically, the Nationalists should benefit from MLP disunity
and defeat the governing party. This assumes the maintenance
of the democratic system, an assumption that is not assured.
One of the MLP contenders, such as the tough Lorry Sant,,, might
try to outdo Mintoff himself by establishing an authoritarian
regime.
SECRET/SENSITIVE
Decl: OADR
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B. Foreign Policy Developments
Mintoff tried to place his small country in the
international spotlight. He kept the Madrid CSCE conference
hostage for months by demanding that the meeting focus on
Mediterranean issues, and Malta threatens to do the same for
the present CDE meeting in Stockholm. Malta has quarreled with
Italy and the EC over levels of aid and has established full or
partial embargoes against France, Japan, and Italy due to the
bilateral trade imbalance. Malta recently asked the U.S. and
UK for major soft loans to make up for Italy's "failure" to
support Malta. Mintoff has offered himself as mediator in most
of the world's major disputes, e.g., North Korea-South Korea
and Cyprus. Arrogance and a readiness to provoke confrontation
have been Mintoff's trademark. No one--East, West, or Third
World, enjoys dealing with Malta.
Under Prime Minister Mifsud Bonnici, the style of Malta's
foreign policy, though not its substance, has noticeably
changed. The Maltese government remains capable of demanding
"rectification" from the U.S. for our 1984 Human Rights Report,
or even demanding recompense for Malta's UN Security Council
vote on the KAL 007 shootdown. Nevetheless, Mifsud Bonnici has
clearly adopted a more civil tone. He has, moreover,
repeatedly stated that he wants to improve relations with the
United States and Western Europe.
Officially neutral, Malta has in recent years increased its
ties to the Soviet bloc. The Soviets established a resident
Embassy in 1981, signed a neutrality agreement the same year,
and obtained rights to bunker merchant ships. Mintoff visited
Moscow December 19-21, 1984, after several years of efforts
which the Soviets had resisted.
On the economic front,,-"the two governments concluded an
ambitious economic protocol in March 1984 providing $260
million in trade over three years. The Soviets also agreed to
construct a surgical instruments plant and to purchase its
products. Recently the Soviets announced the signing of a $140
million contract for construction in Malta of eight Soviet
ships. It remains to be seen whether these agreements will be
implemented as envisaged.
Libya also has boosted its presence in Malta. Mintoff
courted Libya soon after announcing his neutrality policy in
1979, but relations cooled in a dispute over possibly
oil-bearing waters claimed by both sides. Relations gradually
improved throughout 1984, largely at Mintoff's initiative,
SECRET/SENSITIVE
Decl: OADR
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9
leading to a five-year 'friendship and cooperation' treaty
signed on November 19, 1984. The treaty provides for
political, economic, and security consultations, as well as
Libyan-training of Maltese forces on Malta.
C. Economic Developments
Malta is well off by Third World standards. Its small size
and heavy dependence on foreign trade, however, make it
vulnerable to external factors. The mainstay of the economy
has been shipbuilding and service industries, notably tourism
and ship repairs. The major UK/NATO base at Grand Harbor was
the foundation for the Maltese economy for decades. Since the
departure of NATO forces in 1979, Malta has struggled to find
substitutes for that key source of income.
Malta today conducts shipbuilding and repair at the former
British facility and produces light manufactured goods, such as
textiles and processed foods. Much of Malta's exports are in
semi-finished goods for further processing elsewhere.
Three-fourths of Malta's trade is with Western Europe,
principally the FRG, UK and Italy. Trade with communist
countries, though small, is increasing.
Malta has suffered from the recession in Western Europe,
and GDP declined in 1983 for the first time since the mid 1960s.
The economy rebounded somewhat in 1984 as GDP increased by 2.7
percent. The government's main economic goal is to reduce
unemployment, officially given at 7.9 percent but estimated at
much higher by opposition economists.
Tourism has fallen off from a peak of 728,732 arrivals in
1980 to 490,812 in 1983. Much of this decline stems from the
recession in Western Europe, which provides the bulk of Malta's
tourists, but the Maltese are also to blame for giving shabby
treatment to tour operators. The tourist industry is vital.
Malta regularly runs a sizeable trade deficit, yet income from
tourism and from investments abroad has kept the balance of
payments in surplus every year since independence. Malta's
sizeable foreign currency reserves (about $1.2 billion) and low
external debt make the nation less vulnerable to outside
pressure and provide scope for an expansion of the domestic
economy.
The government has a policy of encouraging new
export-oriented industries with the help of foreign
investment. This campaign has experienced only limited success.
SECRET/SENSITIVE
Decl: OADR
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II.'U.S. INTERESTS IN MALTA
,The U.S. has an interest in:,
--Denying the use of Malta for military purposes by the
Soviets or other potential adversaries;
--Preventing Malta from serving as a base for international
.terrorism;
--Maintaining Malta's essentially Western orientation and
democratic political system; and
--Seeking Maltese support in international forums on issues
important to us.
The United States has had only limited involvement with
Malta since closure of the NATO base in 1979. We have depended
on our allies (e.g..the UK and Italy), who have significant
interests, to take the lead. When Malta declared a policy of
neutrality and nonalignment, Mintoff urged the U.S. to sign a
neutrality and economic assistance treaty along the lines of
the 1980 Italy-Malta accord. -Malta would still like a
bilateral pact--provided that'it features substantial economic
assistance. The Maltese. resurrected this request as recently
as December 1984. We have declined to endorse formally Maltese
neutrality. We have, however, assured Malta that we respect
its choice of neutrality and nonalignment, and that this
decison poses no obstacle to fruitful and friendly relations.
Except for Export-Import Bank loans, little U.S. economic or
security assistance has been provided.
There is little hope of enticing Malta back into the
Western alliance. A return to NATO military presence is not in
the cards, even should the relatively pro-Western Nationalists
regain power. Leaders of both parties state that the islands
should not again serve as a military platform for any foreign
power.
This avowed Maltese goal meshes with our own bedrock
objective of denying the islands to our adversaries. Malta's
new emphasis on nonalignment will, however, entail.its
strengthening ties to states opposed to U.S. interests. We
should seek to ensure that Malta remains true to its own
declared principle and that it retains the political and
economic capability to do so. The Maltese claim to seek
equidistance between the superpowers; we should insist that
they do so.
SECRET/SENSITIVE
Decl: OADR
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We should also ensure that Malta does not allow itself to
serve as a transit point or staging area for Libyan or other
terrorist activity. To date, Malta seems to have a de facto
arrangement with Libya and the PLO: no terrorist acts in Malta
in return for unobstructed transit of Libyans and PLO
operatives. We must not let the Maltese believe this
arrangement is acceptable, let alone permit the situation to
escalate into one in which terrorists sally forth from Malta
for operations, then retire to the islands for sanctuary.
