Debt is the greatest source of stress in the world today, it is viral, messy and the irresponsible love of profit is to blame. In poverty stricken Africa we can hardly tell the difference between the “boom and burst cycle” of economy the capitalist West have recurrently experienced, and we can only watch in envy as their governments one after the other effect austerity measures in a desperate bid to salvage every penny for the greater good; the reason being that most of us in Africa live in countries where the inflation rate is double digit, where unemployment is endemic and the insanity in an already dysfunctional government means that where palliatives exists, governments can take them away and offer no explanations as to when and how it’ll be returned(ie fuel subsidy removal in Nigeria) or if the economy will ever be fixed at all. We thrive in recession it seems, and one important way through which we have achieved this survival instinct is by seeking greener pastures abroad.
The diasporic community is an economy on its own that supports a lot of Africans, and some of their investments directly impact the economy. And with Europe and America on spending-cuts galore, that billion dollar economy is threatened. The big question many at home waiting on a dwindling western-union-cash ask is: where in the world did all the money go? Dodgy practices in the banking sector aided by weak regulations during the post 9/11economic boom contributed to the financial mess that culminated in a widespread slow down across the globe. When this happens, the financial rule of thumb is to pump public money into banks when they fail (give it a fancy name, “stimulus plan”) and allow taxpayers responsible for the failed banks in the long run thereby putting ordinary people, families and businesses through a difficult time.
However, the collapse of these banks was not only an economic and financial crisis, it was also a socio-political crisis threatening the stability of countries in Europe as creditors take advantage of the mess and decide how much they were willing to make out of all these transactions with the borrowers. The IMF and the World Bank and their likes through the strings that comes with such loans help the western countries keep control of most 3rd world economies because such loans don’t come without some form of austerity strictures as collateral. I remember one of the preconditions of the IMF to credit the IBB led government in Nigeria was that he mortgaged the future of education in Nigeria by reducing the universities in Nigeria to five. As an African, I can understand the imminent prejudice in such a transaction of the greedy African and the European exploiter. But these are desperate times in the EU, and desperate measures means that regional ties dissolve in the face of business, and profit to them however ‘unprofessional’, is profit
Greece is sold out to its creditors in a desperate bid to remain part of the EU, Iceland went rogue with Britain and the Netherlands, and Cyprus is confused which path to tread. Whither Cyprus? The ECB, IMF and Germany want to help by providing 10billion Euros and make depositors bear the burden for the mess created by the banks with a one-off tax of 6.75 percent on bank deposits of above 20,000 Euros and 9.9 percent on above 100,000 Euros.
However, this has outraged the people of Cyprus who feel their Government took a reckless deal for such a small amount of money, the Cypriots are now desperately courting the Russian oligarchs as a plan B and I’m here
wondering why no one (not even the media) is talking about the Icelandic model?
Iceland’s economy is recovering faster and more effectively after the 2008
recession, better than that of any country including the EU and America. And what Iceland did was to save the people and let the banks die. The
orthodox style where bankers are allowed to get reckless in their pursuit of
profit, when they get lucky they share the jumbo pay among themselves and when they fail the people should starve to make the banks survive was no more.
It introduced capital controls, liquidated the junk corporations and banks that failed, discouraged the reckless behavior that caused the crisis by going after the “bankstars” with criminal prosecutions and locking them in jail and also providing help to the ordinary people in the real economy. Although it still owes the British and Netherland’s government who paid out their people who lost money to the “Icesave” account and still remains on Gordon Brown’s terrorism legislation as a result, it happened to be a small price for its dignity rather than agree to a doomed debt slave. Iceland has since moved on, a fallen unemployment rate to below five percent, it repaid its IMF rescue loan ahead of schedule, its tourism industry is back on track and it’s been enjoying a full recovery in every sector of its economy (apart from the banking sector). For the government of Cyprus, it is a struggle
between the right of the people and the capitalistic financial market.
However, the moral of the Icelandic story is democracy; it should be the right of Cypriot to decide how much burden they want to shoulder if they want to at all, and not the EU or the Russian’s prerogative. There’s so much inspiration from the unorthodox story of Iceland for countries like Cyprus and those of sub-Saharan Africa. It is an emotional story that shows that policy autonomy and political prudence from our leaders is imperative if Africa wants to abandon this abyss of economic retrogression that has caused more and more of our productive populace to dump the motherland for an uncertain future in foreign lands.