“Start-up cities” for refugees as a long term solution to the refugee and migration crisis

Published on CapX and by the Foundation for Economic Education.

It was also translated into French by Contrepoints and into Czech by Nechtenasbyt.cz. It was also highlighted here as well as on Spanish free market newssite libremercado.com

Much has been written about how to deal with the current refugee and migration crisis, but an actual comprehensive solution hasn't been provided. According to some estimates, one year ago, there were around 60 million refugees in the world. In 2015, around one million of these 60 million entered Europe by sea, which already caused a massive political crisis. Even those who’re keen to allow more migration should realise that even tripling the numbers allowed in last year would only provide solace to a tiny part of those in need. There is a more structural and comprehensive solution however. It combines the idea of “start-up cities” with simple historical precedents: to create a new city, very similar to Hong Kong, to welcome refugees. 

The example of Hong Kong

What was Hong Kong otherwise than a city governed by Western officials and populated largely by refugees from Maoist China? If it was possible for the British to provide a safe home for millions of people on the run in much more challenging times, why wouldn’t it be possible for the whole of the developed world – not just Western countries – to give any refugee the most precious thing the developed world can offer them: the protection of the rule of law, which has propelled the US, Canada, Europe, Japan, and parts of East and Southeast Asia to the levels of wealth they enjoy today.

I propose to create what I call “free havens”, which really are newly created cities, governed by officials from countries with a high level of rule of law, and where any refugee could go to. This idea is very similar to the concept of “startup cities” or “private cities”, whereby cities would be created by private investors from scratch in a bid to create a much nicer place to live than in existing cities and to provide a more beneficial investment climate by offering a much stronger protection of property rights than elsewhere. A territory should be rented from a state, similar to how the British leased Hong Kong from China for 100 years, but this time a fair price should obviously be paid to the landlord.

Where?

Where would this be located? It could be anywhere really where nobody lives, given that only around three percent of the world is urbanised. A similar proposal was made by Egyptian businessman Naguib Sawiris, one of the richest men in Africa, who has offered to buy an island off Italy or Greece in order to rehouse hundreds of thousands of refugees. He has identified 23 uninhabited islands of which he’d like to buy one to host refugees, but the Greek government wasn’t interested. Other alternatives would be to create it inside Syria or Libya after liberating an area from terrorist groups. Perhaps an offshore territory owned by Britain or France could be suitable, for example one of the two areas in Cyprus which currently host British military bases. If no State would agree, a more ambitious variety of the plan could be to locate these cities on newly created islands.

Politically unrealistic? Less than one would think: the only proven method to protect external borders results in the emergence of large off-shore centers for refugees:

Does this proposal sound politically unrealistic? Less than one would think. A similar campaign to create a “refugee nation” was started by American entrepreneur Jason Buzi, and many other prominent people have endorsed the idea, including Bob Pleysier, who headed the Belgian government’s asylum department for a long time and knows the ins and outs of the problem. The more people realise this challenge can’t be dealt with by tampering in the margins, the more they are warming to the idea.

Reality is slowly pushing politicians towards the idea, but rather indirectly.

Both in Australia in 2013 and in Europe in 2016, the so-called “Australian solution” of border control was implemented when the pressure on the external border really became too massive.

This solution involves telling anyone who tries to enter illegally to await their asylum a

pplication in refugee shelters near the border or off-shore, so they no longer have a terrible incentive to risk their lives but still retain the right to apply for asylum.

In Australia, this effectively brought down the recorded number of people drowning in Australian waters to near-zero from at least 1000 in the 13 years before . To realise this, Australia created off-shore shelters in Papua New Guinea.

In March 2016, Europe’s politicians decided to try a whole new approach in Greece, in desperation to avoid another Summer of discontent, following a strong increase in the popularity of right wing populists across Europe. Since then, only five people would have died in trying to make it from Turkey to Greece, a sharp decrease from the 805 who died last year in Greek-Turkish waters. This coincided with a sharp 95% drop in asylum seekers arriving in Greece from Turkey.

In implementing something like the “Australian” approach, Greece prevented asylum seekers from continuing their journey from the Greek islands close to Turkey to mainland Greece, while before they could make it to Greece’s mainland and then on to the Balkan and Germany very easily. However, despite the success of cutting the number of deaths-at-sea, just as in Australia’s case, the conditions in Greece’s so-called “hot spots”, where people are detained, are very troubling. The same must be said of Australia’s off-shore shelters. Of course the EU and Greece could have only copied the good aspects of Australia’s approach, while avoiding the bad ones, bud sadly, this didn’t happen.

