The Malta Financial Services Centre: A Study in Micro-State Dependency Management?

In 1988, the newly elected Nationalist government decided to develop the Maltese Islands1 into a serious and credible offshore business location. Two years later, it formally applied for full membership of the European Union (EU). After five buoyant years which clearly indicated signs of positive growth in the offshore sector, the same government, reelected in 1992, decided to phase out offshore business and in 1994 replaced the existing law by other legislation which represented more extensive, elaborate and sophisticated ambitions. The new Labour government, elected to power in late 1996, has put on hold the island’s application for EU membership. When still in opposition back in 1988, Labour Party spokespersons had raised a series of objections to the offshore legislative proposals, but the present Labour government has on a number of occasions very clearly indicated its fullest commitment to the island’s aim to develop into a properly supervised and credible financial centre. It recently appointed a committee of experts which submitted a report on developing Malta’s financial services industry by exploiting its location on the periphery of the EU.2 There is broad political consensus on the island that financial services should remain one of the major growth areas of the economy.