Backlash
grows to Schengen backlash
Business
raises alarms about the high cost of restoring borders in Europe.
By JANOSCH DELCKER
2/4/16, 5:30 AM CET
BERLIN — The
migration crisis and anxieties about terrorism have brought into
pointed focus the political and security costs of a borderless
Europe.
Now pressure to
tighten controls at frontiers and possibly gut the Schengen accord
that created a passport-free continent is highlighting another cost —
the economic one of reinstating Europe’s borders.
It is huge, say the
EU pols who want to keep Schengen, as well as businesses that profit
from the smooth movement of people and products around the EU.
Every day, some 3.5
million people cross the borders between the 22 EU countries plus
Iceland, Liechtenstein, Norway and Switzerland in the Schengen zone.
Almost 1.7 million people in Europe work in one Schengen country and
live in another. Every year, a couple of trillion euros in goods and
services moves around this area.
The warnings of
disruptions and economic calamities in case of Schengen’s collapse
are growing in volume.
The French
government’s economic planning agency, France Stratégie, estimated
in a report released this week that the reintroduction of permanent
border controls within the EU would cost the bloc €110 billion per
year, and make the EU economy 0.8 percent smaller within a decade.
Traffic jams and red
tape would particularly hit trade and tourism, the agency added.
In a press release
at the end of January, the Association of German Chambers of Commerce
and Industry (DIHK) estimated that border controls would cost Germany
€10 billion a year. “It’s a careful estimate,” Dirk
Schlotböller of DIHK said, “which involves all border crossings of
goods and people. This also includes tourism, retail trade, skilled
crafts, etc.”
The cost of
Schengen’s collapse would dent but not cripple an EU economy of
€14.3 trillion.
Germany, which saw
the arrival of over 1 million asylum-seekers last year, used an
emergency clause in the Schengen treaty to introduce checks at its
land border with Austria in September. Austria, France, Denmark,
Sweden and Norway also introduced temporary border controls, which
are currently limited to a maximum of six months.
EU interior
ministers last week took the first step toward adopting new
legislation that will allow extending these border checks up to two
years. Many countries have been pushing for such a “worst case”
solution, as they fear this year a new record number of migrants
might come to Europe.
The Schengen area
was established in 1995 and has been lauded as “the greatest
achievement of European integration.”
The estimates of
undoing this “achievement” vary. Last month, in a speech before
the European Parliament, Commission President Jean-Claude Juncker
said the re-imposition of border controls would cost €3
billion-a-year in lost business, citing the Commission’s estimates.
Whether over €100
billion per the French or Juncker’s €3 billion, the cost of
Schengen’s collapse would dent but not cripple an EU economy of
€14.3 trillion. But the impact varies by region and sector, which
will shape the politics of the border debate in the coming months.
Slovaks, Estonians,
Hungarians and Estonians are the EU citizens who most often commute
to work across an internal Schengen border. Certain regions are so
closely intertwined economically that strict border checks are nearly
unimaginable: Germany’s Bavaria and Czech Bohemia, for example, or
Catalonia and southern France. Lorry drivers can still remember the
days before Poland joined the EU and Schengen when it took up to 30
hours to cross into Germany.
The pro-Schengen
lobby
The tension between
public opinion and economic interest is growing in Germany. According
to two recent independent polls by public broadcaster ARD and private
TV station N24, a majority of Germans favor re-establishing border
controls, particularly if other countries in Europe are doing so.
“We demand to
intensify the controls at every border from the German-Austrian
border all the way down to the Republic of Macedonia, in a concerted
action,” Thomas Kreuzer, the Bavarian state parliament chairman of
the Christian Social Union (CSU), the more conservative Bavarian
sister party of Angela Merkel’s CDU, told POLITICO. “We have a
situation, at which Austria has introduced an upper limit of
refugees, but is still waving through those who want to go to
Germany. This is intolerable.”
Yet Germany’s
position as Europe’s wealthiest industrial economy and the world’s
third-biggest exporter relies on smooth trade in both directions. So
businesses have launched a major lobbying effort to fight stricter
border controls. The cost estimate released by the German chamber of
commerce last month was an early shot across the political bows.
France would suffer
losses between €1 billion and €2 billion annually in the short
term if Europe returns to borders.
“Our business
model depends on open borders,” Anton Börner, president of BGA, an
industry association that represents wholesalers, service providers
and exporters, was quoted as saying by Süddeutsche Zeitung in late
January.
Dieter Zetsche, CEO
of automobile giant Daimler, said in a written statement last month
that the “highly interwoven automobile industry depends heavily on
borders within the Schengen area. All centrifugal forces that run
counter to a strong unified Europe will have negative effects on our
industry and its competitiveness.”
Baden-Württemberg,
Bavaria’s neighbor and the third-richest state in Germany, is run
by a coalition of the Green Party and the center-left Social
Democrats (SPD).
“No one can just
close the borders. That would have fatal consequences for the
economy, particularly for Baden-Württemberg, which relies on
international business relations,” said Nils Schmid of the SPD,
Baden-Württemberg’s economy minister. Referring to the Bavarian
push to close the borders, he said, “such pseudo solutions
massively endanger wealth and jobs in our state.”
While Kreuzer and
others on the German right insist that tighter controls on
cross-border passenger transport will have a minimal impact on
economic activity, German business is pushing the opposite story:
that borders will bring higher costs for everyone involved in the
supply chain.
‘An economic
catastrophe’
Anton Börner of the
BGA estimated that closing the borders would increase the cost for
international road transport alone across Europe by about €3
billion per year.
“If Germany closed
its borders, this would be a blatant intrusion into our day-to-day
business,” said Cora Bügenburg, a branch manager at the German
logistics and haulage company Allgaier Translog. “Since the fall of
the Iron Curtain, Germany has become the center of transit traffic in
Europe, and the traffic volume has increased immensely. If the
borders were closed, it would directly harm us and the manufacturing
industry we are supplying.”
Tourism would shrink
by €500 million to €1 billion a year, while the negative impact
on trade would amount to between €60 million and €120 million
annually.
France Stratégie,
the government economic agency, said France would suffer losses
between €1 billion and €2 billion annually in the short term if
Europe returns to borders. Tourism would shrink by €500 million to
€1 billion a year, while the negative impact on trade would amount
to between €60 million and €120 million annually.
In the longer term,
the economic effects could even result in a 0.5 percent cut in
France’s annual economic growth, or about €10 billion, according
to France Stratégie.
The champions of a
borderless Europe are invoking the economic case to make the
political one for keeping Schengen.
“I don’t even
want to imagine what it would mean if all of a sudden, trucks and
employees would have to wait for hours at the borders again,”
Germany’s Deputy Chancellor and Economy Minister Sigmar Gabriel of
the Social Democratic Party said in a radio interview in January.
“Those are huge economic disadvantages.”
He added that the
collapse of Schengen would lead to “an economic catastrophe for the
whole continent.”
Hans von der
Burchard in Brussels contributed to this article.
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