Apart from this EU-induced policy change in Greece, two other major factors contributed to a sharp drop in drownings between Turkey and Greece. In the first place, there was the closure of the so-called “Balkan route”, with countries from Austria all the way to Macedonia implementing border controls, thereby preventing asylum seekers from making it to Germany and Sweden, where many desire to go. Secondly, there was the “EU-Turkey deal”, whereby Turkey promised to crack down on human smugglers and accept to “take back” both irregular migrants and asylum seekers, with Greece declaring Turkey a “safe country” so this would be legally possible. The implementation has been fraught with problems, but both factors did disincentive people not to risk their lives.

How different this is from the situation in the water between Libya and Italy, where an increasing number of people is trying to make the risky journey, with a lot of drownings as a result. There, on the “Central Mediterranean Route”, almost 2.900 refugees died in 2015 and already 2.606 in the first half of 2016 alone.

So far, well-intended coordinated military actions to save the lives of those trying to make it and combat human smugglers, have largely failed to stop human smuggling. More problematically, they have served to convince more people to risk their lives at sea. A well-intended operation to save lives is seen by many as a ferry for migrants keen to cross the Mediterranean. The House of Lords has acknowledged there is some validity in claims that these operations “act as a magnet to migrants and ease the task of smugglers”. Also the Libyan coastguard explicitly warned, to no avail, that the EU's "Operation Sophia" boosts migrant smuggling, explaining that "people, when they get rescued, call their friends to tell them that there are EU vessels only 20 miles from Libyan waters to save them."

To have a deal with chaos – ridden Libya is much harder still than it is with Turkey, so eventually also Italy will be forced to consider what Greece has done: to tell those applying for asylum that they need to await their asylum claim somewhere.

If the EU would create more temporary refugee shelter where asylum seekers are told to await their asylum claim, the pressure to provide decent standards will increase. Some people will be granted asylum, but others won’t. If the numbers remain as big as they are today, these kind of temporary refugee shelters may be overwhelmed and people may be forced to stay there for longer periods.

According to a top UN official, Europe must prepare for the arrival of millions more refugees from the Middle East and Africa as “young people all have cellphones and they can see what’s happening in other parts of the world, and that acts as a magnet.” 

Given the pressure which can be expected in the new few decades, with Africa’s population expected to more than double in 40 years, creating an actual city with law enforcement will then seem much less like an overambitious, costly plan than welcoming lots and lots of people in dodgy off-shore shelters where they have no perspective. Hence, events on the ground may drive policy makers to this solution.

How would such a “startup city” for refugees look like?

Would companies invest in such a “startup city” for refugees? Certainly. When facing the choice between Ethiopia, Pakistan, or a place run by countries with a high level of rule of law, it shouldn’t be excluded for the likes of Ikea, Nestle, Coca Cola or Apple to consider moving production capacity over there.

When wondering how to run such a place most efficiently, Hong Kong springs to mind. Sir John James Cowperthwaite was the British civil servant who acted as Financial Secretary of Hong Kong after World War II. He's considered the architect of its economic success. Having watched Chinese refugees arriving, he concluded they seemed to be getting along fine if left to themselves, so he made it the crux of his policy for the government not to do much to help refugees, beyond giving them freedom, security, the rule of law and a hard currency. His administration did provide public housing, but not much more. This policy of positive non-interventionism has been extremely successful despite later developments of more intervention. That some Chinese capital had moved to Hong Kong did play a role in the Crown colony’s success, but the fact that the Chinese border was closed meant the city experienced an economic miracle in the decades following World War II against all odds. The Economist described it in 1977 as follows: “A businessman setting up shop in Hong Kong finds low taxes, no foolish government interferences…a government leaning over to encourage him to make as much money as he can. He finds, blessed discovery, no politics.”

Crucial for the success of the development of Hong Kong was of course the fact that it could rely on British rule of law. This is also what proponents of “startup cities” want: to enable people living in corrupt juridisdictions to somehow enjoy the benefits of a higher quality of legal protection.

One example is a project to develop so-called “LEAP-zones”, something which Honduras allowed, under the name “ZEDE”. These are semi-autonomous zones on the territory of a certain state, with distinct legal, economic, administrative, and political (LEAP) protection for job creators. There, investors can count on the protection of US rule of law, which makes the project different from more traditional schemes to boost investment through reduced regulations or lower tax rates. The LEAP-zone project in Honduras may however not be a roaring success yet, given reports that it seems to be struggling with disputes over who owns the land identified for it.

This reminds of prominent development economist Paul Romer’s project to develop a foreign-run “charter city” in Madagascar and therefore lease out farmland to South Korean concern Daewoo, opening up the hub both to migrants from nearby countries as well as to locals. Regretfully, the project collapsed in 2009 after the country experienced a coup, apparently partly triggered due to anger towards the project, which was denounced as treason.

