Thursday, June 28, 2018

Could ‘refugee cities’ be the answer to the migrant crisis?

A version of this article was published on CapX

Mass migration has become the most important topic in Western political debate. Across the political spectrum, the ideas are changing. Any criticism on chaotic migration management is no longer seen as “far right”. At the same time, most people realise that in the age of fast moving globalization and all the opportunities it brings, it would be foolish to impose overly harsh restrictions on immigration. A cross-ideological consensus seems to have emerged that in any case, the way migration happens needs to be controlled. Precisely there, Europe seems to be failing. While the numbers have fallen a lot, still around 44.000 irregular migrants have crossed the Mediterranean in 2018. Tragically, more than 1.000 have drowned at sea this year. Since 2014, almost 2 million irregular migrants crossed Europe's sea border, with an estimated 16,607 having died in trying to do so. EU estimates on the total number of illegal border-crossing amount to 204.719 in 2017, 511.047 in 2016 and 1.8 million in 2015. That’s 2.5 million in total for these three years of intense irregular migration.

The arrival of Italy’s new “populist” government looks like the key game changer in this regard which truly may force Europe’s politicians to make choices. Here’s an overview of what won’t work and what is likely to work to control Europe’s external border, which first and foremost should end the drownings.

What won’t work:

1.       Reforming the “Dublin” rules
The Italian government has increased the pressure on France to allow people to pass its border freely, while it has demanded from other EU leaders to change the so-called “Dublin regulation” which mandates that the country where an irregular migrant arrives is responsible to process his or her asylum request. The latter is an old Italian demand and most analysts agree it’s unlikely to go anywhere.

Also, if implemented, it may not ease the pressure on Italy’s sea border. When one knows that the chance has increased one will be able to apply for asylum in Germany, if Germany would take over a percentage of those who were initially forced to apply for asylum in Italy, one would surely try harder to make it illegally into the EU.

2.       Relocating people within the passport-free Schengen zone
This is an old desire by German Chancellor Angela Merkel. In the fall of 2015, despite warnings from France not to do it, Germany chose to outvote Eastern European opposition and impose “mandatory refugee quotas” at the EU level. These really have contributed to a lot of Euroscepticism in Central and Eastern Europe as well as to legal challenges, while the few people that have been relocated to poorer EU member states, like Portugal, have mostly already left these countries.
It’s obviously a good idea to avoid that migrants and asylum seekers are all concentrated in one place, but the truth of the matter is that this is not possible in the Schengen zone, where there are no passport checks between countries, at least in principle.

That said, if EU countries indeed would create centres outside of the EU where people can apply for asylum, EU countries may need to figure out a certain distribution key among them, as well as a common asylum procedure.

In the first place, this idea is obviously also completely unrelated from the question how to stop irregular entry into the European Union. Then many politicians have linked the two issues, as they don’t know the answer to the border protection challenge.

3.       Economic development (at least not in the short to medium term)
Many policy makers have suggested “development aid” as a solution. Those who understand that development aid actually has a pretty bad track record to promote economic development have suggested more free trade and less agricultural export subsidies. Naturally, I’m very much in favour of these policies and am convinced that more liberal economic policies will lift the poor up, as has happen with around 1 billion Chinese.

However, this all won’t be enough to prevent people from trying to make it to Europe. What we see is that it is precisely not the very poor but those who have reached certain income that try to make it to Europe. The very poor can’t afford the fees paid to smugglers. That said, of course, in the long term, serious economic development would prevent mass migration.

What may work:

1.       Stop the boats
Interior Minister Matteo Salvini has pledged to no longer allow boats with asylum seekers to dock in Italian ports. His policies are a bit confused and seem mainly oriented against boats run by NGOs. Under Salvini’s watch, asylum seekers were brought to Italy after they were saved by the US Navy who handed them over to the Italian coastguard, while also a Danish commercial ship owned by freight company Maersk which had saved people was allowed to dock in Italy, after some haggling, as it appeared that the Italian authorities may have asked the Maersk to rescue the migrants.

