The Euro And Schengen: Common Flaws And Common Solutions

This article, written by Professor Paul de Grauwe of the London School of Economics, was brought to our attention by Dr Anthony Coughlan of Dublin.  It illustrates the threat to national sovereignty that both the EU’s flagship projects pose.

What do the Euro and Schengen have in common? Both are projects that have the same flaw: they’re unfinished business. And therefore they risk falling apart.

The Eurozone is a monetary union, with one currency, the euro circulating in the Union and managed by one central bank, the European Central Bank. What’s wrong with that? One may ask.

The fundamental problem of the Eurozone is that national governments have their own budgets and issue their own debt. When recession strikes, the system gets into trouble. During a recession government budget deficits automatically increase. Countries that are hit hardest by the recession show larger budget deficits and debt increases.

Financial markets that are fully integrated in a monetary union are lurking, ready to strike when observing signs of weakness. Countries hit hardest by the recession experience “sudden stop”: investors massively sell the government bonds, raising the interest rates and pushing these countries into illiquidity.

The other countries in the system profit from this, as investors in search of a safe haven buy these countries’ government bonds. Thus during recessions, free capital movements destabilize the Eurozone and plunge the weaker countries into a “bad equilibrium” of ever deeper recession and rising unemployment.

What about Schengen? As the Eurozone, it is an unfinished project. The residents of the Schengen area move freely within the area. The problem is that the architects of that area forgot to integrate the police and the intelligence services. Moreover, they forgot to transfer the authority to control the external borders to one European body.

As a result a problem arises in the Schengen area that is similar to what happens in the Eurozone. Criminal gangs move freely within the area. They commit burglaries in one country and flee to another one. In contrast police forces have to stop at borders. Terrorists are planning from Brussels how to attack Paris and escape from the radar of the national police forces and intelligence services. National police forces and intelligence services are not integrated and can no longer guarantee the security of their citizens.

The danger of unions that are unfinished is that they will disintegrate. Without a fiscal union free capital movements will create great instability when the next recession strikes the Eurozone. In the long run, governments that can no longer guarantee a minimum of economic stability to their citizens will be tempted to leave the Eurozone.

The choice we have today is simple. If we want to keep the Euro we will have to create a fiscal union. This implies that a significant proportion of national budgets and national government debts will have to be centralized. A formidable transfer of sovereignty from the nation states to European institutions. If we want to preserve the Schengen area, we will have to integrate police forces and intelligence services while creating a joint control at the external borders. Failure to integrate further dooms both projects, the Eurozone and the Schengen area.

The Eurozone and the Schengen area have fundamentally weakened national governments while nothing has been put into place at the European level to offset this loss of power of nation states. The Euro and Schengen can only be saved if we create European institutions that can do what national governments no longer can do, i.e. to ensure economic stability and security for the citizens of Europe.

 


Freedom of Movement between EEA (European Economic Area) states and the EU

A helpful summary by Robert Oulds of the restrictions on free movement of people which EEA states outside the EU can apply

Membership of the European Economic Area Agreement outside the EU includes the principle of free movement of labour but does allow EEA states in practice to place restrictions on immigration from EU states.

It is possible to impose restrictions on immigration (from EU and other EEA countries) whilst remaining in the EEA. Liechtenstein, an EEA member with less potential influence than Britain, continues to use clauses in the EEA agreement to restrict the movement of persons. Article 112(1) of the EEA Agreement reads “If serious economic, societal or environmental difficulties of a sectorial or regional nature liable to persist are arising, a Contracting Party may unilaterally take appropriate measures under the conditions and procedures laid down in Article 113” The restrictions used by Liechtenstein are further reinforced by Protocol 15 (Article 5-7) of the EEA Agreement. This allows Liechtenstein to keep specific restrictions on the free movement of people. These have been kept in place by what is known as the EEA Council (1) .

There will also be greater latitude to restrict non-British EU citizens’ access to benefits and to deny residency to those who are deemed not to have sufficient resources to support themselves. The current debate in Britain on immigration largely ignores the role of the European Court of Human Rights and the European Convention. Article 3 of the Convention (inhuman or degrading treatment or punishment) and Article 8 (private and family life, his home and his correspondence) would also be relevant to the issue of immigration. These two articles are often taken together , especially in cases of repatriation.