The lesson of these two experiments is obvious: such projects can only work if they are being developed on land which isn’t claimed by anyone and if they enjoy the same level of rock-solid independence from foreign intervention of Hong Kong.

Who would take the lead?

The European Union may not be perfect, but it does has some experience with “rule of law”-missions. Part of its EULEX-mission in Kosovo was to administer justice in the most delicate sectors over there. There have been major problems with the implementation, but at least Kosovo has known some kind of stability. Either way a crucial difference between free havens and the mission in Kosovo or historical Western “colonies” would be that anyone moving to such a place would do so voluntarily.

Of course, it’s clear that if the whole thing would be a private venture, things may be run much more efficiently, given that it’s not weak taxpayers but assertive shareholders of companies keen to see return on their investment that would be monitoring the project. Still, as Paul Romer’s experience in Madagascar teaches us: this is such a massive project that recognition by State actors in any way or another will be vital for its success.

What about the cost?

The Belgian State’s police and justice system costs around 3 billion euro per year, to serve 11 million people. Obviously a lot more would be needed to provide basic infrastructure, but to find funding, the EU’s 130 billion euro budget could be used. Anyone dealing with it knows massive spending improvements could be made. More than 270 billion euros are still being transferred to the already plentiful pockets of agricultural landowners, including the Queen of England, between 2014 and 2020. With Brexit, a major reform of the EU Budget is needed and given how the EU’s agricultural policies have been hurting developing countries for decades, it wouldn’t be such a bad idea to start looking there.

In any case, the refugee crisis has so far proven to impose a very high cost anyway. Germany's IFO institute has estimated the cost for Germany to be about 20 billion euro per year, although many other economists have claimed that to the extent these people can be integrated they’ll prove an economic boost.

Why would such a “Free haven” offer standards of justice and safety that are sufficiently high to make such a project succeed, so people would actually voluntarily want to go there, and companies would actually want to invest, thereby freeing up the resources needed to compensate the host State to actually allow such a Free haven to exist on its territory?

The answer is simple: For this project to be a success, it needs to become more safe than the most unsafe place in the world and its investment climate should beat the most horrible place on earth to do business, to attract those fellow human beings who actually have to survive there at the moment. Surely that shouldn’t be too much of a challenge. Would it really be so hard to do better than North Korea, Syria or Congo? Either way, the modest solutions have failed.

CETA

My comment in The Economist regarding the EU-Canada trade deal CETA, on how supranational overreach fuels populism and hostility to free trade: “Brussels has received a message: people do not feel like they have enough control over their own fates”   

Roll back protectionism

Published on Politico.eu

For the first time since World War II, those arguing to remove barriers to trade are on the defensive in Europe. The ghost of protectionism haunts the Continent.

We see this play out in protests against EU trade deals with the U.S. and with Canada, where the agreements’ opponents consciously avoid the debate that lower tariffs benefit consumers, and choose to focus on side issues. They take issue with the use of private arbitration courts to settle disputes, despite the fact that the system has worked successfully since the 1950s. They also stir up fear that “regulatory cooperation” will endanger sovereignty, when in truth it’s no more than a burdensome process that identifies incompatible and protectionist elements in EU and U.S. legislation.

The debate over whether to grant market economy status to China, which would deprive the EU of possibilities to impose trade restrictions on the country, is also making waves. The European Parliament is very much on the protectionist side of this debate. Surprisingly, so is business.

All kinds of protectionist instincts surfaced in the campaign for the U.K.’s referendum on its membership in the EU. In the aftermath of the Brexit vote, some EU capitals are keen to restrict the City of London’s access to the EU, despite the fact the move would drive up the cost of financing big projects in the EU, and hurt consumers.

Likewise, some Brexit campaigners have discussed engaging in silly tit-for-tat protectionism strategies, such as threatening to impose tariffs on German car imports into the U.K. This, again, would hit consumers hardest.

Europe has enough debt, regulations and taxes already. It shouldn’t add protectionism to the mix. Consumers should be the focus of debates on trade agreements.

The Brexit referendum - my take

Interview with Euronews TV:




Interview met Elsevier (in Dutch):

Interview with BBC World Service programme "The Inquiry": 

http://bbc.in/29gDq09

Brexit : the EU and Britain will work this out, but don’t hold your breath

Published on PublicAffairsEU

Last week’s vote in Britain to leave the EU truly shocked Brussels. Whereas many had anticipated a narrow win for "remain", as indicated by some opinion polls, not so many had realised that "narrow" also meant the “Brexit” - camp could win.

