Editor, Refer to Kenneth Agutamba’s article, “Europe’s sick ‘PIGS’ may dampen EAC’s monetary union hopes” (The New Times, July 12). While PIGS sounds catchier but it is actually PIIGS—Italy was similarly in the mix and on the brink until the ECB opened up its spigots to flood the markets with liquidity to drastically reduce the interest rates markets were demanding on Italian government debt. And the French were not far behind either. It is also not true to say austerity means foregoing “luxury” items alone. It extends to withdrawing essential services and products as well for poor people, the old and the young who cannot access them except as public services and subsidized goods. Austerity is in reality nothing more than another fancy term for the equally jargonized IMF/creditor-imposed structural adjustment programmes (SAPs) and extended structural adjustment programmes (ESAPs) that so ravaged African economies in the 1970s to early 1990s (and whose enduring effects we still feel to this day), involving wholesale disinvestment of state-owned industries and privatizing them into foreign-owned monopolies, the destruction of public services, including health, education, agricultural extension services and many more in order to wring out the smallest “savings” to pay off foreign debts, many of them odious, never having benefitted the citizenry who were now required to bear the brunt of repaying them. The SAPs/ESAPs also came with the loss of effective sovereignty with many critical decisions on national economic, fiscal and monetary policy transferred to the agents of creditor banks and other debt holders, the IMF-World Bank and the Paris and London Clubs on the forefront. And yet those SAP/ESAP policies never helped any single country escape from its debt trap, until the highly indebted poor country programme (HIPC) was enacted in the late 1990s to forgive poor countries’ debts in recognition they were un-repayable. But that was after about two to three decades of misery and intense social conflict, including wars in many countries, as a direct result of the burdens of servicing debts that societies could not bear, should never have been contracted or extended, and should have been written off or repudiated once it became clear they could never be repaid without the destruction of the societies of the indebted countries. What I never imagined in my wildest dreams was that the EU would be administered the same destructive poisonous policies and programmes to one of theirs (the cradle of their civilization, as we are told so often) with the same venomous abandon as they did to us Third World populations a few decades before. I also thought the IMF had been chastened by its late 1990s and 2000s experience, when so many countries abandoned its advice and financing and the institution was almost going out of business. But, clearly extremely bad ideas are extremely hard to kill. But I fully agree with the writer on the main point in his article. We East Africans should learn valuable lessons from the lessons of the Euro-Fiasco and not rush into the straitjacket of a single currency. At least not until there is greater convergence among our economies and a single overarching fiscal structure that sets overall taxation policy and ensures revenue transfers among the constituent states (as in the United States). One of the things many people don’t seem to grasp is that, contrary to assumptions, the Euro (although it looks like a single currency) is in fact a system of fixed-exchange of legacy currencies. A real destructive straitjacket for the periphery countries of the Euro, who cannot use exchange rate flexibility to improve their competitiveness and therefore now find themselves in deep hot water without any easy way out. Mwene Kalinda