EEA/EFTA states are outside the provisions of Article 6 of the EU’s Treaty on European Union which states: 2. The Union shall accede to to to the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, shall constitute general principles of the Union’s law..

There is already a great deal of flexibility in the EEA agreement. This goes beyond the ability to restrict immigration an opt-out of areas of EEA rules. Iceland even unilaterally imposed capital controls after its financial crash of 2008. This is permitted within the EEA safeguards. Article 112.(2). There is also no enforcement mechanism to prevent this from happening even if such flexibility was not contained within the EEA. Whilst this paper does not advocate such a policy it shows that some restriction on the free movement of people can be implemented.

The EEA rule relating to freedom of movement, Directive 2004/38 has qualifications, conditions and limitation. Persons exercising their right of residence should not however become an unreasonable burden on the social assistance system of the host Member State during an initial period of residence. Therefore the right of EU citizens and their family members for periods of residence no longer than three months should be the subject of conditions. For periods of residence longer than three months. Member states should have the possibility to require EU citizens to register with the competent authorities in the place of residence, attested by a registration certificate issued to that effect.

The treaty allows restrictions to be placed on the right of free movement and residence on the grounds of public policy, public security or public health. Article 7. 1b(b) have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host member state during their period of residence and have comprehensive sickness insurance cover in the host member state. (3) No right is absolute and neither is freedom of movement within the EEA nations after they have assessed the relevant legislation and applied it according to their own interpretation of what freedom of movement means.

Footnotes

(1) EEA Council Decision No 1/95 . Official Journal of the European Communities, 20 April 1995, pages
L 86/58 and 86/80 .

(2) Official Journal of the European Communities , 3 January 1994, pages L/28, 176-8 and 562

(3) Directive 2004/38/EC of the European Parliament and Council of 29 April 2004.

Immigration in Budapest

I visited Budapest on 22nd September 2015 to take part in a debate at the Eotvos University on what were the costs and benefits of immigration.

I last visited Budapest in May before the immigration crisis became serious and, in fact, I used the Kaleti railway station three times and, although there were plenty of backpackers there, I did not see any obvious migrants at that time.

This time I did not visit Kaleti but I was told that, two weeks ago, it was indeed full of migrants sleeping there.

Yet, in central Budapest this time I never saw a single distressed migrant, despite the presence of literally thousands of Chinese, American, Australian and European tourists in the streets, in the restaurants and on the river Danube.

This brings home one important observation. There can be a major crisis going on in a country and, indeed, there are still major migration flows in and around the Hungarian borders, but the central district of politics, culture, fashion and money, can be quite serene. So, in the UK, suburbs of old industrial towns can be demographically transformed while Islington, Hampstead and Kensington are unaware of what’s going on. Thus the political and donor classes are often quite detached.

I had been briefed about the Hungarian character; that it was reclusive, cautious and undemonstrative, at least in politics. This has its roots in the disastrous result of the First World War when the Treaty of Trianon led to the loss of two-thirds of traditional Hungarian territory to Slovakia, Russia, Poland, Serbia and Croatia. It was reinforced by the fairly benign dictatorship of Admiral Horthy following a short-lived ‘Red’ Terror under the government of Bela Kun and Tibor Szamuely and the Arrow Cross-Nazi occupation of 1944/5. Disasters for the Hungarian army on the Eastern Front and the transportation of much of Hungarian Jewry to Auschwitz in 1944 followed.

Then came the Communist tyranny and, finally, the revolt of 1956, after which some 2,000 people were shot and 200,000 Hungarians left the country. All this is chillingly displayed at the ‘House of Terror’, a much visited building which housed the Gestapo and the NKVD and is a must-see for visitors.

Presently, the Hungarian government, led by Viktor Orban, is a nationalist conservative one but it is harried by Jobbik, which can be described as an ethnic nationalist party. Left wing views are still put forward but were, on the whole, muted at the university.

The content of the debate was interesting but hardly novel and was, of course, heavily influenced by the current migration crisis. I was paired with an excellent German Professor, Dr. Weede, who was highly critical of Mrs. Merkel and opposed by two Hungarian professors.

