EU’s uncertainty threatens Africa

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It would appear that philosophers have been dead right in asserting, for centuries, that change is the only constant. The physical world is littered with evidence of the evolution and alteration of matter, and change is the only certainty.

A rapid appraisal of recent global economic and political events leads to the question: has the world entered the most difficult period in human history, an era where uncertainty, like change, has become a constant to the extent that we can rhetorically argue that the certainty of uncertainty is certain?

In his essay Understanding Uncertainty, Dennis Lindley had this to say about uncertainty: “There are some things that you know to be true, and others that you know to be false; yet, despite this extensive knowledge that you have, there remain many things whose truth or falsity is not known to you. We say that you are uncertain about them. You are uncertain, to varying degrees, about everything in the future; much of the past is hidden from you; and there is a lot of the present about which you do not have full information. Uncertainty is everywhere and you cannot escape from it.”

Much of what we were certain about even a decade ago has since become uncertain. Perhaps even then we were deluded, or at least barely knew what was happening around us. But we now find ourselves in the midst of doubt; a vortex of complexities defies our established knowledge of economic and political philosophy, constraining our ability to predict the next course of action.

The pursuit of advancement compels us to tackle these uncertainties that threaten the very essence of civilisation and human progress. The “economic and political turmoil in Europe”, in the BBC’s words, will affect efforts to grow our economies in Africa and to improve our social conditions, compelling us to join the resulting debates.

For much of the 20th century economists could confidently diagnose problems confronting national and global economies, and propose remedies. In an article in the New York Times of May 6, leading economist Paul Krugman concludes that “disputes in economics used to be bounded by a shared understanding of evidence, creating a broad range of agreement about economic policy”, yet today “we have responded to the crisis with a mix of paralysis and confusion”.

We cannot say the same of Europe today. The near-collapse of Greece and the deep crises in Portugal, Ireland, Italy and Spain defy established economic thinking. When Africa and Latin America faced similar problems in the 1980s, the common refrain was: “Your problems are structural.” And therefore structural adjustment programmes were prescribed. In the current crisis in Europe, that certainty has disappeared. There is no longer a standard package that economists (at least in the global north) broadly accepts and reference to the failures being “structural” has been muted from the nomenclature – compared with what were characterised as the problems of Africa in the 1980s.

Imagine you’re a student of economic history and your professor asks you to do a qualitative comparative analysis of the causes and variations to economic difficulties of post-colonial Zimbabwe and post-Athens (2004 Olympics) Greece. Having dealt with history, now proceed, using econometric modelling, to propose potential solutions… Notice the uncertainty with which you approach this exercise?

One of the few certainties is that the prospects of recovery in the global economy are very tentative. We cannot but worry about a Europe that cannot pay its debt, a Europe that cannot buy Africa’s products, a Europe that may plunge deeper into right-wing politics as has just happened in Greece and somewhat in France.

This breeds apprehension and uncertainty for most of us. It defies established wisdom about what needs to be done to stabilise the global economy.

The events of Sunday, May 6 (outcome of elections in Greece and France) validate our dilemma. The left and the right won elections in France and Greece, respectively, on the anti-austerity ticket.

We see a confluence of ideas here. Both far left and far right parties reject the austerity measures championed by the European Central Bank, the German chancellor and the outgoing president of France. The new leadership of France argues that recovery will occur when spending, not austerity, is prioritised. In other words, Europe needs to spend money on strategic and catalytic projects to stimulate growth and job creation. Much like SA did leading up to the 2010 World Cup – the build programme served as a counter-cyclical measure against recession.

Another SA lesson to the world is the financial and credit market regulatory framework model which, only last week, the queen announced in Parliament as a national priority in Britain.

The newly victorious Greek parties, on the other hand, oppose austerity, but, unlike the French Socialist Party, dwell more on protecting sovereignty than on solutions. The truth is their threat to leave the euro is just that. They need the euro zone as much as Europe needs Greece – to prevent a contagion as well as recover their money.

Already in Ireland, Spain and Italy, presidential palaces have welcomed new tenants, thanks to the fallout occasioned by the recession.

Beyond the devastating effects of the persistent recession, we should be more concerned about what should be done going forward. Perhaps Vivian Forester, a French intellectual, is correct in noting that: “We are living in the midst of a masterly deception, in a world gone forever, although we stubbornly insist on denying it… We are fiddling with the vestiges of that world, busily plugging gaps, patching up emptiness, fudging up substitutes around a system that has not just collapsed but vanished.”

Unfortunately, the gains of socialist parties in France and Greece should not spark razzmatazz in Africa, for a number of reasons.

First, these parties are not necessarily internationalists. They are preoccupied with national politics rather than solidarity with progressive forces in Africa.

Second, the left parties in Greece have little chance of forming a government because they lack the necessary numbers.

Third, there is just too much disunity about what needs to be done. “Euro falls as Greeks turn to the extremes,” read the headline in the International Herald Tribune of May 8, while Newsweek on May 7 reported a warning from outgoing president Sarkozy that should the “fiscal policy nerd” win French elections, there’ll be “instant market turmoil”. Meanwhile, the German chancellor has warned that renegotiating Europe’s fiscal path is non-negotiable.

Fourth, the crisis in Europe might draw leaders away from the development agenda, thus weakening Africa’s case in multilateral institutions like the G20. Already the Gleneagles commitments have been silently shelved.

The EU seems increasingly inward-looking and may simply drop Africa from its agenda. Already the International Monetary Fund has done so; it is now preoccupied with Europe.

We cannot afford a slide back into the era where Africa took a back seat. There is too much at stake. Uncertainty has marked the lives of millions of people from the developing world for too long. The global economy has to stabilise. The European market must be revived and opened for Africa’s products. Africa needs capital from the West to finance its grand economic and social infrastructure programmes. Ambitious organisations such as Brics are necessary, but cannot immediately replace European and North American markets and capital.

Finally, the world urgently needs to manage the schizophrenia occasioned by the crisis of capitalism – the freedom of the free market. Trends point to deepening protectionism and monopolisation of markets. Administrative measures are being applied to limit imports of value-added products from African and Latin American countries.

As Africa diversifies from primary sectors to manufacturing, it battles to gain market access in North America and Europe. As Africa curtails subsidies, heeding the advice of the superpowers and international finance institutions, Europe and North America continue to subsidise farmers.

It is becoming clearer that the freedom of the free market system encompasses significant dictatorship. The dictatorship of the dominant political and economic interests overrules every other code we thought the free market was about. Since 2008 (when the rupture happened), the world has become more uncertain about what experts mean when they advocate industrialisation and export-led growth as a route to prosperity for African countries.

What is most certain is the need for Africa to remain on the development agenda of all multilateral and global financial institutions.

On a more positive note, as Hamid al Ghazali, a renowned Islamic philosopher, said, the “certainty of necessity is preceded by intense doubt”.

Beyond these immediate qualms – especially if we add Brics into the mix – our prospects look positive.

n Ngcaweni is a public servant writing in his personal capacity


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