A whole range of reactions followed. While the six Foreign Ministers of EU "founding states" and EU Commission President Juncker sent out hostile messages, German Chancellor Angela Merkel was more concilliatory, warning there is "no need to be nasty" to the UK. 

At this week’s EU Summit, EU leaders stated that “access to the single market requires acceptance of all four freedoms, including the freedom of movement”, which really should be seen more of a negotiation statement rather than a prediction. They also granted some time for the UK to figure out who’ll become PM. After that, some kind of official negotiation is due to start.

It’s still not certain that the UK will opt to use the EU procedure for member states to leave the Union, which is layed down in article 50 of the EU Treaty. The UK may be frightened by the prospect that not only ultra-federalist MEPs have a veto over this, but also that the EU controls the timetable in this procedure. This because from the moment it is triggered, a period of two years starts, after which Britain automatically leaves the EU. This two-year period can however be prolonged, with the consent of each member state, which is likely, given that tariffs on UK exports which would be swiftly followed by tariffs on German or Benelux imports into the UK isn’t something the likes of Germany are looking forward to. A lot of jobs would swiftly be lost, for example in the German car manufacturing industry.

On Thursday, a bombshell hit UK politics, with the announcement of former Conservative London Mayor Boris Johnson, the most prominent campaigner for Brexit, that he wouldn’t be running to become PM. The consequences of this aren’t entirely clear yet. That Theresa May, who now looks to be the favorite to succeed David Cameron, has campaigned for “remain”, may make a deal between Britain and the EU perhaps a bit easier.

Any UK government is likely to demand restrictions on freedom of movement and market access to the EU at the same time. Given that nobody is ready for a trade war, some deal should be feasibly at some point, although there may be restrictions for Britain’s financial services, as much as this would also hit investment on the Continent. It’s not so intelligent to cut of one’s financial bloodline, but Continental politicans have proven in the past to sometimes opt for politics over economics, even at great cost. The EU will at some point also need to close a deal with Switzerland on freedom of movement, given that the Swiss people have demanded this in a referendum in 2014. So far, Brussels has refused to negotiate over this, but when the Swiss are joined in their demand by the British, the EU may like to offer some kind of solution which could be applied to both, especially when the stakes are so high, given the size of trade between the UK and the EU.

Many in Britain are currently requesting a deal similar to the one Norway enjoys, which includes automatic access to the European Economic Area (EEA). When it will sink in that this means taking over a lot of EU rules automatically, which effectively reduces Parliament’s sovereignty as compared to now, while remaining under the jurisdiction of the EU’s Court of Justice in Luxembourg, it can be expected that the preferred solution will be to close a bilateral Free Trade Agreement (FTA). This however can take years. Seven years, according to EU Council President Donald Tusk. This means Britain is unlikely to leave the EU anytime soon. Given the stakes, a deal between the EU and Britain is ultimately likely. Many proponents of Brexit will at that point claim that Britain is still a member of the EU in all but name, perhaps a stretch. Many of those who currently refuse to believe Britain won’t leave, will in any case be proven wrong. The full force of popular power in one of the world’s oldest democracies shouldn’t be underestimated

My comments live on CNN right after the Brexit result was announced

The transcript of my CNN comments on Brexit in the early hours of June 24th, 2016:

QUEST: To the houses of parliaments now, Christiane Amanpour is there with guest.

And Christiane, one thought, though, no matter what the pundits and experts say, you know, tonight the people have spoken. They have made their decision. And the establishment may hate it, but they have to respect it.

AMANPOUR: Well, I mean, Richard, you are absolutely right. And therein, lies the dilemma. Because this is unprecedented, because it has never happened before, no country has ever withdrawn voluntarily from the European Union. We were going to be in a period of some uncertainty, which we we'll discuss with our guest here, about how it goes forward in the parliament behind me and how it goes forward in negotiations with Europe.

So, we're going to talk now quickly to Pieter Cleppe. Now, he is the Brussels Head of the office known as Open Europe.

Pieter Cleppe, thanks for joining me. In your heart of hearts, were you expecting this?

PIETER CLEPPE, OPEN EUROPE BRUSSELS OFFICE HEAD: I was definitely thinking it could be a possibility. The race was extremely tight.

AMANPOUR: What happens next? I mean, is it going to be Europe sort of, you know, getting ever closer, battening down the hatches, standing against Great Britain in order not to tempt other countries to do the same? Or is it Europe trying to do everything it can to make this easy for a Brexit Britain?

