The West African Monetary Experiment: Repeating Mistakes or part of a new order?

I have spent the latter half of this past week quite happily lecturing to members of the Nigerian House of Representatives and Senate--sharp, clear minded men--on the lessons of Europe's legal and economic order.

A great many people might not know of the new constitutional and international architecture that has risen over the past decade within Africa. An African Union and African Economic Community have been proposed and brought forth. Alongside these bodies, which in truth cover a continent too big and diverse to be organised on European lines, regional bodies have been given a new prominence.

The South African Development Community, the Economic Community of West Africa, and the East African Community are just three examples of these developments.

In addition, some lessons have been learned from European developments. So, for instance, the West African community (ECOWAS) has set up a Court of Justice on European Union lines.

Unlike the European Union, that court, which has power over disputes, interpretation of treaties, and the application of laws known as 'protocols' rather than directives, also has a Human Rights responsibility.

That means that a very powerful engine of economic integration has been added to one of human rights. Cases concerning visas, immigration, and potentially government spending, police and army policy, and civil society in West Africa, are now within the orbit of the Judges.

West Africa is no stranger to monetary union either. The CFA Franc, from the francophone part of the area, is an old-established single currency. It is organised and run by a system in which central banks check each other and their governments, and is explicitly linked in the European Union treaties with the government of France.

Indeed, the support of the CFA Franc is technically a matter of EU law. Some people in Africa have even questioned whether or not the CFA Franc is almost a 'currency designed to keep Africa poor' by France.

Now, in just over seventeen months, the English-speaking part of West Africa, home of one of the world's last oil booms, plans to set up its own Monetary Union. The six-member West African Monetary Zone proposes to create a currency, called the ECO, which will be linked to the CFA. The idea is to expand trade, stabilise prices, and discipline governments.

Before our eyes, would we but look, a vast experiment is taking place. Some of Europe's lessons are being learned; some are not. For instance, the rush to monetary union and the way in which it was done in Europe has meant that there is no effective mechanism when states are confronted with high interest rates and low growth because a few of their number are running deficits and borrowing like there is no tomorrow.

The West African solution is a series of commissions--rather than one--with executive power; a much smaller, directly elected parliament to supervise matters; and the backing of Nigeria's huge oil wealth for four smaller states in a transitional period.

Nigerians are also considering the development of sovereign funds which could take oil wealth, invest in outside government bonds, and eventually give West Africa something of the heft that South Korea, Japan and China can exercise over the likes of the grossly-indebted US government.

America's weakness, after years of debt and international friendlessness, Europe's expansionary technocrats, and the engine of an elite-led attempt to bind Nigeria and other African powers more and more tightly into a law-governed international liberal order are about to face their strongest test.

Stagflation, the desperate need of China, Europe and America for declining supplies of cheap energy, and the approaching turmoil on international markets as the dollar tumbles are just part of the coming storm. Special investment vehicles and futures markets are crashing and rolling, and credit drowns the hopes of ordinary people for lifestyles they can't afford, as the leviathan of a global economic crisis makes its way towards the surface.

When this is added to the clash of neoconservatism and islamism, which pulls democrats and free people along in its wake, and which may shift focus soon from Iraq and Afghanistan to a terrible confrontation with Iran, the clouds seem darker still. ECOWAS has had joint security protocols and active armed forces since 1975, under Nigerian leadership. I found myself wondering where the West African armies might be deployed not a few times this week.

The demographics of a world full of angry young men with no hope of marriage who suffer from a vast social barrier between themselves and the concentrated monopolies of wealth and income that benefit from commodity and oil booms are terrifying.

So the experiment with creating a firm and robust grid that may order and shelter West Africa from what is coming is to be welcomed. I wonder, however, how strong it is, how well it will deal with the monetary tensions within such a system, and who will obey the Judges. Democrats and free men may also wonder at whether the sovereignty of people who threw off Imperialism can be dissolved, as per the European example. I wish them good luck.


Popular Posts