What Ireland can learn from Iceland’s economic recovery

GERALDINE O’CONNELL CUSACK,

Published Sunday, December 12, 2010, 7:03 AM

Updated Sunday, December 12, 2010, 7:33 AM

Larger Text

E-mail

6 Comments

There is much Ireland can learn from other European countries at this present moment.

For instance, Great Britain and Denmark, though members of the EU, have chosen to remain outside the European Monetary Union. They have retained their own national currencies and full sovereignty over their monetary and fiscal affairs.

In addition, Denmark has successfully negotiated opt-outs from Europe in the fields of Common Defence, Justice and Home Affairs, and Union Citizenship.

Norway and Iceland are neither members of the European Union nor the Monetary Union. However, they both belong to the European Economic Area (EEA) and enjoy the same advantageous terms governing internal markets as full EU member states. European countries can negotiate terms with the European Union that do not necessitate full membership or monetary union.

But such successful negotiations demand a clear vision for national solidarity and strong courageous leadership.

Then there is Iceland. Prior to her financial meltdown in 2008, 60% of her citizens favoured entering EU membership and monetary union.

Today, more than 70% oppose the move. Why? Because had Iceland been in the Eurozone when their banks collapsed, Brussels would have stepped in.

And in return for bailing them out, Brussels would have seized Iceland’s 200 mile limit fishing grounds – the richest in the world – and control over their thermal energy supply, which powers 90% of Iceland’s electricity.

In contrast, as a sovereign nation with sovereign control, Iceland has managed to successfully restructure her banking system, devalue her currency, boost her exports of fish, and restrict foreign imports. Three new banks have been established – one with state majority share.

Her GDP growth in 2009 was –6.5%. Today it stands at 0%. The unemployment rate in 2009 was 9.4%. Today it has been reduced to 7%. Then compare these figures with Ireland’s disastrous catalogue of economic blunders.

A large degree of resistance exists in each of these countries to further encroachments by Europe into their national affairs - its immigration policies, labour rights, foreign affairs, and military development.

This prevailing climate of unease should be regarded in Ireland as a favourable omen for advancing a new vision.

Although it is by no means certain that such advances would be welcomed, considering Ireland’s current economic crisis and dysfunctional government, a strong case can be made for Ireland’s positive contributions to a new alliance.

1 2 3 Next page >

Nster.com

E-mail

6 Comments

See all comments

sully1167 | Dec 13, 2010, 05:50 AM EST

Well said cilloween & Geraldine. Icelanders don't give up so easily on their country. Iceland's economy is much worse than Ireland's yet they don't emigrate in large numbers. A lot of countries that joined the EU gave up their sovereignty and sacrificed their culture. All in the name of greed and materialism. Iceland did not want to go that route. Any Irish billionares telling Irish people to leave Ireland,just want to replace Irish workers with cheap immigrant labor so they came become even wealthier.

Report abuse

seamusmoore | Dec 12, 2010, 08:03 PM EST

A couple weeks of the current weather and Ireland will be an Ice-land. Go on John Gormley and you global warming clowns.

Report abuse

cillowen | Dec 12, 2010, 11:44 AM EST

You can tell the Irish - but you can't tell them much. They know where they're going - to a better place in the hereafter. ===== Gerry was brought in from the cold - remember - brought to Washington and all became well for England's number 1 problem. Don't know what he'll bring to the table. Maybe better than what the future pretends. Lets drop the commie and name calling type acroynms. ===== Erin go Broke - rather than being complete slaves. Get out there and sow those praties - get thy army to clean up the scum that is a spreading cancer which terrorizes families across the country. Be a hero at home instead, and not be the saviour of the world going hither and thither as peace keepers. Blood sucker politicians are hard to take and even look at knowing their rape and sell out to foreigners.

Report abuse

haasny007 | Dec 12, 2010, 11:43 AM EST

Oh, Geraldine, did you pick your own facts, or what? Without the EU, Ireland would still be one of the poorest countries in all of Europe. Eire is in bad shape now, but at least it has a decent infrastructure in place, courtesy of Brussels. Yes, Ireland could have avoided the real estate bubble without the euro, i.e. cheap money when the going was good. But the real estate crash also could have been avoided by a better regulation of the banks. Leaving the euro now is not an option for Ireland or any other euro country as it will multiply the euro-denominated government debt by a sinking new national currency. Think Argentina when it de-dollarized its economy in 2001. Iceland is still considering EU and euro membership. And fiscally prudent EU countries like Estonia, who will join the euro as of 1/1/2011, still see a benefit in the common currency. The euro is here to stay, provided there is a political will to keep it intact. A closer fiscal and monetary union is necessary to make it work. That will be the next step.

Report abuse

CitizenWhy | Dec 12, 2010, 10:41 AM EST

Another thing for Ireland to pursue would be for agricultural areas to completely free themselves from the use of foreign oil by recycling materials found in abundance in agricultural areas. This has been done in a Swedish area of 80,000 people. Google: Swedish city cuts its fossil fuel use New York Times.

Report abuse

CitizenWhy | Dec 12, 2010, 10:34 AM EST

1. You mentioned, but need to emphasize more, the power of devaluing a country's currency in order to jump start an economy. Iceland devalued its currency and kicked its economy back into growth mode (in addition to repudiating its bank debts which, like Ireland's, were owed to foreign banks). Devaluation makes it hard to buy from abroad and to spend abroad. It increases exports, decreases imports, and gives greater aggregate domestic spending and lending power. ... 2. Another alternative to the EU would be a cooperative union (each country with its own currency) of France, Belgium, Ireland, Spain and Portugal. This union would provide links to Brazil, So. America, and Africa for mutual economic growth. ... In either case the Euro has become a toy for the German banks, to the detriment of other countries. ... Of course the Irish people would also have to elect a government that would strictly regulate its banks and create an orderly bankruptcy procedure for any banks engaged in irresponsible borrowing and lending (along the lines of the Swedish model). In fact it would be a good thing to have bank regulators from other countries be part of the Irish bank regulation system. You know, well trained professionals who do not have cozy personal relations with the politicians.

Report abuse