As everybody else on the platform was a professor I was also called professor and did not contradict those who used this term!

Yes, Hungarians in this audience were restrained, cautious and undemonstrative. They were concerned about immigration from Asia and Africa, although it was not visible to the casual observer. There was certainly no enthusiasm for the EU and Dr. Weede was scathing about the behaviour of Merkel, leaving the Eastern European states to carry much of the cost for her ‘virtue-signalling’.

Yet, like the other Eastern and Southern European states, the Hungarians do get benefits from the EU and they don’t want to lose the economic benefits of EU membership and the ability to travel and migrate for work offered by Schengen, (Hungary is not in the euro) and the EU Treaties.

However, there is no enthusiasm for the EU. It is a ‘transactional’ relationship. Few seem to want any migrants but most Hungarians have still not been confronted by the actuality of mass migration. Certainly, the real nature of EU membership is now being noticed.

Expat worries are mistaken

The pro-independence movement is excited by the prospect of withdrawal. However, to secure that all-important “out” vote, it will be necessary to win over a good many people for whom the terms of the debate so far has made them anything but excited about the thought of “Brexit”. One such group is the expatriate community. Some of our compatriots living abroad are very concerned indeed.

The root of the problem is the strong language that has been used in the debate about immigration. For a number of voters, a desire to limit the number of people coming to the UK is the most important reason they would give for supporting withdrawal from the EU. Some of these people may have genuine concerns, such as suffering an increase in waiting times at their local GP’s surgery due to large numbers of migrants, or finding themselves undercut by Eastern European tradesmen willing to work for a pittance. Others may be xenophobes in the worst sense. For all the variety of reasons different people may give for their concerns, the net result is that there is considerable political capital to be made in talking tough on immigration, whether from the EU or elsewhere.

However, this cuts both ways. A substantial number of UK citizens live abroad – some 8% of our population, in fact. Most countries boasting large numbers of expatriate Brits are, unsurprisingly, Anglophone nations such as Australia, Canada, New Zealand and the USA, but the prospect of a retirement in the sunnier climate of the Mediterranean has attracted large numbers of our fellow-countrymen too. Estimates vary, but it is possible that as many as 700,000 UK citizens are resident in Spain and 200-400,000 in France. Also growing in popularity is Bulgaria, which boasts a pleasant climate, incredibly cheap housing and, at least in the villages, a strong community spirit. At least 50,000 of our countrymen have chosen to relocate to this country whose own citizens are not exactly popular when they come over here. It’s not just retired people who have moved abroad. Berlin, hardly renowned for sea, sand and sunshine, was home to over 14,000 Brits at the end of 2012 – many of them young people attracted by a city that has developed a trendy image in recent years.

If freedom of movement of people were curtailed when we leave the EU, what would become of these people? As has already been pointed out on this website, misinformation stating that they would become “illegal immigrants” has been put about by no less an individual than Dominic Grieve, the former Attorney General. As we pointed out, people who have acquired rights of residence will still have those rights whatever form of exit might ensue. They simply can’t be booted out. However, our blog isn’t reaching the areas it should, for a recent report suggests that a number of expats are so concerned about withdrawal thay they looking at acquiring dual citizenship to ensure they won’t end up stateless. Likewise, as the Guardian reported recently a number of EU citizens resident in the UK are considering similar action.

It would be a tragedy for the “out” campaign if immigration was to become the most dominant issue. It would mean that we would lose, point blank, and the blame lying with wishful thinking. Given that the most seamless exit route from the EU is via the EEA and EFTA, whatever some people might desire, we would still initially remain subject to all four freedoms of the Single Market, including free movement of people, so compulsory repatriation of EU residents just isn’t going to happen. Within the EEA, we need not allow the dependents of migrant workers from the EU to join them and if we feel we are struggling to cope with the number of EU citizens arriving here, there is the possibility of applying a temporary brake, as Liechtenstein has done. That is all. Furthermore, any long-term arrangement replacing the EEA agreement would inevitably want to ensure the preservation of vested rights – a fundamental principle of international law – allowing long-term residents to remain where they are. It is, of course, possible that independence may well result in substantial numbers of people voluntarily returning to their own country. Some expats, disillusioned with recent politics in the UK, may feel that independence offers a chance to put the country right and come home. Some EU citizens currently resident in the UK may decide that they do not wish to reside outside of the EU, even if they would not be treated any differently in an independent UK. However, we cannot be sure what will happen. Others clearly like it here and will want to stay, come what may. It is therefore better for them and for our own expatriate community if ALL supporters of withdrawal keep the focus on what really counts – the re-establishment of UK sovereignty – rather than allowing free movement of people to dominate the forthcoming campaign. Those who are uncomfortable with the current level of immigration will vote to leave regardless. Their votes are already in the bag. We need to focus on winning the votes of people who have other concerns and alienating our expat community for no sensible reason will do our cause no good.