We have an interest in supporting democratic institutions
in a country which at least partially belongs to Western
Europe. Democracy in Malta, while under attack, has not
collapsed. In keeping with the Administration's Project
Democracy initiative, we should seek to ensure that Malta does
not disappear from the ranks of the democratic West.
Malta has become famous as a gadfly in international
forums, especially the CSCE and CDE, for insisting that
Mediterranean issues be treated. Our interests would profit
from Maltese agreement not to hold these forums hostage to
irrelevant Maltese concerns. At the same time, Maltese support
for us on some issues has proved useful, such as Malta's
pivotal UN Security Council vote on the KAL shootdown.
III. SOVIET INTERESTS
A. Objectives
The Soviets have been gradually pushing since the early
1970s to establish closer ties with Malta because of its
strategic location. The wooing of Malta also is part of the
general Soviet effort to gain influence among non-aligned
nations. The Soviets hope to counter the substantial Western
and Chinese presence there. They would gain obvious political
benefit by securing the support of a semi-Western European
nation. In the longer term, the Soviets would welcome military
access to Malta.
In recent years these efforts have begun to produce
results, although the Soviets have experienced many of the same
frustrations with Mintoff's diplomacy by blackmail as the
West. The Soviets at present do not appear willing to spend
significantly more effort and money to court Malta. However,
if the local situation--say an unstable new
government--presented clearer opportunities, they would find it
SECRET/SENSITIVE
Decl: OADR
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useful and convenient to exploit Malta's air and maritime
facilities for intelligence collection, transit, and logistic
support.
B. Political Relations
The USSR and Malta established diplomatic relations in
1974. Following the opening of a resident Soviet Embassy in
1981, previously limited contacts have gradually increased, and
within the past year the tempo of official visits has risen
sharply. Diplomatic dialogue reached a high point in December
1984 with Mintoff's trip to Moscow, where he was given a
high-level reception, meeting separately with General Secretary
Chernenko, Premier Tikhonov, and Foreign Minister Gromyko.
Tikhonov's remarks during a dinner for the Prime Minister
and official Soviet reports of his other meetings stressed
Moscow's support for Malta's independent stand on Mediterranean
security issues at the Stockholm disarmament
conference--although Soviet press accounts omitted some of
Mintoff's more harebrained ideas. The Soviets view his calls
for a nuclear-free Mediterranean and for limits on naval
activity and bases in the region as a useful propaganda tool
and a thorn in the side of the West. They presumably are
aware, however, that most non-Warsaw Pact delegates consider
these positions nonstarters that fall largely outside the CDE
mandate. If the CDE were ever to move toward consensus, the
Soviets would not encourage the sort of behavior demonstrated
by the Maltese at CDE's parent conference in Madrid, where--to
Moscow's evident dissatisfaction--Maltese obstructionism
delayed agreement on a concluding document by several months.
C. Economic Ties
The significance of Soviet trade ties is not their present
size but the potential for growth if existing promises are
realized. The Soviets accounted for less than one percent of
Malta's total trade in 1983. According to Soviet trade data,
Soviet exports increased from $2 million in 1982 to $32 million
(96 percent oil) in 1983. Imports from Malta rose from $1.5
million to $10 million and consist of mainly clothing and ship
repair services. In the January-September 1984 period Soviet
imports were up 60 percent from the same period in 1983 and
exports were down 75 percent--mainly due to lower demand for
oil.
A large share of Soviet-Maltese trade will continue to be
in the commercial maritime area. Bunkering facilities are
still limited to fishing and merchant vessels, and Malta
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dismisses out of hand Soviet requests to repair warships and
naval auxiliaries. The Soviets have made little use of the
bunkering agreement, and Soviet ship visits actually declined
in 1984 compared with 1983.
Soviet-Maltese trade could expand substantially, mainly in-
traditional sectors, as a result of the March 1984 trade
protocol. The Maltese have also signed a $140 million
agreement with the Soviets to build eight Soviet timber ships.
The contract, if fulfilled, would provide a much-needed boost
to Malta's financially troubled shipbuilding industry. Malta
also hopes that it can parlay the Soviet contract into orders
from the Libyan and Algerian minority owners of the Malta
Shipbuilding Company as well as from other Arab and Eastern
Bloc countries. The Maltese may have difficulty, however, in
fulfilling the contract, since the timber ships are still in
the experimental design stage, and the shipyard has yet to
build a ship since its inception in 1976.
These important contracts, if implemented, would boost
Moscow's influence in Malta's maritime sector--the political
base for many Labor Party leaders, including Mintoff, Lorry
Sant, and Mifsud Bonnici--but they would not necessarily lead
to Soviet naval use of Maltese ports. The Soviets might offer
even more substantial assistance if they believed some
agreement on Soviet military access were possible. The Soviets
know from bitter experience, however, that unless a Mintoff
successor deviates sharply from his policies, Malta will not
provide access to Soviet naval vessels.
Overall, Soviet-Maltese trade is likely to remain
relatively small and unstable, at least for the next several
years, despite these efforts. The Soviets have frequently
voiced frustration with Maltese pricing, quality, and delivery
in the past, and these failings are likely to continue to
inhibit any significant -trade expansion.
D. Soviet Presence
The Soviets have increased their overall presence over the
past several years, but so far the number of Soviets on Malta
does not appear unusual for a country of its size. Soviets
resident in Malta now number between 40 and 50. The Soviet
Embassy in Valletta now has a diplomatic staff of In. Two
25X1'(1
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Decl: OADR
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The Soviets, along with the Czechoslovaks and Bulgarians,
have initiated direct air service to Malta on their national
policies or influence the attitudes of the Maltese government
and people.
airlines. The three countries also have established
"friendship societies' that sponsor delegations, student
exchanges, and exhibitions lauding bilateral cooperation.
Cuban-Maltese friendship society apparently is run by the
Soviet Embassy in Malta.
The Soviets have also worked to cultivate a number of
individuals who may be in a position to push pro-Soviet
E. Soviet Propaganda
One of the more worrisome developments in recent Maltese
political life has been an increase in pro-Soviet and
anti-Western rhetoric and propaganda, from Maltese politicians
and media. In particular, slogans of MLP leaders have taken on
a specifically anti-American flavor. One message displayed at
the Labor Party club in the center of Valletta in June 1984
stated "From the Soviets and the Libyans, we have seen bounty;
from the Americans, only festering lice."
The Soviets and their allies have found willing recipients
for their propaganda in the government-controlled media during
the past two years. This is primarily the result of Mintoff's
exasperation over the limits of Western economic assistance.
It is also the result, however, of efforts by well-placed
pro-Soviet Maltese to give pro-Soviet 'information' services
ready access to Maltese outlets. The Soviets also use
semi-official exchanges and delegations effectively to increase
their role in the Maltese media. For example, news of
President Reagan's reelection was eclipsed in Valletta by the
visit of a 'friendship" delegation led by a Soviet cosmonaut.
