What if Schen­gen fails?

Financial Mirror (Cyprus) - - FRONT PAGE -

The on­go­ing refugee cri­sis car­ries with it the prospect of coun­tries putting per­ma­nent bor­der con­trols back in place. Some of the 26 coun­tries, that have signed up to the Schen­gen Agree­ment have al­ready rein­tro­duced short-term bor­der con­trols, be­cause of the unchecked in­flux of mi­grants. Aus­tria, Ger­many, Den­mark and Swe­den are among those who have de­cided to re­in­state con­trols.

The con­trols de­signed to stem the move­ment of refugees from south to north also ham­per the free flow of traf­fic and there­fore slow down the cross bor­der ex­change of goods and ser­vices. Even af­fect­ing tourism and cross bor­der com­mut­ing. As the refugee cri­sis shows no sign of abat­ing and with no prospect of se­cur­ing Europe’s com­mon out­ward bor­der, re-es­tab­lish­ing con­trols within could be­come a per­ma­nent re­al­ity again.

This would ba­si­cally be the end of the Schen­gen Agree­ment as we know it. All the more wor­ry­ing as the open bor­ders pol­icy is cen­tral to the Euro­pean pro­ject, be­cause the EU is based on the political and eco­nomic in­te­gra­tion of its mem­ber states. The below chart is based on a re­port by the Ger­man Ber­tels­mann Foun­da­tion and stakes out the pos­si­ble eco­nomic costs of clos­ing the bor­ders again.

It is based on the as­sump­tion of a worst case sce­nario in which con­trols would take place on all intra-Euro­pean bor­ders, con­sti­tut­ing a com­plete dis­man­tling of the Schen­gen Zone. This col­lapse would for var­i­ous rea­sons make im­ported goods pricier. For ex­am­ple, just-in-time de­liv­er­ies, on which many com­pa­nies base their pro­duc­tion cy­cle and sales, would be se­verely ham­pered.

The fig­ures are pro­jec­tions and in this sense fal­li­ble. But it is very un­likely that ham­per­ing the free flow of peo­ple, goods and ser­vices would have no detri­men­tal im­pact at all on the economies of the Schen­gen Area, of which non-EU states Switzer­land, Nor­way, Ice­land and Liecht­en­stein are also mem­bers. If Schen­gen fails, there will be a neg­a­tive eco­nomic im­pact, it’s just hard to pre­dict on what scale.

The eco­nomic fall­out will also be felt by non-Schen­gen EU mem­bers such as Great Bri­tain. The au­thors of the re­port come to the con­clu­sion that: “In spite of favourable eco­nomic de­vel­op­ments, Great Bri­tain, ac­cord­ing to our cal­cu­la­tions, would be far worse af­fected by the long-term reinstallation of bor­der con­trols within the EU than Ger­many”.

The au­thors pre­dict that rip­ple ef­fects of a Schen­gen col­lapse would even af­fect the two big­gest non-EU mar­kets, China and the US. (Source: Statista)

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.