CLEPPE: I suspect the second will happen. You will see some instincts, especially at the E.U. level among E.U. commissioner officials, who think that now they should punish U.K. in a bit to try to avoid that other countries may consider leaving as well. But, of course, given the stakes, if you would restrict financial trade from the U.K. into the continent, you would actually drive up the cost of investment on the continent.

If Britain in retaliation would impose tariffs on, for example, German cars, this will, of course, cause a lot of damage for German industry. So you would see a massive development now to try to deal with this and to try to keep trade as open as possible. AMANPOUR: So that's for that aspect. What about the political aspect? Because all we have heard from European Leaders is that they are very concerned about a so-called "run on the bank". I don't mean literally, although you can see what's happening to the sterling right now. But in terms of other similar movements in Europe, doing the same kind of thing?

CLEPPE: Well, there's exchange rate volatility. But I don't think this is directly related to the health of the banking system. However, the political fallout will be enormous.

[00:35:00]

Basically, what has happened is that British people have not expressed so much desire against the idea of trades. Those ultimately responsible for all of this are to be found in Brussels. They have basically diverted a project that was oriented on removing trade barriers into something that was much more political, a project that was intent on mingling into national budget decisions into organizing transfers between European countries and even intermingling into what is a sensitive issue all over the world, asylum policy.

AMANPOUR: So we have already heard in the run-up to this vote the very powerful German Finance Minister, Wolfgang Schauble saying that there is not going to be an ever closer more Europe response to this. Because he said people will think we're nuts if we go into that. That we haven't heard what the British people have said. So what are they going to do? You just say, you know, it's up to Europe to fix itself. How will that happen? How can you see that happen? Is it possible?

CLEPPE: Well, European Council President Donald Tusk has already committed that within a few months there will be a major conclave to deal with the future of the European Inion. And then I think when the E.U. asks itself the question, "Why are we so unpopular?" The obvious conclusion is not that it provides a framework so cheap airlines can offer services all over the continent. People tend to like that aspect of the E.U. So the E.U. should keep that aspect.

But clearly, people don't like interventions into very sensitive national budget policy, which is closely interrelated with democracy, also transfers asylum policy. These kinds of aspects of the E.U. project should be ditched to put it bluntly.

AMANPOUR: Pieter Cleppe of the Open Europe there in Brussels, thanks for joining me. We go back to Hala and Richard in the studio now.

Brexit: Made in UK, designed in Brussels

Published on EU Observer

If the British vote for Brexit, the European Union will be reaping what it has sown.

In 1992, Denmark voted against the Maastricht Treaty, which established the possibility of creating a common European currency. In France's referendum on the same issue, only 51.1 percent voted in favour.

What if Europe’s leaders had listened to the doubts of their citizens and ditched the Maastricht Treaty?

The euro enabled countries to borrow more cheaply than they ever could have done without access to the ECB’s cheap financing. But this wasn’t a good thing.

It allowed Belgium, Greece and Italy to postpone necessary public sector reforms. As a result, the public sector and the public debt burden were allowed to grow even bigger.

It led to property bubbles and massive private debt in Ireland and Spain, which forced both countries to beg for a bailout. It led to transfers between countries, through the bailout funds and the ECB, and between taxpayers and banks. For example in Greece, the banks were able to dump a large part of their exposure on to eurozone taxpayers.

The common currency threatens the EU

The conditions linked to those transfers, in the form of a Troika or a Memorandum of Understanding, evoked a lot of anger in those countries forced to comply with the conditions.

Savers, insurance companies and pensioners in Germany, the Benelux and elsewhere have expressed their anger at the ECB using loose monetary policies, for example low and negative interest rates, to keep the euro project alive.

Italy’s GDP per capita is smaller than before it joined the euro. The “banking union”, common Eurozone regulation and supervision for banks, has the UK government worried about eurozone protectionism, fearing non-eurozone banks may one day no longer enjoy access to the single market without having to comply with eurozone rules.

In many countries, anger about the economic misery brought about by the euro debt machine translates into a vote for parties keen to leave the EU. In short, the common currency has ended up threatening the EU.

Anti-EU sentiment

Was the euro needed for countries to trade? No, it wasn’t. The UK, Poland and Sweden are happily trading without being a member. Was it needed to force a crisis which could then be abused to centralise power and organise transfers? Yes it was.

There were the referendums on the Nice Treaty, rejected by the Irish in 2001, the “European Constitution”, rejected by the French and the Dutch in 2005, and the Lisbon Treaty, rejected again by the Irish in 2008.

Time and again voters were asked to vote for a second time on these projects which boil down to transfers of power to the EU policy level, either in the form of scrapping vetoes or in the form of the development of new useless bureaucracies, such as an “EU Foreign Ministry” or “EU Council Presidency”.