Heavy media coverage was afforded the cosmonaut's allegation
that the President's reelection was ensured by the U.S.
military-industrial complex.
IV. LIBYAN-MALTESE RELATIONS
Libyan-Maltese ties have been steadily improving since 1983
after three years of bilateral disputes. Relations were quite
good in the 1970s when Valletta allowed Libya to maintain a
radio transmitter on the island in return for economic and
milit
i
ary ass
tr
stance. Relations began to sour in 1980, however,
facilities in Malta and closed the radio station. In July 1980
SECRET/SENSITIVE
Decl: OADR
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the Libyan navy prevented a Maltese oil exploration rig from
drilling in the Libyan-claimed continental shelf, and Mintoff
put a freeze on any further dealings with Qadhafi. The first
thaw came in 1982 when Mintoff helped foil a hijacking by
Libyan dissidents, and in 1983 Libya signed a trade agreement
with Malta that doubled the volume of trade between the two
countries.
Qadhafi wants to improve relations with Malta to counter
what he sees as 'imperialist' influence in the Mediterranean.
Mintoff's nonaligned and socialist views bear some resemblance
to Qadhafi's, and both men denounce superpower influence in the
region. Moreover, Malta provides a European platform from
which Qadhafi broadcasts propaganda, and he has used Malta as a
site for international conferences of leftists. On at least
one occasion he has conducted subversive operations there in an
attempt to conceal the Libyan source; the failed Libyan plot to
assassinate former Libyan Prime Minister Bakkoush in Egypt was
mounted from the Libyan People's Bureau in Valletta. Libyan
media and propaganda assets in Malta are extensive, including
three newspapers and two publishing houses. Libyan commercial
establishments may also provide cover for subversive activities.
Malta's interest in closer ties with Tripoli clearly is
driven by economic needs. Libya has $140 million in
investments in Malta, is the country's fourth largest export
market, and supplies 10 percent of Malta's oil needs. Malta
also sees access to Libya's labor market as a means of easing
its own chronic unemployment. In addition, the Libyan bogeyman
can act as a lever on other potential aid donors. Past
experience indicates that the Maltese government will seek to
use closer ties with Libya to exert pressure on Italy and on
the Arab Gulf States, which have reduced their support for
Malta because of financial difficulties.
At a minimum, it appears now that Qadhafi would like to
return to the pre-1980 relationship. The November 1984
security agreement, for example, not only promises Libyan
support against any external threat to Malta and training for
the island's small military force, but also stipulates that
Malta will not be used militarily against Libya. Qadhafi
probably hopes that Malta will again accept Libyan military
students as it did before 1980, when 1,400 Libyans were sent to
Malta for technical training. Since January 1984 Malta has
provided harbor and maintenance services for Libyan naval
vessels and has increasingly become a regular port of call for
Libyan ships. Moreover, a Libyan contingent may replace the
Italian military mission which has provided aid and training
for Maltese air traffic controllers, maritime patrols, and
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Decl: OADR
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helicopter units, as well as instructing the Maltese Armed
Forces in use of Bofors guns. This mission had originally been
run by the Libyans prior to 1980.
Although a Libyan presence in Malta would not significantly
improve Libyan military capabilities, it would be of strategic
and psychological value. Qadhafi probably would like to gain
access to Maltese airfields primarily in order to frustrate the
U.S. by increasing Libya's presence in the vicinity of American
installations in Sicily. Qadhafi probably expects that even a
small Libyan contingent on Malta would burnish Libya's image as
a regional power and increase pressure on Italy to expand trade
relations and intelligence exchanges. He might also view an
advisory group there as the thin edge of a larger military
presence.
We expect Qadhafi will use his economic leverage over
Valletta to advance Libyan political influence in Malta. So
long as closer relations result in greater trade and economic
assistance, Mintoff and his successors will cooperate with
Qadhafi--but they will draw the line at compromising Maltese
autonomy. In particular, we do not think the Maltese will cave
in to Libyan pressure for significant military presence on
Malta or for control of military facilities.
Prospects for Soviet-Libyan Cooperation on Malta
The Soviet Union and Libya have a mutual interest in
blocking a stronger Western presence in Malta and exploiting
the country's nonaligned status. Moscow therefore probably
would support a larger Libyan contingent there. We doubt,
however, that the Soviets have directed Libya's activities on
the island. They are wary of Qadhafi's unpredictability and
would be skeptical of his ability to further their long-term
interests. The Libyans, for their- part, have their own agenda
on Malta. They probably-would cooperate with Moscow if it
seemed in their interest, but only if there were no strings
attached.
V. POTENTIAL MILITARY THREAT TO THE U.S. AND NATO
A. Evolution of Strategic Importance
Malta's strategic importance derived from its geographical
position in the midst of cross-Mediterranean traffic:
north-south and east-west. In World War II, Malta provided the
key to holding North Africa and territory further east. Royal
Air Force air power operating from Malta interdicted the
logistic flow from Italy and Sicily to North Africa. German
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Decl: OADR
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and Italian air and naval power came close to
counterinterdicting Malta,but.critical supplies got through to
Malta,.preventing surrender of the island and allowing
continued interruption of the Axis north-south lines of
communication.
While Mintoff apparently assumes that Malta retains crucial
strategic signficance, and Mifsud Bonnici will most likely keep
that assumption, it is no longer valid. Technological advances
in the range, speed, and capacities of weapons and platforms
have lessened Malta's present strategic importance as a land
base. The island represents a useful potential base from which
to interdict. maritime anC aerial transit, but the same can be
accomplished in other ways. Within the confines of the
Mediterranean, shipping can be controlled by surface, submarine
or air power. Moreover, other land base areas are likely to be
available to one side or the other in a future conflict--Sicily
for NATO, and Libya for our adversaries.. If Libya is available
to hostile forces, Malta is of limited tactical or strategic
value in a war involving U.S.?or NATO participation.
Thus, Malta's likely role is that of a spoiler rather than
a principal variable. Given the characteristics of modern
weapons, it is likely that military forces attempting to
operate from an isolated Malta can be reduced with less cost
than they could extract, except perhaps in a situation of
surprise attack. However, neutralizing hostile forces on Malta
would require commitment of already limited resources.
B. Impact of Eventual Soviet Military Presence
1. Major Military Presence
Establishment of a Soviet military presence in Malta (in
conjunction with Soviet presence in Libya) would confer no
significant increase in military operational threat to NATO's
southern flank. If, however, the Soviets did not have access
to Libya or to other nearby bases, a Soviet base in Malta would
increase the threat. to NATO's southern region during the
initiation stages of a conflict, to pro-Western countries along
the Mediterranean littoral in'North Africa, and in particular,
to the air (potentially) and sea lines of communication to
Greece and Turkey.during reinforcement and continuing
operations. 0
In the event of East-West hostilities, Soviet naval and air..
elements in Malta, operating in conjunction with Soviet forces
based in Libya, would enjoy increased flexibility demanding a
commensurate increase in friendly resource requirements to
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Decl: OADR
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SECRET/SENSITIVE
defend against and eliminate the total threat. The GLCM base
in Sicily is located only about 100 kilometers from Malta.
