I spent the summer after I graduated some ten years ago in Ireland, it was one of the best experiences of my life. Ireland, you felt was a nation that could do everything, money from the EU was funding everything.
There was a building boom to rival Dubai, young people were brash and optimistic, and a nation that had long been a de facto colony of Britain was forging its own identity and future.
Loans were available for all, houses were being bought in minutes, and the Celtic tiger was roaring.
The Celtic tiger was a misnomer, the tiger is not native to Europe and the term was borrowed from the far-east.
While the tigers of the East look like they are here to stay, the Irish tiger is all but dead now. Ireland acted as an Atlantic bridge for American companies to branch into Europe, corporation tax was 12%, all deposits and loans were guaranteed by the government and Ireland was the biggest growing economy in Europe for years in a row. Now the country had to accept a bailout package worth $100 billion and loss of sovereignty.
Our own experiment with the East African Community is modeled on the EU and we will have to reevaluate the situation with regards to EAC. We need more intra-regional trade, but too much regional trade is what is killing the EU.
The EU is a fortress designed to keep trade internal, so UK trades more with Ireland than with Brazil, India, Turkey, Mexico and so forth, but the real growth is outside the EU and they were not tapping into that growth. So for Rwanda we need to balance regional and international trade in growth areas.
The second issue is with a single currency, the Euro looks doomed at the moment, the global crisis is affecting nations differently but the currency is the same, so nations cannot devalue currency or raise interest rates.
This crisis is due more to the indiscipline in spending over decades than it is due to the current financial crisis, all the crisis has done is underline long-standing problems in Europe’s economies. The only way Europe can now survive is by lowering trade barriers and truly having free and fair trade while they can still call the shots.
As for Rwanda, it shows that quick growth can be costly. That is why the banks have tightened lending, it wasn’t just due to just limited capital but common sense, a future built on debt is unstable.
However bad aid is, debt is worse and the effects of debt multiply over time and all the pain Ireland avoided is now returning tenfold.
I am skeptical of the benefits of a single currency, as reliant as we are on our regional partners, we must keep control of our future and sovereignty. You can receive aid and opt out later, but debts hold you until what belongs to Caesar is rendered on to Caesar.