Prosperity without integrity? Malta’s economic dead end

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Malta’s economy is built on the pillars of financial services and gaming. But Manuel Delia asks: Is this prosperity built on moral compromise? By relying on loopholes, secrecy, and addiction-driven industries, Malta risks confusing short-term gain with long-term wellbeing, eroding not just its economy, but its democracy itself.

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Malta takes pride in its economic successes. We describe ourselves as a centre for financial services and gaming, as if these were neutral, reputable terms. Remove the polite labels, and what remains is less glamorous: one industry prospers by helping outsiders evade taxes, the other by supporting businesses that thrive on people’s addictions.

For a small country with no oil, no minerals, and no space to farm, this is the narrative we tell ourselves: moral compromise is the cost of survival. The argument appears pragmatic, even clever. Better to exploit loopholes than fall into irrelevance. Better to host online casinos than to export potatoes.

But is this truly the best we can do? Should a nation of half a million people depend on supporting tax evaders and those who exploit gamblers for its prosperity? Or is the deeper, more uncomfortable truth that we have confused short-term gains with long-term wellbeing, thereby damaging not only our economy’s resilience but also the very foundations of our democracy?

This article asks a simple question: Does Malta need to be amoral to succeed?

Malta’s dependence on financial services and gaming did not happen by chance. Successive governments promoted the island as agile, adaptable, and “open for business.” We had no natural resources, so we traded on what we had: a passport into the EU, a reputation for light-touch regulation, and the promise that if you set up here, nobody would ask too many awkward questions.

For a time, this seemed to be a masterstroke. Banking, insurance, and investment firms are founded here by the hundreds. Gaming companies set up their servers and declared Malta the “capital of iGaming.” The sectors now contribute a significant portion of the GDP, employ thousands, and support a thriving service economy, including lawyers, accountants, IT specialists, and estate agents.

But behind the official account lies another reality. Financial services have become a shorthand for helping wealthy outsiders minimise their tax bills. Gaming has become a euphemism for hosting businesses that exploit compulsive behaviour and debt. Our role was to provide the legal framework, the servers, and the workforce that made these models profitable.

We told ourselves that this was clever pragmatism for a small island. Yet what we truly built was an economy that outsources its risks and keeps the moral costs at arm’s length. It pays off in the short term, but it leaves us dangerously dependent on industries that regulators and the public worldwide are increasingly suspicious of.

“When morality becomes optional in economics, it soon becomes optional in politics.”

Whenever criticism of Malta’s economic model is raised, the usual defence quickly emerges: everyone does it. Small nations cannot compete with large economies on scale, so we establish niches in the grey areas. Cyprus operates financial schemes. Gibraltar thrives on gaming. Ireland attracted tech companies with generous tax deals. Why should Malta be any different?

The problem is, this defence doesn’t last long. Yes, other small states have used similar tactics — but many have also recognised their limits. Ireland promoted its low-tax strategy to attract investment, but then developed an innovation and talent ecosystem around it. Estonia used its small size to lead in digital trust and governance, rather than hiding behind opacity. Luxembourg is now focusing on the green and space finance sectors.

Meanwhile, Malta clings to the myth that its prosperity depends on turning a blind eye to its problems. However, reputational risk is increasing. The EU and OECD are closing tax loopholes. International watchdogs are tightening anti-money-laundering measures. Gaming is under greater scrutiny for its social impacts. The world is progressing, and Malta remains defending the indefensible.

Far from being unavoidable, amorality is a tactic that makes us vulnerable. What appears as clever pragmatism may, in reality, be narrow-minded, self-destructive behaviour.

The danger is not just economic. An economy that relies on opacity and loopholes inevitably erodes the institutions designed to protect the public interest.

When financial interests depend on compliant regulators, the temptation to bend rules grows strong. Planning laws are often bypassed to favour well-connected developers; financial watchdogs are lenient to reassure important clients; gaming oversight is relaxed to prevent operators from relocating elsewhere. Rules become optional for those who can challenge them, and meaningless for everyone else.

This dynamic is harmful to democracy. It fosters a culture where citizens no longer trust that the law is applied fairly. If economic success depends on regulatory capture, then politics turns into managing exceptions for the powerful rather than upholding rules for the majority. Corruption stops being a rare occurrence; it becomes the core business model.

“Low tax was Ireland’s entry point; innovation and talent made it sustainable.”

The cost is measured not only in reputational damage abroad but also in cynicism at home. People conclude that fairness is an illusion, that government exists to serve those who can pay for access, and that public life is merely a theatre of excuses. In such a climate, democracy is weakened not by a single scandal but by the normalisation of amorality as a national strategy.

When a country accepts that morality is optional in economics, it shouldn’t be surprised if morality also becomes optional in politics.

The biggest mistake Malta could make is to believe there are no alternatives. Our size, rather than a disadvantage, can be a strategic benefit if we make the right choices. Small states can respond more quickly, pass laws more swiftly, and craft a sharper identity than larger economies, but only if they select a route that fosters trust rather than damages it.

There are examples close to home. Ireland may have initially offered tax advantages, but it used that as a starting point to develop an innovation ecosystem, anchored by universities and tech talent. Estonia turned its small size into agility, pioneering digital governance that has become a global benchmark. Luxembourg reinvented itself as a centre for sustainable finance, using its credibility as its main selling point.

Malta could implement similar changes. Instead of maintaining secrecy and exploiting loopholes, we should focus on transparent finance, such as becoming a hub for environmental, social, and governance investments: funds and projects that channel money into companies practising sustainability, fair treatment of workers, and open management. Rather than hosting dubious shell companies, Malta could establish itself as a trustworthy jurisdiction for investors who want their money to do good as well as generate profits.

Our gaming expertise can develop into responsible digital innovation, such as gamified education, health applications, or online platforms that improve rather than exploit human behaviour. And our greatest untapped asset, a functioning rule of law, could become the foundation of our brand: a jurisdiction trusted not because it turns a blind eye, but because it upholds integrity.

The choice is not between prosperity and principles. The real dilemma is between short-term gains that fall apart under investigation and long-term credibility that supports growth.

So, does Malta need to be amoral to succeed? The answer is no, but only if we accept that the path we are on is not clever pragmatism but a dead end. Economies based on secrecy and addiction may generate money in the short term, but they cannot garner respect, stability, or trust. And without those, prosperity remains fragile.

The alternative is more challenging, but significantly more rewarding: leveraging Malta’s small size to create an economy built on integrity and trust. We can become the place where finance signifies clean capital, where digital innovation benefits people rather than exploits them, and where rules are not bent for the powerful but enforced fairly for everyone.

That is not merely an economic choice; it is a democratic one. Because when a country’s wealth is based on honesty and fairness, its politics can follow suit.

Malta’s future need not rely on loopholes and dependencies. Our true strength lies not in taking shortcuts, but in setting the way forward. We can be remembered either as the country that chose easy ways or as the nation that demonstrated integrity is not a flaw but the foundation of lasting prosperity.

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