Because of the limestone nature of Malta's subsoil, surface to
surface missile storage could be made almost impervious to all
but nuclear attack and physical occupation.
Should the Soviets gain permanent access to a Maltese
airfield, they would probably station an air defense squadron
of fighter aircraft, up to a regiment of strike bombers, an
anti-ship missile support unit, coastal defense cruise
missiles, and a squadron of ASW aircraft. Anti-ship missile
aircraft could threaten the entire Mediterranean, its western
approaches, and the eastern straits. The Soviets could also
provide several Mainstay AWAC aircraft for air defense. But
air operations from Malta would be difficult to sustain in the
absence of substantial pre-stockage of POL. Furthermore,
Western ability to concentrate force, overwhelm the air
defenses and render runways inoperable seems highly probable.
Moreover, Soviet military establishment would require time
between initial presence--expanded to occupation--expanded to
useable, significant military force--all (again, in the absence
of pre-stockage in Libya) at considerable distance from source
of supply. During a major conflict Moscow would not count on
such distant shore facilities to support combat operations.
Aside from operational military benefits, however, a
substantial Soviet military presence on Malta could have a
damaging psychological impact on Western public perception of
Mediterranean security interests.
2. Limited Military Access
While Maltese facilities would not be vital for Soviet
naval operations in the Mediterranean, even limited access to
the islands' harbors and airfields would be of nuisance value
and would accord some desired redundancy in Soviet assets.
Maltese ports and airfields could give the Soviets a platform
for supporting their own naval operations and monitoring the
U.S. Sixth Fleet. The USSR currently maintains some 45 ships
and submarines in the Mediterranean. A Soviet naval facility
would provide support such as maintenance, ordnance, and
personnel facilities. Their squadron already receives
maintenance and logistics support from Soviet ships using ports
in Syria and Libya and limited repairs from certain Yugoslavian
and Tunisian shipyards. The Soviets also have the restricted
use of an airfield in Syria and one in Libya to support
increasing deployments of Soviet naval ASW/reconnaissance
aircraft to the area. Nonetheless, the USSR continually tries
to expand its access to facilities throughout the Mediterranean
to avoid relying on only a few countries. Libyan ports and the
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Decl: OADR
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airfield at Umm Aitiquh provide Soviet naval forces
capabilities similar to prospective facilities in Malta, but
the Soviets may feel they cannot rely only on Libyan
facilities.
C. Impact of Eventual Libyan Military Presence
Malta has relatively little to offer Libyan military
planners, except to improve the reach and reaction time of
Libyan missile-equipped ships and aircraft. Libyan-based
aircraft can reach western Turkey, all of Greece, half of
Italy, and the Mediterranean islands from Corsica to Cyprus.
Assuming that Libya would respect Tunisian neutrality, the use
of Malta would marginally increase the threat radius, covering
a greater part of Italy and bringing within range Spain's
Balearic Islands.
(CIA prefers the following language to the preceding
paragraph: Malta can offer Libya improved reach and reaction
time of Libyan missile-equiped ships and interceptors.
Libyan-based aircraft in theory can reach western Turkey, all
of Greece, half of Italy, and the Mediterranean islands from
Corsica to Cyprus. But possession of Malta would increase the
interceptors' actual operational' radius, covering southern
Italy and almost reaching to Sardinia. End of CIA dissent.)
The periodic presence of Libyan missile-equipped naval
craft at Valletta suggests that Malta may be providing some
maintenance, a critical shortfall within the Libyan navy. The
stationing of such craft in Malta would improve the Libyan
naval reach and reaction time in the strategic Strait of
Sicily. However, current and projected Libyan capabilities
will remain constrained by manning levels, training
deficiencies, and infrequent. exercises.
D. The Terrorist Threat
Libya already has used Malta once as a staging area for
state-sponsored terrorist activities; the Libyan Peoples Bureau
was involved in the attempt on former Libyan Prime Minister
Bakkoush. Otherwise, Libyan activists have used Malta-only for
transit, not as a safe haven. While terrorists could in the
future make heavier use of Malta, they already have use of
nearby Libya itself, and the addition of Malta might offer
little advantage. The Maltese government would, in any case,
have difficulty in concealing its own newly cooperative role,
and would face criticism from a number of concerned
governments.
SECRET/SENSITIVE
Decl: OADR
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E. U.S. Ability to Counter Potential Threats
A crisis in Malta requiring a U.S. military response would
be governed by a USCINCEUR CONPLAN. The CONPLAN provides for
the deployment of forces to execute a wide range of contingency
operations within the USEUCOM area of responsibility which
includes Malta. These forces would be deployed, after National
Command Authority approval, to protect U.S. citizens, their
property and interests, U.S. property, and designated foreign
nationals.
Substantial Soviet presence, or Libyan presence involving
more advanced varieties of Soviet supplied aircraft and ships,
would necessitate relocation of critically short NATO and U.S.
counterair capabilities as well as increase the political
pressure upon the U.S. for aid and assistance in provision of
early warning and air defense capabilities. This would be so
particularly in the case of Spain, Italy, and conceivably,
Greece. However, a similar Soviet presence in Libya or
elsewhere along the North African littoral carries the same
imperatives. Malta is no longer the unique stategic site that
Mintoff and Mifsud Bonnici recall from the past.
VI. CONSTRAINTS ON SOVIET OR LIBYAN INFLUENCE
The Soviet role in Malta may appear more significant than
it is in fact. The Soviets started from zero, so that movement
has occurred basically in one direction. Yet, although we have
not had a productive relationship with the Mintoff-Mifsud
Bonnici regime, the fact remains that Malta is by nature and
long tradition a country which looks to the West. With a
unique language and history, the Maltese, like many other
island peoples, have a relatively self-centered worldview. But
Malta's roots in the West long predate Dom Mintoff and should
outlast him as well.
A. Western Cultural and Political Influences
The long British relationship has left deep marks. Malta
derives its political institutions, including the
administrative and legal systems, from British models. Nearly
all Maltese are fluent in English, in addition to their'native
language. They look to London for cultural experience, and the
leading newspaper, the Times, is replete with British cultural
references. Contact is ina tained through extensive travel in
both directions,. and British visitors represent the bulk of
Malta's tourist trade.
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The only serious competitor to the UK for cultural
influence is Italy. Increasingly, Maltese are learning Italian
as a third language, if for no other reason than to gain access
to that most powerful of all influences, Western television.
Malta is well within range of Italian TV transmitters, and
although Malta has its own television network, the Maltese
universally prefer Italian TV to the strictly controlled diet
they get from TV Malta.
