The European integration process is in tatters as the once-strong economies of Spain, Italy and Belgium stand precariously to follow the path that already has dramatically weakened Greece, Portugal, and Ireland. Moreover, the European Union’s (EU) larger, more economically developed economies – most notably, France and Germany – are increasingly hesitant to intervene and provide the leadership and resources necessary to avoid the demise of the integration movement.
This fear stems partially from the potential for a cascading effect that would drag the union’s strongest economies into insolvency. This economically calamitous period was exposed when Greece admitted that it couldn’t service its enormous public debt and the EU subsequently was forced, albeit with great hesitation, to call an emergency summit for approving funds to bail out its delinquent member.
This is now followed by revelations that Spain and Italy, the region’s third and fourth largest economies, are on the verge of not meeting their debt commitments. As a short-term remedy, The European Central Bank has intervened, buying government bonds in these countries to provide much needed capital in order to avoid default.
This is not a sustainable strategy and without enormous financial booster shots from the richer economies along with ongoing prudent financial and austere management of the respective economies, both countries face even greater risks of insolvency.
In the end, the richer economies will provide the financial injections needed to avoid regional and, in an interconnected world, global catastrophe.
There are pertinent lessons here for Guyana and its own integration efforts with Caricom. If the region is to pursue the deep levels of integration as envisaged by the Caribbean Single Market and Economy (CSME), then we risk making all of our economies vulnerable to the array of credit, market and financial problems that will hit in one or more of the region’s countries at any time.
When this happens, the region does not have an ‘undisputed leader(s)’ – or, more formally, financial hegemon(s) – to provide essential resources to avert or remedy economic crises. We end up in a situation where small, poor economies are asked to bail out their equally small, poor regional peers. This does not constitute pragmatic policy and I don’t see leaders in Caricom countries lining up to bail out anyone.
We can already cite examples of this dynamic being manifested. For example, when Jamaica recently ran into economic difficulties, the country turned to the International Monetary Fund (IMF) for assistance. Where was Trinidad, Guyana and Barbados – the so-called More Developed Countries of the region – or the Caribbean Development Bank to provide the necessary assistance for it struggling counterpart? A second example arises from the natural disasters that are prone to occur in the region. The current Trinidad Prime Minister said her country cannot be expected to play the roles of ‘godfather’ and ‘ATM’ for the region when such unfortunate events occur.
These examples reflect just one element (see my previous letter titled ‘Regional integration is impractical,’ Stabroek News, February 27, 2011) of what makes the Caricom project untenable. Foremost, it lacks an undisputed regional leader(s) to advance the process for region-wide benefit.
Guyana must reassess earnestly its involvement in the Caricom integration process and should direct its meagre financial and technical resources toward other integration efforts that are more likely to succeed, or adopt a unilateral strategy open to regional economic cooperation with the entire global community.