After Spain decided to welcome one NGO boat with asylum seekers, it made clear it wasn’t going to repeat this. A Spanish Minister stated his country could not "become the sea rescue organization for all of Europe."

This illustrates why this measure alone wouldn’t be sufficient.

2.       Create a place where asylum seekers can await their asylum request 
Australia’s centre-right government led by Tony Abbott did implement a “stop the boats” policy in 2013, but there, it was preceded by a solution which was much more key: to create a place where migrants could be brought, through the “Regional Resettlement Arrangement between Australia and Papua New Guinea” and before that with Nauru. This was agreed in 2012 and 2013 by Australia’s Labour government, which really merely restored a policy which started in 2001 but had been suspended by the same Labour government in 2007, leading to a big increase in irregular arrivals by boat.

In March 2016, Greece effectively copied what Australia had done, in order to stem the flow of migrants trying to enter Greece irregularly from Turkey. Greece banned asylum seekers from leaving a number of Greek islands. A Greek administrative court decision recently ended the policy but the Greek government is implementing legislation so to reinstate it. Greece was really forced to do this as a result of the closure of the so-called Balkan Route. When Macedonia shut its border with Greece, the Greek government basically “sacrificed” the islands so to prevent that many of these migrants would be stuck in mainland Greece.

To be fair, cooperation with Turkey in the form of the “EU-Turkey deal probably played a part as well, but the key reason why people no longer risked their life by making it from Turkey to the Greek islands was that they knew they would be stuck on a Greek island.

The solution has been an enormous success in terms of avoiding drownings-at-sea. In Australia, the number went from at least 1000 in the 13 years before to near-zero. In Greece, Undocumented migrant deaths in the Aegean Sea plummeted 85 percent in 2017 compared to 2016. It all makes clear that expanding EU border patrol force “Frontex” may perhaps help a bit with patrol capacity, but the problem is not really related to the number of border guards but to the question what happens after border guards discover irregular entry. When one can then continue one’s journey, there’s not much point of having border guards. Then it must be added that the conditions in these Greek and Australian off-shore shelters are pretty bad. This is not acceptable but it is unrelated to the success in bringing down drownings-at-sea.
At this week’s EU Summit, EU leaders are about to agree to "a new approach to disembarkation of those who are saved in Search and Rescue operations", this "to eliminate the incentive to embark on perilous journeys". This is a very important decision, even if it only concerns an agreement on an idea that needs to be implemented.

Many details are lacking, but one of the requirements for these processing centres for asylum seekers, which the Benelux, Austria and Italy think should be located outside of the EU,  is that they should be "secure".

Unsurprisingly, the first reaction of non-EU countries that would be expected to host these centres has been negative. Algeria, Egypt, Morocco, Libya, Tunisia and Niger have been named as possible locations and the latter three have already openly rejected. Libya even rejects Italy’s idea to host such migrant reception centres at its southern borders, which are scarcely populated.

France and Spain have suggested to locate these centres on EU territory. According to some sources they are considering to beef up the “hot spots” located in Greece and Italy. These really are centres where migrants are fingerprinted and receive documents in return, so they can travel on. Countries like Belgium can then send them back to Italy when they try to illegally sneak into lorries heading to the UK. When one doesn’t have to await a positive asylum verdict before being able to travel on, it’s clear there is big incentive to risk one’s life and pay a smuggler to cross the sea from Libya into Italy.

According to another source, the Franco-Spanish plan would be to host this reception centre in the Spanish enclaves of Ceuta and Melilla. These are on EU territory but on the other side of the Gibraltar straits. Around 160.000 people live there, so this will likely be met with some protest as well.

The Austrian Interior Ministry would go even further and has suggested that “no applications for asylum filed on EU territory” would be ideal, with only limited exceptions.

One thing is for certain: if one wants to remove the incentive to make it to Europe illegaly, one must make sure that who-ever manages to enter the EU won’t be able to travel on and awaits one’s asylum request somewhere. But even if this could be pulled off, either at an EU enclave in Africa or through financial compensation for the non-EU country hosting centres for migrants, it wouldn’t even be the full solution. The obvious remaining question will be: what to do with those that have been denied asylum?  