The Maltese press reflects the essentially Western
orientation of the country. The government-controlled organs
do frequently criticize the U.S., yet in general, USIS
placements and pro-U.S. comments greatly exceed pro-Soviet
coverage. This was true even during December 1984, despite
Mintoff's visit to Moscow and announcement of the contract to
build Soviet ships. Although pro-Soviet articles have
increased, so have anti-Soviet articles in the opposition
press, which enjoys greater readership and credibility.
B. Catholicism
Malta is arguably the most devoutly Roman Catholic country
in the world. In a nation of approximately 330,000, there are
some 300 Roman Catholic churches. And, unlike many other
nominally Catholic countries, such as nearby Italy, the Maltese
are churchgoers, with more than two-thirds of the people
regularly attending mass (one recent Gallup poll placed weekly
church attendance at 90 percent). The Church wields
incalculable influence in Malta, and it is well-placed to
caution the public against the blandishments of the Soviet
bloc. It is probably even more inclined to do so under the
present pope, who has taken a stern line against Marxist
ideology and has rejected efforts of 'liberation theologians'
to unify the two worldviews.
C. Economic Links with the West
The Maltese government trumpets.its new economic ties with
the East, obscuring the fact that Malta's economic well-being
is bound up with the West. Three-fourths of Malta's trade is
with Western Europe. The Maltese have long participated in
the Western economic system and have enjoyed its high-quality
products. It would be a shift of the first order for a Maltese
leader to convert the Maltese to using the inferior products of
the Soviet bloc.
Italy alone purchased 10 percent of Malta's exports and
furnished 26.8 percent of Malta's imports in 1983. In
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Decl: OADR
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addition, Italy has an aid relationship with Malta, providing
$81 million since 1980. Malta is presently quarreling with
Italy over the terms of aid and trade. Still, Italy's
proximity, economic strength, and interest in Malta ensure that
the lines remain open. Mifsud Bonnici has expressed a desire
to,resolve differences with Italy, although little measurable
action has yet taken place.
The European Commmunity. Malta enjoys an important
association with the EC, permitting Maltese,goods to enter EC
countries duty-free. This access to a major nearby market
lends crucial support to Malta's export trade. The EC has also
been an aid donor, although here too, Malta is feuding with its
benefactor.
The United Kingdom is probably the leading foreign investor
in Malta. The British also furnish the bulk of Malta's tourist
trade, an asset of tremendous importance to Malta's balance of
payments. The UK is a major trading partner, furnishing 16.8
percent of imports and purchasing 16.9 percent of Malta's
exports in 1983.
The FRG plays a key economic role in Malta and even
maintains an approximate trade balance. West Germany is
Malta's leading export market, purchasing 32.1 percent of
Malta's exports in 1983, and it furnished 16 percent of Malta's
imports. German firms came to Malta in the 1970s as part of a
boom in textile production. This sector is declining and
appears to offer little room for growth. It is nevertheless a
vital buttress of the economy and could not easily be replaced.
D. The Role of China
The leading economic supplier among communist countries is
the PRC, whose influence serves Western interests by
discouraging Maltese ties.-with the Soviet bloc. China has
quietly established itself as a major source of assistance to
important development projects, for example, providing
technology and manpower for construction of a new deepwater
port at Marsaxlokk. The PRC has extended $45 million in
economic assistance since 1972. The China connection is of
obvious importance to the Maltese, and it would be jeopardized
by a significant Maltese turn toward the Soviets.
VII. U.S. RESPONSE
U.S. interests require that we and our allies nurture
Malta's existing ties with the West. We cannot predict with
certainty what sort of regime will succeed the present
SECRET/SENSITIVE
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leadership. If it turns out to be the Nationalists, then
Malta, while retaining its nonaligned status will be more open
to cooperation with the West. If Prime Minister Mifsud Bonnici
or some other new Labor Party leader assumes control, he will
probably cause us more frustration. In any case, we should
ensure that the Maltese, under any regime, continue to
recognize the value of continued ties to the West.
A. Levers and Limitations in Influencing Maltese Policy
In the short term, we unfortunately have few carrots and
fewer sticks with which to influence Maltese policy. Politics
for Malta boils down to dollars and cents. The Maltese
government makes little or no distinction between political and
economic issues beyond its own bedrock objective of. preserving
Maltese independence and neutrality. Malta wants money and
jobs. Unfortunately, the Maltese government does not seem
committed to creating the business climate that will draw new
foreign investment to the islands. Maltese leaders believe
they can haggle and threaten and achieve the same result. They
are wrong, but no one has yet convinced them to change their
way of doing business.
1. Political Ties. We have worked hard and effectively to
impress upon the Maltese that we take them seriously. The
Embassy in Valletta has good access to Maltese officials, and
Ambassador Rentschler has'had frequent meetings with Mintoff,
Mifsud Bonnici, and other leaders. We have bent over backward
to demonstrate serious consideration of even Mintoff's most
outlandish schemes, such as his desire to mediate between North
and South Korea, or his wish that Malta supplant Switzerland as
an international financial center. We have, however, avoided
the formal neutrality treaty that Malta seeks. Mintoff has
written to the President, asking that he invite Mifsud Bonnici
for an official visit to Washington. Thus, we must consider a
response to this request...
2. Trade and Investment. The Maltese seek new
export-oriented industry to fuel economic growth. Malta, while
lacking in natural resources, holds assets as a potential
manufacturing site. It is centrally located, and it has
excellent harbors and a well-regarded, educated, trainable,
English-speaking populace. The government has a declared
policy of attracting new foreign investment. Unfortunately,
the same government has fostered an investment climate that
discourages newcomers and encourages existing firms to consider
moving elsewhere.
SECRET/SENSITIVE
Decl: OADR
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24 -
.a. U.S. Investment. We have a limited history of trade and
investment in Malta, as the market is too small and too distant
.to interest U.S. companies. The U.S. purchased 3.2 percent of
Malta's exports and supplied 11.4 percent of Malta's imports in
1983. Eight U.S. firms, including a Hilton hotel and a
Bluebell (Wrangler) bluejeans factory, operate in Malta and
employ about 2,000 workers. O.S. investment has a total book
value of about $80 million.
We. have been urging U.S. firms to consider investing in
Malta, and we have sponsored an impressive number of visits and
other contacts designed ultimately to bring new O.S. firms to
Malta:
--The Department of Energy sent a team.to Malta in April
1983 to examine Malta as a coal transshipment point.
--DOE completed a feasibility study in November 1983 of the
Marsaxlokk Port Project (designed to serve as a transshipment
site).
--The Trade and Development Program sent missions in late
1983 and produced feasibility studies on transshipment of
feedgrain and on investment opportunities in electronics,
software, and steel castings.
--Overseas Private Investment Corporation President Craig
Nalen visited Malta in April.1983.
--In-1984 OPIC commissioned an International Executive
Service Corps study on trade and investment in Malta.
