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(b) Dockyard. We should press the Maltese to expropriate and develop the Malta dockyard, as an important source of additional employment.
The
Dr. Olivier was likely to argue that he could not obtain the necessary constitutional amendment (for which co-operation of the Malta Opposition would be required) unless he could point to a concession from us in the shape of an offer to meet the cost of compensation by means of writing off the remaining half (£3 million) of our loan to Bailey (Malta) Ltd.
case on merits for a concession here was not strong. On the other hand, the prospects for our ever recovering the loan (which becane repayable only if a profit was made on the dockyard) were uncertain, and neanwhile the current costs were considerable; and it was possible that if the Maltese demonstrated a clear intention to nationalise the dockyard Baileys would be
prepared to settle for substantially less than the compensation which they
were now asking from us, For those reasons the Committee felt that on
balance an offer to pay the full compensation to Baileys would be a con- cession worth making if it ensured prompt Maltese action in respect of the dockyard and generally helped the negotiations. It was, however, noted
that the Maltese in the discussions in Malta with the Minister without
Portfolio had shown no particular interest in the dockyard; and it was suggested that the Leader of the Malta Opposition (Mr. Mintoff) would not
co-operate in the necessary constitutional amendment unless he obtained sone
electoral advantage also; for this reason, and because we were in no position to insist on Maltese action, we should not (as the report by officials recommended) regard Maltese agreement to take action in respect
of the dockyard as an essential part of a general settlement with Malta.
(c) Unspent balances. To regard the unspent balances of aid from earlier years as still available would involve cutting other aid commitments within
the annual aid ceiling. In discussions in Malta the Maltese had not
pressed for any concession in this respect, and we should not be prepared
to grant one.
(a) Malta and NATO. At an early stage the Maltese had raised (probably for tactical reasons) the question of our capacity to carry out our obligation to defend Malta after the defence run-down, and had suggested a
joint study under the auspices of NATO. The Secretary-General of NATO (Sr. Brosio) had also raised with the Foreign Secretary the question of a
NATO study of this question. It would be unacceptable, and might well have
undesirable repercussions elsewhere, to permit NATO to act as an arbiter of
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