3.       Create a place where those denied asylum can be sent if they have no other place to go 
Vincent Cochetel, the head of UN refugee agency UNHCR EU, has stated that "Many risk migrating [to the EU] because those denied asylum are hardly ever sent back". Last year, there were an estimated 600,000 people illegally in the EU, down from 2.2 million people in 2017. In a report on Germany, the Wall Street Germany notes that “on paper, rejected asylum seekers should be swiftly deported. But most linger on, shielded by bureaucratic inertia, lack of resources or sympathetic judges”
A policy paper drafted by Austria’s Interior Ministry suggests to send failed asylum claimants that already are in the EU to a facility in a country outside the bloc. This plan is also supported by Danish Prime Minister Lars Lokke Rasmussen, who has stated that “I’m optimistic. Based on my discussions with other European leaders - and the dialogue that is going on at official level - it is my expectation that we will be able to take the first step this year”. Austria’s Chancellor Sebastian Kurz has confirmed that talks have already reached an advanced stage.

Albania has been named as a possible location, and although the Albanian government has rejected it, Albania’s opposition alleges the government wants to open centres in order to accelerate Albania's accession to the EU.

To find a place to send denied asylum seekers may be an even bigger challenge than to find a place to welcome people to await their asylum request. And even if all that would succeed, we are still not there. If people that are denied asylum are being sent somewhere, they will obviously need to develop their life. How to avoid that such a place would degrade into something like the Palestinian refugee camps, where people are often not even legally allowed to make a living?

To deal with that question, I have proposed to develop refugee cities where everyone – people denied asylum, economic migrants or even Westerners – could live. I won’t repeat the whole argument, which can be found here. It’s not particularly original. Bob Pleysier, the head of Belgium’s asylum department, who has seen it all, supports this idea and there are even campaigns in favour of it, such as the “refugee cities” campaign.

The Economist recently highlighted research which argued that completely open borders would result in gains amounting to 78 Trillion USD. The researchers who calculated this admit that there are serious challenges but that these could all be bought off with the gains resulting from unrestricted migration. Even if they would be right, there is no way on earth to sell this politically in the West. Therefore: why should the West then not replicate itself somewhere else? After all, the main reason why people chose to migrate to the developed world is the high protection of rule of law, which ultimately results in great economic development.

The great precedent is of course Hong Kong: a city governed by Western officials outside of the West, where many refugees from Communist China not only found shelter but also stable rule of law so to develop their life. If the British could pull this off on their own more than 50 years ago, there is literally no reason why it couldn’t be copied today, in our technologically advanced age of rapidly growing cities and with the combined forces of European countries struggling to deal with migration flows.

Money really shouldn’t be an issue. The cost of the refugee crisis for Germany alone has been estimated to be about 20 billion euro per year. The Belgian State’s police and justice system costs around 3 billion euro per year, to serve 11 million people. Of course there’s infrastructure, but there also is the EU’s 130 billion euro budget, while private investors should be interested to invest in a project involving all that human capital that is currently wasting their precious time in refugee shelters in the Middle East or in Europe’s underground economy. Refugees and economic migrants could use their savings for something better than handing it over to organized crime groups to smuggle them to Europe.

Naturally, it’s possible that European countries will manage to “stem the flow” by merely creating a center outside of the European Continent where few migrants would go to that don’t stand a chance for asylum. Maybe that will fix the issue, but given the fact that Africa’s population is about to double or even triple in the next few decades, I wouldn’t be so sure. At the moment, there are more than 13.000 people on the Greek islands, which serve as such an off-shore center, in limbo. What if there are 100.000? 1 million? How unrealistic becomes such a project then? In Italy, the asylum pressure is currently relatively low, due to a shaky deal between Italy and Libyan tribes, but what if this collapses?

In my view, there are three main conditions where to locate such a safe place for people denied residency in Europe. First, there must be enough space, so to be able to welcome millions. Secondly, nobody should currently already live there, so to safeguard consent from the host state, which could be paid a fair amount of rent. And thirdly, people should be able to develop a life there. That means providing justice, rule of law, police, external security and support. Surely when multinational companies invest fortunes in very shaky countries, they should in theory be interested to invest in such a place run by the developed world. And even if it wouldn’t only replicate half of the success of Hong Kong, that would be a major step forward for the world’s “bottom billion”.