--In October 1983 our two governments formed the Maltese
American Business. Council to encourage commercial and
investment links. A Maltese contingent of this organization
visited the U.S. in May 1984 to meet with investment-oriented
U.S. officials and industry leaders.
--Malta Development Corporation Chairman Paul Xuereb came
to the U.S. in August 1984 to explore investment
possibilities.
--NSC Senior Staff Officer Roger Robinson visited Malta in
October 1984 to discuss Malta's plan to become an international
financial and trading center.
-OPIC sponsored an investment mission to Malta in June-
1984.
SECRET/SENSITIVE
Decl:. OADR
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SECRET/SENSITIVE
These efforts, while demonstrating U.S. responsiveness,
have generated no significant new U.S. investment. The Maltese
have even expressed some irritation in the wake of these
contacts, complaining that they have not 'produced results.'
This Maltese attitude rests on the assumption that we can
simply direct U.S. business to invest in Malta. We have duly
publicized the contacts and potential opportunites, but the
hard fact is that U.S. firms are not interested, and a major
reason for their reluctance is the stance of the Maltese
government. Corruption, a slow-moving bureaucracy, an
overvalued currency, difficult operating conditions, and a
government that suddenly renegotiates contracts, does not honor
others, spouts socialist rhetoric, and suspects Malta's own
business class of disloyalty to the regime--these are the
problems that lie in the path of any potential investor.
Mintoff has not helped matters by engaging in disputes with
Wrangler bluejeans and with Texaco.
b. Other Western Countries. Western European countries
have been more heavily engaged than we in Malta. They
constitute a key element in preserving Western influence.
Italy remains a major investor and trading partner. Rome
sees a strategic interest in Malta and is inclined to endure
Mintoff's antics in order to retain influence and safeguard its
southern flank.
The UK is probably the largest source of foreign
investment, with about 47 firms operating in Malta. The UK is
also the bellwether of foreign tourism, and it is vital for
Malta to rebuild the tourist trade. Malta unfortunately
accepts no blame for the decline. When the British offered to
discuss ways to improve tourism, Mintoff replied that the UK
needs Malta as a tourist destination and that London should
therefore provide a L50 million soft loan.
The FRG is a major investor and trading partner. About 40
firms operate in Malta, employing 4,500 workers. The trend,
however, is for the FRG to cut back.
2. Economic and Security Assistance
The Maltese demand economic assistance as well as trade and
investment from every nation with which they deal. They are
open in depicting this aid as Malta's just 'reward' for
neutrality. It is an essential part of the neutrality
agreements that Mintoff has sought since declaring Malta's
neutral, nonaligned status. A limited but significant amount
SECRET/SENSITIVE
Decl: OADR
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of aid has been forthcoming from Western Europe, and Malta is
eager for more. Maltese leaders have acted, however, in such a
way as to dry up his source.
a. U.S. Assistance. We have no economic aid program in
Malta, because Malta is ineligible for Development Assistance
and is not a priority for Economic Support Funds. Malta has a
consistently positive balance of payments and substantial
reserves, and the population lives comfortably. Per capita GNP
is over $3,000, placing Malta in the middle-income range.
The one AID-related program we have permits Malta to obtain
excess USG property, paying only for original acquisition cost,
reconditioning, and freight. Malta attaches great importance
to this program. In February 1983 Malta requested and received
Secretary Shultz's agreement for the U.S. to transport this
merchandise gratis in naval ships from the U.S. to Naples.
This 'lift of opportunity" has yet to occur, because the
Maltese dawdled at designating their final shopping list and
are still delaying in completing the purchase agreement. We
nevertheless expect them to do so, at which time AID will
transport the items to an East coast port and the Navy will
ship them to Naples.
We also provided Malta with a small computer in September
1984 for their project to construct a new deepwater port at
Marsaxlokk. The Department of Energy provided the computer and
funded installation under the rubric of boosting U.S. coal
exports, gaining us some credit with the Maltese.
We have had minimal security assistance with Malta,
although Malta is an eligible country. The Maltese have little
interest in upgrading their modest security forces, and the
items they would probably desire would likely be for
crowd-control. Malta is interested in excess MAP property,
just as it has sought other excess USG equipment. Malta has
not sought International Military Education and Training
(IMET), a possible new source of assistance. Whereas Malta
would not accept combat training, it probably would desire
training programs in technical fields.
b. Allies' Economic and Security Assistance. The Italians
perceive their own interest in increasing their presence and
thereby preempting any unfriendly nation from establishing
itself so close to Italian territory. Thus, Italy has been
willing to walk the extra mile. Italy signed a treaty in 1980
supporting Maltese neutrality and pledging a five-year program
of $95 million in grant and loan assistance, retroactive to
1979. Italy has also provided military training for Maltese
SECRET/SENSITIVE
Decl: OADR
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SECRET/SENSITIVE
security forces; an Italian training team remains in Malta,
awaiting bilateral agreement to resume its functions. Italy
sees economic opportunity as well as political necessity in
nurturing relations with Malta.. Trade has been substantially
in Italy's favor, more than compensating for the amount of aid
that Italy donates.
Maltese-Italian relations have soured, however, due to
typical Maltese tactics. When the aid protocol expired at the
end of 1983, development loan funds of $14 million had not been
dispersed, because Malta refused to designate suitable. projects
and instead insisted on cash payment. This, Italy would not
do. The Italians are willing to discuss a new aid protocol,
but Malta refuses to begin talking until this money that is
'owed' to them is paid first. The Maltese then aggravated the
situation by announcing that they will cease importing
nonessential Italian goods unless Italy takes steps to
eliminate the trade imbalance ($196.1 million to $36.1 million
in 1983). The Maltese government began to harass the Italian
military training. mission, and even declared the 1980
neutrality treaty void. The Italian foreign ministry
nevertheless views this downturn as an aberration resulting
from Mintoff's desire to leave office with a flourish, and the
Italians will probably eventually renew their aid program.
The EC has been the other principal aid donor, but
unfortunately, Mintoff has also bit this hand that feeds. In
1983 the EC proposed to renew its aid progam with an offer of
28 MECU (roughly $21 million) dispensed over five years. It
was a reasonable offer, in view of the fact that Malta has a
running battle with the European Parliament over the status of
human rights in Malta. Mintoff, however, angrily rejected the
EC's offer, calling it insulting, and demanded that the whole
sum be transferred before the end of 1984. The EC recently
raised their offer to 29.5 MECU but are unlikely to go higher;
Malta has not yet accepted the new proposal. Mifsud Bonnici
June 17 announced 'a new chapter' in relations with Western
Europe. It remains to be seen what this means in concrete
terms.
B. Looking to the 1987 Election
The next parliamentary election, due by 1987, will affect
Maltese foreign and domestic policies for years to come. This
is true because:
--the Nationalist Party has a much more free enterprise,
pro-Western outlook than the Labor Party; and
SECRET/SENSITIVE
Decl: OADR
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SECRET/SENSITIVE
--the Nationalists would probably win a fair election if
one were held today.