For further comment on the Guardian Article, we recommend the latest article in the EU Referendum blog.

Some Restriction on free movement of people is possible within the EEA agreement

Remaining in the single market as an interim option after leaving the EU does allow a country to place restrictions on immigration. The so-called “Norway Option” is being widely debated at the moment, but it has received a good deal of criticism from those whose prime reason for supporting withdrawal from the EU is their desire to see immigration reduced. Nevertheless, although this arrangement may not satisfy everyone seeking an “out” vote, not only it is the best way of ensuring we win a sufficient number of votes to leave the EU, but it does at least allow some restrictions on immigration, as Robert Oulds from the Bruges Group explains:-

It is possible to impose restrictions on immigration whilst remaining in the European Economic Area. Liechtenstein, an EEA member with less potential influence than Britain, continues to use clauses in the EEA agreement to restrict the movement of persons. Article 112(1) of the EEA Agreement reads: ‘If serious economic, societal or environmental difficulties of a sectorial or regional nature liable to persist are arising, a Contracting Party may unilaterally take appropriate measures under the conditions and procedures laid down in Article 113.’ The restrictions used by Liechtenstein are further reinforced by Protocol 15 (Article 5 – 7) of the EEA agreement. This allows Liechtenstein to keep specific restrictions on the free movement of people. These have been kept in place by what is known as the EEA Council.[1]

There will also be greater latitude to restrict non-British EU citizen’s access to benefits and to deny residency to those who are deemed to not have sufficient resources to support themselves. The current debate in Britain on immigration largely ignores the role of the European Court of Human Rights and the European Convention. Article 3 of the Convention (inhuman or degrading treatment or punishment) and Article 8 (private and family life, his home and his correspondence) would also be relevant to the issue of immigration. These two article are often taken together; especially in cases of repatriation.

EEA/EFTA states are outside of Article 6 of the EU’s Treaty on European Union which states; 2. The Union shall accede to the European Convention for the Protection of Human Rights and Fundamental Freedoms. Such accession shall not affect the Union’s competences as defined in the Treaties 3. Fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, shall constitute general principles of the Union’s law.

 There is already a great deal of flexibility in the EEA agreement. This goes beyond the ability to restrict immigration and opt-out of areas of EEA rules. Iceland even unilaterally imposed capital controls after its financial crash in 2008. This is permitted within the EEA safeguards Article 112.[2] There is also no enforcement mechanism to prevent this from happening even if such flexibility was not contained within the EEA. Whist this paper does not advocate such a policy it shows that radical steps that run contrary, even to the four freedoms of the EEA, can be implemented.

The EEA relevant rule relating to freedom of movement, Directive 2004/38, has qualifications, conditions and limitation. (10) Persons exercising their right of residence should not, however, become an unreasonable burden on the social assistance system of the host Member State during an initial period of residence. Therefore, the right of residence for Union citizens and their family members for periods in excess of three months should be subject to conditions. (12) For periods of residence of longer than three months, Member States should have the possibility to require Union citizens to register with the competent authorities in the place of residence, attested by a registration certificate issued to that effect. (22)

The Treaty allows restrictions to be placed on the right of free movement and residence on grounds of public policy, public security or public health. Article 7, 1 b) (b) have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State.[3] No right is absolute, and neither is freedom of movement within the EEA. What is more, EEA rules only apply to EFTA nations after they have assessed the relevant legislation and applied it according to their own interpretation of what freedom of movement means.