The EU’s new approach of “disembarkation centres” outside of the EU means that Europe’s leaders are realizing that modest solutions are no longer sufficient to deal with such a great and complex challenge as mass migration. A lot of planning and diplomacy will be required to realise this, and given that Europe’s leaders will need to answer the question what to do with those denied asylum, especially as Africa’s population is about to boom, it’s likely they may also consider it a proper answer to develop something like a refugee city, run by European countries, guaranteeing a high level of rule of law for those seeking protection or simply a better life.

Friday, June 22, 2018

A compromise for Brexit is possible

Published on the website of Chinese satellite broadcaster CGTN TV 
Journalists report that many people dealing with Brexit “really don’t know” how the European Union and Britain can agree. But there is no need to despair. In 1992, another country was somehow in a similar situation like Britain. That country is Switzerland, which wasn’t a member of the European Union. The Swiss had just rejected a proposal for its new relationship with the EU. The proposal was that Switzerland would enjoy full access to the EU's single market but to take over all of the EU's regulations in return. Norway, Iceland and Liechtenstein agreed with this and have been in this situation ever since. The initial EU stance had been that not taking over the EU's regulations would cause a loss of market access, which is similar to the EU’s stance vis-à-vis Britain today. Of course, the EU moderated this position and in the following years a fudge was agreed, whereby Switzerland would not automatically take over EU regulations but would only take over regulations in selected sectors, voluntarily. If the Swiss disagreed with a certain EU rule, the sanction would be to lose market access in a the relevant economic sector.
At the moment, the EU is refusing to accept solutions for Brexit that would safeguard British access to the EU market in certain sectors where it is willing to take over EU rules while losing market access in others. The EU is claiming that such an arrangement would endanger the single market. One can only wonder why they agreed it then for the Swiss.
Of course, it must be said that an important condition was for Switzerland to also accept freedom of movement of persons.  Would the UK accept freedom of movement of persons in return for some flexibility from the EU's side? Perhaps to a certain degree.  With Open Europe, we conducted a poll showing that the British public isn't all that hostile to migration at all. And the EU has agreed in its relationship with non-EU member states that enjoy access to its single market that they are able to impose restrictions on freedom of movement, which tiny Liechtenstein has once applied, so this is a precedent.
With Open Europe, we have proposed that Britain could voluntarily align with EU rules on goods so to keep access to the EU market for goods, something that the UK government may support, according to some rumours. Many big companies would take EU rules over anyway and the UK economy is composed for 80% of services so this is a relatively reasonable concession for Britain to avoid damage while keeping the sovereignty to diverge with regards to regulations on services. This approach would also be in the interest of EU27 countries as many of their major producers, like BMW, have production plants in the UK. They would not like to see their supply chains disrupted. Imagine what BMW would think if the EU would tell them they have refused the UK's offer to align its rules for goods with those of the EU simply because it also wants Britain to become a “rule-taker” for all other regulations. Surely BMW would think the EU is living in cloud-cuckoo land. Ivan Rogers, a former British Ambassador to the EU, has pointed out that such a solution might appeal to some EU states as it grants continued frictionless trade in goods trade, where they enjoy a surplus, whilst making trade in services, an area where the UK is exporting more to the Continent than the other way around, far harder.
The idea foreseen in the draft withdrawal agreement which needs to be negotiated by October is that Britain would remain a rule-taker for all sectors until the end of 2020. So there is time until then to negotiate this fudge, you may think? Perhaps not. In that “exit deal”, which really needs to be agreed by November of this year so to leave time for parliamentary ratification in London and Brussels, there is a so-called “backstop” for the Northern Irish border foreseen. This is an arrangement to prevent that a disruptive border in Northern Ireland would endanger the peace process if there is no deal when the UK moves to its new status on 1 January 2021.
Also here, the grand Swiss fudge could be a solution. It would mean that Britain would align with EU rules for goods and maybe – unlike the Swiss – with the EU’s agrifood standards, as a lot of border checks relate to agricultural produce. The EU doesn’t like this, as it considers this to be extending the privilege of a special deal for Northern Ireland to the whole EU. Also, it wouldn’t deal with customs checks, for which the UK would then point at solutions existing at the EU’s customs borders with Norway and Switzerland, which are not perfectly but relatively smooth.
In any case, a grand deal for Brexit that doesn't only cover the Irish border but also the future EU-relationship may need to be agreed by November. It may well open up a debate on freedom of movement, but as I've written, both sides could make very sensible concessions so to make sure Brexit's effects hit citizens and business as little as possible.
Pieter Cleppe represents independent think tank Open Europe in Brussels