The second is true even if the Nationalist run head-to-head
against Dom Mintoff, let alone a situation in which his
charisma were not present. The 1981 election was
gerrymandered, not actually rigged. As things stand now,
either a major positive change in Maltese policy is likely, or
else the Labor Party regime must take the extreme measure of
postponing the election on some pretext, or blatantly rigging
the outcome. This step is certainly possible. Prime Minister
Mifsud Bonnici has threatened that the election might be
postponed due to 'foreign interference.' Actually going
through with it, however, is a bridge that the regime has not
yet crossed.
This is a case in which human rights considerations and
U.S. national security interests coincide. We should do all we
can to ensure that the election takes place, that it is
conducted fairly, and that the Nationalists perceive a fair
chance to compete at the polls. If the Nationalists do not
envision a fair shot at victory, there are the twin dangers
that they may give up the game and resort to emigation, or that
some elements will turn to violence. Neither activity suits
our interests, and terrorism would give the MLP the pretext it
seeks to eliminate democratic forms in Malta.
C. Consultation with Allies
Given the proximity and greater historic involvement in
Malta of. some of our allies, they are better placed than we to
influence events in the country. As part of our increased
attention on Malta, we have already enhanced contact with our
allies, particularly Italy and the UK. We have raised it with
our key NATO allies, and Ambassador Rentschler sparked a series
of luncheon discussions with the five resident missions in
Malta from NATO countries.
The view of our allies is generally less concerned than
ours. The UK has grown impatient with Mintoff's antics, and in
any event London does not see an acute security problem. The
British believe that Mintoff is being as obdurate with the
Soviets as he is with the West, that the Soviets have at least
as great a difficulty in dealing with Malta, and that the
Soviets have gained little for their efforts.
Italy is calm but watchful. The Italians see primarily a
crude financial realpolitik at work in Malta. In Rome's view,
Mintoff--and also his lieutenants--are shrewd nationalists,
SECRET/SENSITIVE
Decl: OADR
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SECRET/SENSITIVE
playing both ends against the middle. Mintoff's recent
flirtation with Libya, for example, represents an effort to
apply pressure on Italy in light of the expired aid protocol.
The Italian foreign ministry views the Maltese-Libyan treaty as
essentially an empty document, and the MFA also considers
Mintoff's visit to Moscow to have been a failure. The Italians
will nevertheless continue to devote attention to their
southern neighbor, probably including new economic assistance.
VIII. OUTLOOK
A. The Near Term
At least until 1987, Malta will most likely continue to be
dominated by Dom Mintoff. He may keep control for a much
longer period. With his large personal following, Mintoff
might even lead his party to another victory in a free
election. It is more likely, however, that he could retain
power only by obstructing the electoral process.
B. The Post-Mintoff Leadership
After Mintoff departs the scene, the polarized Maltese
political society offers two basic contenders for power: the
opposition Nationalist Party and Mintoff's own, probably
fragmented Malta Labor Party:
--The Nationalist Party, profiting from MLP disunity, may
return to power after a long absence.
--The MLP has no clear successor, no matter whom Mintoff
tries to designate. The party will probably divide into
warring factions led by second-rank leaders Mifsud Bonnici,
Lorry Sant, Sceberras Trigona, and perhaps others. The party's
interest would dictate that the MLP eventually coalesce around
a new leader, but there is no guarantee that the candidates for
power will heed that interest.
The MLP or its contending factions will be tempted to
disregard democratic norms even more than Mintoff has done. In
that event, the staying power of the Nationalists is
questionable. They outnumber the MLP, but they are comparative
gentlemen who have not thus far demonstrated willngness to
engage the MLP in the streets. If the political contest
escalates into sheer violence, the MLP is the more experienced
and adept contestant.
SECRET/SENSITIVE
Decl: OADR
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C. Foreign Policy - Soviet and Libyan Influence
1.'Continued Rule by Mintoff
As long as Mintoff continues to dominate, Malta is likely
to remain nettlesome but not threaten important U.S.
interests. Mintoff's maneuvering between East and West is an
old game at which he is remarkably skilled.
2. Nationalist Party Government
A Nationalist regime would reorient Malta more toward the
West. All would not be perfect; the Nationalists are still
Maltese, and the habit of bargaining to the bitter end of a
negotiation would be their style as well. Malta would also
refrain from turning politically toward NATO; the Nationalists
support Malta's nonaligned stance. Still, the NP strongly
criticizes Mintoff for seeking closer ties with the Soviets and
with Libya, and an NP government would display a more skeptical
attitude toward. those two relationships.
3. A Post-Mintoff MLP Government
The possiblity less easy to characterize is that of a
post-Mintoff MLP regime. Here the Soviets and Libyans would
work to increase links to the regime, whose leader may not even
be one of Mintoff's present second-level triumvirate.
a. Mifsud Bonnici in Charge
The present prime minister may eventually come into his
own. He reportedly has begun a concerted effort to win support
through Sunday tours of Labor Party clubs. He also seems to be
trying to improve his image with more conservative voters as
well. He has adopted mor-e conciliatory tones since becoming
prime minister and has begun to draw. on his old union ties to
reach out to 'working class' Nationalists. He seems less
committed than his predecessor, however, in maintaining a
veneer of democratic pluralism.
Mifsud Bonnici probably shares Mintoff's prickly approach
to the Soviets and Libyans as well as toward the West. He has,
however, already sent positive signals to Italy and the EC.
Whether or not he adheres to the Mintoff line in foreign policy
will probably turn on how large a personal base he has managed
to build. Even if his position is relatively secure after
Mintoff, Mifsud Bonnici might be tempted eventually to look
beyond Malta for support, offering new opportunities for the
SECRET/SENSITIVE
Decl: OADR
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U.S. as well as the Soviets and Libyans to increase their
influence.
b.-Scramble for Power
If Mifsud Bonnici cannot consolidate his control, then he,
his two chief rivals, and perhaps others will cast about for
allies.. The contenders would welcome support from any quarter,
including from abroad. Of the three chief rivals, Lorry Sant
would be the most unwelcome victor from our standpoint, given
his purported affinity for the Libyans.
c. The Worst Case
In this situation, we can imagine a scenario that could
lead to a significant foreign military presence on the island.