Last year, the EU lost two referendums. In December, the Danes vote against handing over more powers for the country to be able to continue Europol cooperation, as demanded by the EU. The EU Commission responded that such flexibility was “impossible”.

In July, Greece rejected the terms attached to its third bailout package. This essentially boiled down to a vote for “Grexit”, something which could have been tried, given that the Greek banking system was frozen anyway. It could have meant an alternative to continued fiscal transfers and interventions into national budgetary decisions. Both have created a lot of discontent and anti-EU sentiment since 2010.

Scrap barriers to trade

Last year, there also was the decision to outvote Central and Eastern Europe on the sensitive issue of spreading out refugees, which isn’t even possible in a passport-free zone but which was decided to divert attention from criticism on Angela Merkel’s controversial refugee policy and to organise yet another transfer of power to the EU level.

Finally, this year, David Cameron’s proposals to bridge the gap between the EU and citizens were met with a lukewarm reaction. His proposal, for example, to allow groups of national parliaments to block EU proposals was watered down so as to make it almost impossible to be used.

Was it really so hard to listen to the population’s scepticism? A recent Pew poll has shown that a majority in EU countries want to return powers from the EU back to member states.

Few Europeans are annoyed that the EU makes sure Ryanair and Wizz Air are allowed to operate everywhere. People just don't think the EU should be meddling with national budgets, organising fiscal transfers or micromanaging sensitive national decisions on asylum policy. If the EU wants to become popular again, it must not go there and focus on its core mission: scrapping barriers to trade.

If Brexit happens and is the beginning of the end of the EU project, many of those responsible are to be found in Brussels.

First hit by regulation, then by protectionism. Is Europe going the way of its aluminium sector?

Published on Euractiv 

Over the years, the European Union has been closing a flurry of trade deals  with non-EU states, effectively reducing its external barriers to trade. Unfortunately, it looks as if those days may be coming to an end, with the forces of protectionism gaining ground both at the national and the EU level. While the EU has always had a wasteful and protectionist agricultural policy, a really protectionist, French-style industrial policy never managed to get off the ground. However, that may soon be changing, as both policymakers and industry groups are marching in lockstep to lock the doors of trade to the Continent.

Take the European Parliament, which is resisting awarding "market economy status" to China within the framework of the World Trade Organisation, in a bid to keep a number of possibilities to impose tariffs on Chinese products.  Opposition is also rife against TTIP, a trade deal being negotiated between the EU and the US. There even is firm opposition against the EU-Canada trade deal (CETA), which has already been signed, but the Walloon regional assembly is threatening to block it. 

A lot of the criticism against CETA and TTIP is focused on provisions that hand control over disputes arising from these trade deals to private arbitration courts. This system is already in place since the 1950s, indicating opponents are merely singling it out for criticism as they know they can’t win the argument when attacking the idea to remove barriers. A second point revolves around TTIP’s so-called “regulatory cooperation”, a process that has been painted as a threat to national sovereignty, but the truth is that the US Congress or EU policymakers would obviously never accept far reaching constraints on each other’s legislative capacity, so "regulatory cooperation" will never be much more than a marginal issue.

A good example of how the kneejerk protectionist sentiment is haunting Europe are the EU’s aluminium sector federation’s calls for higher import tariffs on aluminium.

The story begins after the sector had to cope with rigid national and EU labour market rules. On top of that, it also had to endure the EU's grand schemes for energy policy, with overzealous targets for renewable energy and a very troublesome CO2 emissions trading system - both of which ended up increasing energy costs. As a result of all this, between 2000 and 2013, primary aluminium production in the EU has fallen by 32 per cent. Today, only 30% of the primary aluminium needed to serve demand in Europe is actually produced in the EU.

Already existing EU tariffs on primary aluminium imports only made the downturn worse. Originally introduced in the 1970s as a protectionist attempt to shield European Union aluminium investments from the global market, Brussels’ tariffs system has remained strikingly stagnant despite the great deal of industrial change that has taken place across the continent. Today, EU tariffs, which stand at 4% and 6% for primary unwrought alloyed aluminium and 3% for primary unwrought unalloyed aluminium, not only fail to support EU industry but actively harm the Single Market’s predominantly downstream aluminium industry. SMEs are the most exposed, facing higher production costs as a result of these EU import tariffs. According to a study by the LUISS University in Rome, the cost to SMEs was estimated at €15.5 billion.

The story doesn’t end there. As a result of China's economic correction, a healthy phenomenon after years of overproduction brought about by Beijing’s gigantic monetary stimulus, economies worldwide are feeling the pain. In trying to dampen the effects of its industrial overcapacity, China has been flooding world markets with all its produce, including aluminium products, while paying little heed to actual demand.