Thursday, June 07, 2018

A pragmatic plan for Brexit

Published on CapX 
There really only are two different ways of implementing Brexit. The first is for the UK to simply leave. No deal, no negotiations.
That this would be a costly option should be obvious. One estimate puts that  cost at half a million jobs in Britain and 1.2 million in mainland Europe. Brexiteers who claim this would be Britain’s best bet make their case by expressing hope that it may convince the EU to grant more favorable terms. That is, at best, a risky strategy. At worst it would be catastrophic.
The second option is to negotiate Brexit. On this approach there really aren’t as many workable options as the public debate would have you believe.
Staying in the single market is unrealistic as it would degrade Britain to a “vassal state”. Staying in a common customs union would deprive Britain of freedom to trade and wouldn’t avoid disruption at the border. The debate badly needs an injection of common sense.
That is where Open Europe’s new proposal for a negotiated, pragmatic Brexit comes in. As I’ll explain, it is an outcome which Remainers, Brexiteers and the EU27 should find to be an acceptable compromise.
In this proposition for the future EU-UK economic relationship, we look at the key challenge as to how secure market access for both British and European companies. Our proposal involves close alignment with the EU on goods but divergence on services.
Market access and regulation for goods
Many companies outside of the EU choose to adopt EU goods regulations. Therefore, it makes sense for Britain to remain close to the EU in terms of goods regulations. Under the Open Europe proposal, Britain would take over EU rules voluntarily, as Switzerland does, but not automatically, as Norway does.
When the EU came up with its costly REACH chemical regulation, they did not automatically apply to Switzerland. The Swiss have the right to say “no”, at the risk of losing a degree of market access, and we think this model would fit Britain well when it comes to goods trade.
Why would Brexiteers agree to this? Surely it entails a loss of sovereignty?
Hardline Brexiteers will be less than enthusiastic. They will surely claim that goods trade is extremely important for the UK economy, so to give up sovereignty here isn’t reasonable.
That’s not quite right. Goods only accounts for a small part of the British economy. Eighty per cent of economic activity in Britain is services.
These Brexiteers have remarked that smaller companies that don’t export surely shouldn’t be hit by heavy EU regulations and should instead be free to enjoy the benefits of light touch UK regulations.
To deal with this objection, we suggest that the UK only really follows EU goods regulations in highly-regulated sectors. In less-regulated sectors, we think an enhanced mutual recognition agreement could do the trick.
Sure, some sovereignty is traded, and we don’t enjoy the full force of regulatory competition. But that is a tradeoff for something that is very valuable indeed: access to the EU market. Given that half of UK goods exports are directed to the EU market, this makes sense.
Would the EU agree to this? Brussels would surely enjoy imposing rules on the UK. More seriously, many of the manufacturing companies that are based in the UK and that are vulnerable to disruption of their supply chains, are European companies.
Nevertheless, the EU isn’t biting yet. When Britain came up with a version of this – then dubbed “the three baskets approach” — the Commission dismissed it, warning that this is “not compatible with the principles in the [European Council] guidelines.” It really wants Britain to take over all of its regulations, also those on services, despite the fact that in the past it has compromised on this with Switzerland and that there is so much “pick and choose” in the whole operating system of the EU it is simply odd to hear EU officials proclaim that some flexibility would pose a “risk for integrity and distortions to proper functioning of [the] internal market”.
Has the German refusal to open up its services market somehow damaged goods trade between Italy and Spain? Hardly. Yet many pundits, often out of hostility to Brexit, swallow the Commission’s questionable logic without thinking it through.
Market access and regulation for services
When it comes to services, Open Europe’s proposal basically assumes it will be very hard for Britain to agree to the EU’s “market access in return for taking over all our rules”. Therefore, we think it makes more sense for the UK to accept reality and try to limit the disruption from losing a degree of services market access. The latter is possible by trying to conclude a deal that goes further than the existing equivalence regime for financial services.