Footnotes:-
[1] EEA Council Decision No. 1/95, Official Journal of the European Communities, 20th April 1995, pages L 86/58 and 86/80
[2] Official Journal of the European Communities, 3rd January 1994, pages L/28, 176-8 and 562
[3] DIRECTIVE 2004/38/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 29 April 2004

History as pro-immigration propaganda

By Chris McGovern

The EU referendum promised for 2017, or sooner according to some reports, will coincide with the teaching of a new topic for GCSE history – migration to Britain. Given that this topic is, also, likely to have considerable prominence in the public debate it is instructive to consider what will be taught about it in the classroom.

Two of the three major exam boards have included ‘immigration’ in the new exam to be taught from 2016. Currently, the specifications are awaiting final approval by the exam regulator, Ofqual. The version to be offered by the OCR Board – “Immigration to Britain c1000 to 2010”- is illustrative.

The board is very clear about its aim for the new history exam:

“We have updated traditional and popular topics at GCSE and combined them with new and innovative options that aim to address comments in the wider historical community regarding the prevalence of white, male dominated history.

“One of the ways that we have are addressing this is by working with BASA [“The Black and Asian Studies Association”] on our new migration options in paper 2 and paper 3 (J410/08 and J410/11).”

The OCR Board then quotes an endorsement from BASA:

“This course will enable students to learn the long history of how the movement of people – European, African, Asian – to and from these islands has shaped the story of this nation for thousands of years. The history of migration is the story of Britain: in 1984 Peter Fryer wrote: ‘There were Africans in Britain before the English came’…We are delighted to be working with OCR to offer a course which will both open up an analysis of Britain’s place in the modern world and allow every student a personal connection with our shared history.”

A bold BASA ‘kitemark’ is firmly and prominently attached to the top of the syllabus itself.

As Education Secretary, Michael Gove called on schools to stop the trashing of our past. Disastrously, he lost his battle to require the teaching of the landmark personalities and events of British history as part of the national curriculum. Now, we can see that GCSE history, too, is being subverted to provide a vehicle for a politically correct views on history in general and on immigration, in particular.

This new syllabus will ensure that, at the same time as the EU referendum campaign and debates on border controls, pupils will be given some strong and seductive arguments in favour of seeing  current immigration as a natural evolution of a long historical process. According to campaigning think-tank MigrationWatch UK, however, current levels of immigration, resulting from ‘free movement’ within the EU, are at levels unprecedented in the history of Britain and are far from being a natural evolution:

“There have always been episodes of migration to Britain but…those episodes were small and demographically insignificant until the Second World War… In the late 1990s the pace and scale of migration increased to a level without historical precedent… This massive increase dwarfs the scale of any previous inflow in our history.”

This crucial numerical aspect of the immigration narrative is missing from the syllabus. The EU receives a passing ‘fag end’ reference at the end of the syllabus -“issues raised by EU ‘open borders’” – but there is no requirement specifically to consider the issue of numbers raised by MigrationWatch UK.
Pupils will hear a lot about a group of African soldiers stationed on Hadrian’s Wall but less, I suspect, about the enslavement of Britons by the African Emperor, Septimus Severus who died in Eboracum (York). The enslavement of Britons by an African, after all, does not fit the desired narrative of immigrants having a monopoly of being subjugated or maltreated.

19th century Irish ‘ immigration’ fits the subjugation idea much better and is specified for teaching. However, these Irish were born UK citizens as fully as those born in the home counties. The new syllabus veers towards equating deprivation with immigration.

For all its importance, immigration is a political minefield these days and not a straight-forward topic to teach. History GCSE should not be a vehicle for promoting particular viewpoints, such as that of the BASA. Equally, it should not be a vehicle for promoting racism or xenophobia. The OCR should not be in the business of boasting a ‘kitemark’ of political correctness, it should be focusing on a balanced presentation of the past that allows for the input of MigrationWatch UK as much as the Black and Asian Studies Association.

This article first appeared in Conservative Woman. Chris McGovern is Chairman of the Campaign for Real Education.  CIB will be organising an event to launch his recent booklet .A Genaration Betrayed, hopefully some time in June. More details to follow.

Photo by CircaSassy