As a result, large European aluminium producers have pounced on the occasion and are calling for even higher tariffs, despite the obvious harmful effect that the current level has on SMEs, their main customers. It is a surreal turn of events, with producers essentially lobbying to kill off their own industry.

Protection by raising tariffs for an industry that has lost competiveness after years of labour market and energy market regulation can never be the answer. A frequently raised argument is that China is subsidizing its producers and distorting competition. Indeed, in a 2015 interview, Gerd Gotz, the director general of European Aluminium made exactly this point, while demanding for more protection from the EU. However, if applied consistently, it would mean that the EU would have to engage in a race to the bottom for ever more protectionism with the trade policies of its most extremely protectionist competitor. Instead, the EU and its member states should obviously get rid of rigid labour market  rules and troubling energy policies causing European industry to lose competitiveness.

Policy makers in Europe have already saddled the population with excessive debt, excessive regulations and excessive taxes. Instinctive rejection of the outside world by scuttling TTIP, CETA or by denying China its MES would just mean harkening back to the continent’s worst impulses. Adding full-blown protectionism to this toxic mix may be one step too far for Europe’s economic health.

Wat als de Europese Unie naar het ongenoegen had geluisterd?

Gepubliceerd op Knack

Met het opkomende Brits referendum in gedachten is het nuttig om eens te zien hoe het zo ver kwam. Eén zaak is alvast duidelijk. Als de Britten effectief voor “Brexit” kiezen, oogst de Unie wat ze gezaaid heeft.

In 1992 stemde Denemarken tegen het Verdrag van Maastricht, dat het kader voor de euro voorzag. Ook stemden toen slechts 51,1% van de Fransen voor. Wat als de Europese leiders toen hadden geluisterd naar het ongenoegen dat leefde bij de bevolking en niet waren doorgegaan met dat Verdrag, in plaats van de Denen te vragen om opnieuw te stemmen?

De euro liet landen toe om goedkoper te lenen dan ooit mogelijk zou zijn geweest zonder toegang tot het goedkope geldkanaal van de ECB, maar dat was geen goede zaak. Het zorgde ervoor dat landen noodzakelijke hervormingen uitstelden. In België, Griekenland en Italië groeide het ambtenarenapparaat nog meer uit proportie dan voordien. Het goedkope geld leidde in Ierland en Spanje tot gigantische vastgoedluchtbellen en een zeer hoge private schuldgraad, wat beide landen noodzaakte Europese steun aan te vragen. Er kwamen transfers tussen landen en transfers tussen belastingbetalers en banken, zoals bijvoorbeeld in het geval van Griekenland, waar grootbanken enkel schuldverlichting voor Griekenland toestonden op voorwaarde dat de Europese belastingbetaler opdraaide voor de rest van hun blootstelling aan het land. De voorwaarden verbonden aan de euro-noodleningen leidden tot heel wat protest in de landen die ze moesten vervullen. Tegelijk kwam er kritiek van de  “netto-betalers”, terwijl ook de ECB’s lage rentebeleid, deels gericht op het ondersteunen van zwakkere eurolanden, spaarders, verzekeraars en pensioenfondsen alarmeerde.

De Italiaanse economie is per hoofd van de bevolking nu kleiner dan voor het land tot de Eurozone toetrad. De “bankenunie”, een gemeenschappelijke set toezichthoudende regels voor de eurozone, zou wel eens tot eurozone – protectionisme kunnen leiden, in die zin dat banken van buiten de eurozone op een dag niet langer actief zouden kunnen zijn binnen de eurozone als ze ook de bankenunie – regels niet respecteren. Dat is althans de vrees van de Britse regering, die in februari een procedure overeenkwam die dit mogelijk opbreken van het vrij verkeer van kapitaal moet verhinderen, vooraleer ook het vrij verkeer van goederen, diensten en personen er aan moet geloven. In vele euro-landen worden nu partijen populair op basis van de woede over de economische problemen die deels het gevolg zijn van de excessieve schulden die de gemeenschappelijke munt mogelijk maakte. Sommigen, zoals het Front National in Frankrijk of de partij van Geert Wilders in Nederland, vragen echter niet enkel een uitstap uit de eurozone. Ze willen ook van de EU af. Samengevat: de gemeenschappelijke munt vormt een bedreiging voor de Europese Unie.

Was de euro nodig om handel te drijven? Helemaal niet. Het Verenigd Koninkrijk, Polen en Zweden drijven handel zonder lid te zijn van de eurozone. Was de euro nodig om tijdens een crisis een agenda uit te voeren van machtscentralisering en transfers? Jazeker.

