Most Favoured Nation: The Maltese Gambit

SPACing your way back into the EU, sanctions impact, and greening trade defence

Welcome to the 93rd edition of Most Favoured Nation. The full post is for paid subscribers only, but you can sign up for a free trial below.

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The US is going through one of its annual debt ceiling crises again. The basic issue is that, for some reason, the US has imposed an arbitrary limit on the amount of government debt it is allowed to take on, and lifting that limit requires an affirmative vote by Congress. All fine if the governing party runs Congress; not all fine if it does not.

One of the fun things to emerge out of all of this is the platinum coin discussion. Due to legal loopholes/oversight, it is technically possible for the US Mint to create a platinum coin, give it a face value of, say, $1 trillion, and distribute it to the Federal Reserve, which could then deposit the coin at the Treasury, which would reduce/remove the national debt and remove the need for Congress to squabble about lifting the debt ceiling.

An excellent wheeze that genuinely could happen! But one that is very unlikely to happen because it is a bit bonkers, alas.

Anyway, this led me to ask Twitter if there is a UK policy debate equivalent to the platinum coin discussion in the US.

The general criteria: Something that is legally possible but also not going to happen because it is insane.

With thanks to Dmitry and Sean Tuffy, the most legit answer is people trying to get the Queen/King to intervene to overhaul government policy decisions. We saw this quite a lot during Brexit, but it pops up with other policy issues every now and then.

Sure, the King could intervene … but he isn’t going to.

HOWEVER.

My absolute favourite response was from Duncan Robinson, who proposed the Maltese Gambit approach to the UK reentering the EU.

Some of you might remember the SPAC (Special Purpose Acquisition Company) craze that really kicked off in 2019/2020. This was/is a wheeze that allows companies to IPO without having to go through arduous listing procedures.

You simply set up a shell company, fill it with loads of cheap cash from investors with nothing better to do, and then merge with a company that is already listed on a stock exchange somewhere.

Very clever (if not, looking at what happened to most of them, a particularly good investment). The funniest example of this resulted in a single New Jersey deli being valued at $100 million in the stock market. (Read Matt Levine on this here.)

The Maltese Gambit would be the trade/politics/geopolitics version of this. The UK could re-merge with Malta, and in doing so, aquire its EU membership via the backdoor and not have to go through an arduous accession process.

Genius!

Now I know one of you accession nerds is going to contact me saying it is actually more complicated than that. But let me have my fun because — as with the other examples above – it is not going to happen anyway.