Ideally, a wide-ranging mutual recognition agreement for financial services should be agreed, or failing that, an expanded equivalence. In everyday language: when a financial or non-financial product has been regulated or supervised by the UK, the EU should deem it trustworthy with as little hassle as possible, and vice versa.
Why would remainers agree with this? One thing prevails here: “opportunity cost”. Eighty per cent of the UK economy is composed of services and only about a third of Britain’s services exports go to the EU27. The global services market is expected to be growing a lot in the next few decades. However protectionist the EU may be, the EU market is very unlikely to be greater than the global opportunities offered by boosting UK services as a result of being able to set one’s own regulations.
In selected areas where losing access to the EU’s services market really is a very big deal, as for example when it comes to financial clearing, the EU, which at the moment permits US clearing activity, can be expected to be flexible.
Restricting UK clearing houses would fragment the clearing market and badly affect finance opportunities for companies in mainland Europe. More in general, if the EU were to cut off access to the world’s leading financial centre which happens to be at its own doorstep, this would hit EU consumers, but then it’s not certain of course how much the EU realises this.
What’s more: the EU’s services market hasn’t been opened up sufficiently and that is a bad thing. In a Brexit context, it is a good thing, as it means that the damage from losing the EU’s financial passport is smaller than assumed.
As we’ve made clear in an earlier research paper, the EU’s financial passport is mostly important for banks. It’s less vital for asset management and least of all for insurance firms.
You wouldn’t know it given the energy devoted to the customs union debate, but customs checks represent only a fraction of procedures that take place at a border. Most of these are regulatory controls on goods, or checks on agriculture and food. Our solution for goods would thereby also soften border crossings.
Unless one thinks it’s sustainable for Britain to let the EU negotiate market access to the UK market when discussing trade deals with China, India or one day even Russia, while Britain would then need to get permission from these countries to get the access the EU negotiated to their market, it is a no-brainer for Britain to leave the customs union.
That’s to say: at least at some point, given that the challenges of working out customs formalities may well justify that the UK remains somewhat longer under the EU’s external tariff regime. Britain can then leave the common customs arrangement with the EU on the day deals concluded with Australia, India and hopefully the US enter into force, when it will then also be able to scrap tariffs to benefit UK consumers.
Not even Norway, the non-EU country that is institutionally closest to it, has joined a common customs union with the EU. In order to deal with the Irish border and other challenges, we pointat the many precedents in the world that serve to minimise friction at the border – without denying that there is likely to be more friction than at the moment.
Surely, the EU may itself realise that it is better to conclude a sustainable arrangement with Britain rather than one which will come under fire. What we advocate with Open Europe is that the EU and Britain conclude an extensive Free Trade Agreement including zero-tariff and zero-quota trade.
EU regulations that have nothing to do with trade
It is important that Britain makes sure the EU doesn’t once again pull off its trick of selling its many regulations that sometimes have little do with trade as measures relating to open up trade. We think regulation covering employment, taxation and the environment should not be subject to intervention from the EU.
Brussels needn’t fear that Britain will suddenly engage in a regulatory “race to the bottom”. The strength of Jeremy Corbyn should be enough proof that Britain isn’t as “neoliberal” as sometimes claimed.
Surely the UK shouldn’t take over all kind of non-trade related EU rules and, who knows, that may lead to questioning how necessary those rules really are.
Obviously, the EU’s plans for “level playing field agreements” carry a risk in this regard, so here, Britain must issue a strong and firm message: thanks but no thanks.