Er waren de referendums over het “Verdrag van Nice”, waartegen Ierland stemde in 2001. Er was de “Europese Grondwet”, die werd afgekeurd door de Nederlanders en de Fransen in 2005 en het “Verdrag van Lissabon”, dat opnieuw door de Ieren werd afgekeurd in 2008. Telkens opnieuw werden de kiezers gevraagd om een tweede keer naar de stembus te trekken om over de bewuste Verdragen te stemmen. De inhoud van al die Verdragen kwam uiteindelijk steeds op hetzelfde neer: meer macht naar het Europese beleidsniveau overhevelen, ofwel via het schrappen van nationale veto’s, ofwel via het creëren van nutteloze EU-ambtenarijen, zoals het “Europees Ministerie van Buitenlandse Zaken” of “Europees Raadsvoorzitterschap”.

De Europese Unie verloor verleden jaar twee referenda. In december stemde Denemarken tegen de Europese vraag om meer bevoegdheden op te geven op vlak van politionele EU-samenwerking als het land binnen Europol wilde blijven. Na de nee-stem verklaarde de Europese Commissie dat flexibiliteit op dit vlak “onmogelijk” was.

In juli stemden de Grieken dan weer tegen de voorgestelde Europese voorwaarden verbonden aan hun derde “steunpakket”, wat effectief dus een stem voor “Grexit” was. Dat steunpakket kwam er na het Griekse referendum toch in praktisch ongewijzigde vorm, wat jammer is want zo’n “Grexit” was mogelijk gezien het feit dat het Griekse bankensysteem toch gesloten was en er broodnodig een alternatief nodig is voor het beleid van steeds meer transfers en inmenging in nationaal begrotingsbeleid. Die zaken geven aanleiding tot heel wat ongenoegen over de Europese Unie.

Verleden jaar was er bovendien ook de beslissing om Centraal-en Oost-Europese lidstaten in de minderheid te stemmen op vlak van het zogenaamde verplicht “spreidingsplan” van vluchtelingen, wat in de praktijk sowieso niet mogelijk is binnen de paspoortvrije Schengenzone, maar niettemin moest worden doorgedrukt op last van de Duitse Kanselier Angela Merkel. Dat de EU de vluchtelingencrisis probeerde te misbruiken door nog meer macht naar zich toe te trekken zorgde voor veel bijkomend eurosceptisme in de nieuwe EU-lidstaten.

Dit jaar waren we er getuige van hoe de Britse Premier Cameron’s bescheiden voorstellen om de kloof tussen de EU en de burger te dichten volop werden tegengewerkt door de Europese instellingen, en ook wel door sommige Belgische beleidsmakers, zoals Premier Charles Michel of Minister van Buitenlandse Zaken Didier Reynders. Zo was er Cameron’s voorstel om groepen nationale parlementen een veto te geven over voorstellen van de Europese Commissie. In de praktijk zou dit enkel Europese wetgeving tegenhouden waarbij er echt excessieve Europese inmenging is, maar toch werd het vakkundig verwaterd. De grote “eurofielen” lijken maar niet te begrijpen dat wie elke hervorming van de EU tegenwerkt uiteindelijk diezelfde EU bedreigt. De reden waarom de zo belangrijke open grenzen van de Schengen-overeenkomst de asielcrisis in 2015 overleefden, is omdat de EU hier wel een zekere flexibiliteit toestond.   

Is het nu echt zo moeilijk om te luisteren naar het wantrouwen van de bevolking? Een recente peiling door Pew maakte duidelijk dat een meerderheid in een tiental EU – lidstaten bevoegdheden terug van de EU naar de lidstaten wil overhevelen. Weinig Europeanen maken zich druk om het feit dat de Europese ambtenaren lidstaten dwingen om Ryanair of Wizz Air te laten opereren. Er is echter heel wat meer twijfel over de vraag of het wel gezond is dat de EU zich inmengt in nationaal begrotingsbeleid, transfers organiseert of gevoelige beslissingen over asielbeleid wil opleggen. Als de Europese Unie opnieuw populair wil worden, moet ze zich beperkten tot haar kerntaak: het schrappen van handelsbelemmeringen. Uiteraard is het zo dat Groot-Brittannië vaak geen slachtoffer is van de Europese zucht naar steeds meer macht en geld, gezien het feit dat het land zich buiten de eurozone bevindt, maar wie wil lid blijven van zo’n club? Eén ding is zeker: Als “Brexit” het begin van het einde van het Europese Unie - project zou inluiden, dan zijn veel van de verantwoordelijken te vinden in Brussel.