Libya's heavy-handed policy nudges Malta toward the West

The Republic of Malta, three islands strategically placed in the Mediterranean between Sicily and Tunisia, may be tiptoeing its way back to closer understanding with the West.

The main reason, said leaders of Malta's ruling Labor Party during this reporter's recent stopover in the capital city of Valletta, is the heavy-handed policy of Libyan leader Muammar Qaddafi.

Malta Prime Minister Dominic Mintoff has hauled Libya before the United Nations Security Council for acting, as Mr. Mintoff put it, "like Malta's worst enemy."

Italian Prime Minister Francesco Cossiga's government now has initialed a five-year, $15 million yearly economic and technical aid agreement with Malta, helping to compensate Malta for its loss of cheap Libyan oil supplies and other Libyan aid.

Libyan warships ended the Libyan-Maltese honeymoon last month by threatening an Italian oil drilling rig working for Malta in disputed Mediterranean waters. A Western consortium headed by Texaco of the United States had been prospecting for oil in Malta's behalf. (Malta hoped to end the total dependence on Arab oil imports by the 320,000 Maltese -- who saw final closing of the British and NATO naval base there in March 1979.)

Earlier, Mr. Mintoff, who had embraced Colonel Qaddafi as a friend in need when the income from the British bases ended, closed down a Libyan radio propaganda station and two Libyan-packed newspapers in Malta. After the oil-rig incident, he expelled about 40 Libyan military helicopter personnel, closing down what to some observers had looked like an embryonic Libyan helicopter base at the Valletta airport.

However, analysts here believe there was another important reason, besides Colonel Qaddafi, for Italy's interest in hastening to aid Malta, whose main island was an Allied bastion in World War II and a target for italian and German bombers based on the nearby Italian mainland.

This reason is the growing Soviet naval and maritime presence in the Mediterranean, one of the biggest challenges for the NATO alliance's southern headquarters at Naples, Italy. Malta's dockyards, now expanding with the help of loans from Libya and other Arab states and from China, recently contracted to service three Soviet ships.

Early reports of the italian-Maltese agreement suggest that Italy has agreed to give Malta guarantees for its continued independence and neutrality -- something Mr. Mintoff has sought in vain from France, Algeria, and finally from Libya, since Malta became a fully independent member of the Commonwealth in 1964 .

Until last year Malta, with its position at a vital "choke point" on Mediterranean shipping and communication lanes, had rarely been free of foreign colonists or foreign bases. Malta's largest private employer is a factory exporting blue jeans under American license, and employing 1,500 workers.

But the biggest question in the island's economic future now is what will become of the $60 million Libyan Arab Maltese Holding company, a series of joint ventures including the big dockyards and the Malta Shipbuilding Company financed jointly by Libyan funds and Maltese private capital.

Partners who may now wonder what will become of the Libyan connection include a Brazilian trading firm, a French plastics processing company, and others including General Electric's Medelec switchgear Company and a large Italian pump manufacturer.