None of Mintoff's likely MLP successors has his sophistication
and his ability to play countries off against each other
successfully, nor do these men have the charisma and leadership
qualities that have allowed Mintoff to dominate Malta so
thoroughly. Public protests against a government that is
already seen to be representing a minority would probably
become even more widespread. In particular, an MLP decision to
postpone elections it could not hope to win would be likely to
spark demonstrations on a major scale. Under such
circumstances, Mintoff's successor might turn to Libya (or,
much less likely, to the Soviet Union) to supplement Malta's
meagre crowd control capabilities. Qadhafi would probably be
quick to supply assistance, but he might insist on Maltese
favors in return. Permission to set up early warning radar on
Malta ('to guard against our common foes') could lead
incrementally to more troops, more frequent port calls, and
even Libyan fighter aircraft stationed on Malta.
d. Constraints Likely To Prevail
This last scenario is, however, unlikely. Many constraints
will apply, no matter who is at the Maltese helm. On balance,
we do not see the Maltese intentionally compromising their
sovereignty, their cherished nonaligned status, or their own
economic welfare by reorienting toward Moscow. Barring a major
falling out with the West, Malta's economy will continue to
depend much more heavily on the West than the East. Sheer
self-interest should prevent the Maltese from cutting their
Western ties. Moreover, the ardent Catholicism of the Maltese,
prevailing Maltese affinity for the West, and the valuable
relationship with the PRC, probably would restrain Labor Party
leaders from any abrupt move toward deep entanglements with the
USSR.
SECRET/SENSITIVE
Decl: OADR
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The same factors hold for excessive Maltese involvement
with Libya. Although it is possible that one of Mintoff's
successors could be bought out by Libya, he would have his work
cut out to convince the Maltese--who, by all accounts, dislike
and suspect the Libyans--that a close alliance would be in
Malta's interest. It is much more likely that Qadhafi will
eventually overplay his hand or that the Maltese will find a
more generous patron whose designs are not quite so blatant,
and Libyan-Maltese cooperation will languish once more.
SECRET/SENSITIVE
Decl: OADR
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SECRET/SENSITIVE
DRAFT NSDD
U.S. POLICY TOWARD MALTA
This directive defines U.S. policy toward Malta in light of
Malta's move to enhance ties to Libya and the Soviet bloc,
accompanied by an increasingly authoritarian style of
government. For now, the situation warrants close U.S.
monitoring, consultation with our allies, and a modest
expansion of U.S. resources designed to help keep Malta
nonaligned and free from foreign exploitation or domination.
The United States will maintain businesslike relations with the
present regime, but will not extend extraordinary support
(e.g., economic assistance or high-level visits) as long as
there remains some prospect of the Nationalist Party returning
to power via elections in 1987.
OBJECTIVES
0 Deny the use of Malta for military purposes by the
Soviets or Libyans.
-- Persuade Malta to fulfill its declared policy of
neutrality and nonalignment.
o Prevent Malta from serving as a base for international
terrorism.
0 Maintain Malta's essentially Western orientation and
democratic system.
Nurture Malta's economic links to the West.
Encourage the government to permit free elections, due
by 1987.
Discourage the government's assault on democratic
institutions.
Encourage the Nationalist Party and any
democratically-inclined members of the MLP.
SECRET/SENSITIVE
DECL:OADR
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SECRET/SENSITIVE
ACTION
As a way of seeking to achieve the objectives above, the
United States will take the following actions:
Note. Those steps which enhance cooperation with Malta
will be taken incrementally, in accordance with the response of
the Maltese government.
o Political/Diplomatic
Increase consultations with the PRC (which has a
substantial presence in Malta), the Vatican, and our
NATO allies (especially Italy, the FRG, and the UK,
whose interests are most directly affected) by
conducting periodic reviews.
Instruct our ambassador to Malta to take every
opportunity to:
a) express publicly and privately our support and
sympathy for the democratic process in Malta and
the maintenance of human rights;
b) reiterate our expectation that Malta will
remain true to its avowed policy of neutrality
and nonalignment;
c) ensure that the Government of Malta and its
leaders understand that their relations with the
U.S. and the West would be adversely affected if
Malta grants military access to Libya or to the
Soviet Union and its allies (e.g., politically:
reduce diplomatic contacts, and no longer
characterize Malta as nonaligned; economically:
encourage our friends and allies to reduce
commercial ties to Malta).
Withhold extraordinary support from the present Labor
Party regime while the Nationalist Party retains some
chance of returning to power in 1987.
Maintain frequent contact with Maltese officials,
demonstrating that we do take them seriously and will
consider any reasonable proposal for political or
economic cooperation.
SECRET/SENSITIVE
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 C1....1---;C;-,4 7.-. M-4 C...- , A.......-.......J C- M.,1.,....., ')/l.14/C)G/C)C) ? C'IA ~C1C107~C1 C1G 7C1~C1 C1 C1~C1 C1 C14 C1 C1G~ A
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- 3 -
Turn aside Maltese requests for meetings with the
President or other senior officials above the Under
Secretary level, but consider more frequent visits by
officals at an appropriate level.
Enhance contact with Nationalist Party leaders and
with any MLP leaders who show willingness to preserve
democratic norms.
Promote contact with the NP through the international
Christian Democratic movement.
-- Utilize Project Democracy to encourage the democratic
process through contacts with nonpolitical,
democratically-inclined. organizations such as the
Chamber of Commerce.
o Public Diplomacy Efforts.
-- Boost the USIS information effort and staff in order
to:
a) give the Maltese a'clearer picture of U.S.
policies; and
b) better expose and counter Soviet propaganda
and disinformation.
Increase leader grants and other exchanges.
(USIA notes that staff increases are dependent on Congressional
approval.)
Trade and Investment
-- Continue the AID Excess Property program, including
the promised one-time 'lift of opportunity' by U.S.
naval vessels to Naples.
-- Call attention of U.S. firms to trade and investment
opportunities in Malta.
Impress upon.the Maltese that it is up to them to
establish an.attractive investment climate.
Cease responding to requests for assistance on items
that do not warrant action (e.g.., Malta's request to
become an East-West financial center)
Have OPIC and Commerce. sponsor a series of trade and
investment missions to Malta.
SECRET/SENSITIVE
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O
7A ~
SECRET/SENSITIVE
- 4
Have DOE and Commerce organize a visit of U.S. coal
exporters and transporters to examine Malta as a site
.for transshipment of.coal destined for Mediterranean
ports.
-- Encourage U.S. firms to consider Malta as a
transshipment point for grain.
0 Economic or Military/Security Programs.
-- Offer $25,000 to $50,000 in FY 1985 or FY 1986 for
Internati
n
l
o
a
Military Education and Training (TMrml
(W1791S)
SECRET/SENSITIVE
25X1 (1
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ROUTING AND RECORD SHEET
SUBJECT: (Optional)
SIG on Malta/NSDD
FROM: EXTENSION
NO.
NIC No. 03823-85
A/NI0 for EUROPE
DATE
31 July 1985
TO: (Officer designation, room number, and
building)
DATE
OFFICER'S
COMMENTS (Number each comment to show from whom
RECEIVED
FORWARDE
D INITIALS
to whom. Draw a line across column after each comment.)
1.
NIO/EUR
fir!
Q-~
2.
DDI Reg.
3.
4.
C/NIC
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
FORM 61 O USE PREVIOUS
1-79 EDITIONS
25X1
25X1
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