Bor­ders in Europe will threaten in­ter­nal mar­ket

EU Com­mis­sion First Vice Pres­i­dent FRANS TIM­MER­MANS tells Kevin Schem­bri Or­land that the cre­ation of bor­ders in Europe will mean prob­lems for the in­ter­nal mar­ket. “If we be­gin cre­at­ing bor­ders in Europe, Schen­gen will not sur­vive. As a re­sult of that, th

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What are the main chal­lenges Malta will face dur­ing the EU Coun­cil Pres­i­dency?

In my ex­pe­ri­ence with pres­i­den­cies, there are three things that mat­ter: what items are still on the agenda, what you want to add to the agenda, and events.

Fifty per cent of it is dom­i­nated by events and, in the world we live in, such events are un­pre­dictable. As such you need to be flex­i­ble enough to re­act to them. I am ab­so­lutely con­vinced that the Mal­tese gov­ern­ment will be able to do that due to the Prime Min­is­ter’s ex­pe­ri­ence and be­cause he is highly re­garded by his col­leagues in the EU Coun­cil.

Look­ing at what is on the ta­ble, mi­gra­tion will be a big is­sue, and so will Brexit. As far as we un­der­stand the Bri­tish Prime Min­is­ter, Brexit is bound to start dur­ing the Mal­tese Pres­i­dency. Aside from th­ese, both in­ter­nal and ex­ter­nal se­cu­rity, in­vest­ment, and the pri­or­i­ties dis­cussed in Bratislava will also be on the ta­ble.

As for Malta’s pri­or­i­ties, th­ese will most prob­a­bly have to do with mi­gra­tion and spe­cific is­sues like the Mediter­ranean and the mar­itime econ­omy. I also as­sume that Africa will be very im­por­tant for Malta as well.

Do we fore­see any eco­nomic ef­fects for the EU once Bri­tain trig­gers Ar­ti­cle 50?

What in­vestors don’t like is in­se­cu­rity, and so as long as we don’t clar­ify the is­sues, in­vestors will be care­ful. I be­lieve the best thing we can do for our econ­omy is to clar­ify what the Euro­peans and what the Bri­tish want.

The eco­nomic ef­fects would de­pend on what kind of re­la­tion­ship the UK wants with the EU. There will not, how­ever, be any de-link­ing of the in­ter­nal mar­ket with free­dom of move­ment. So if you want to be in the in­ter­nal mar­ket, you have to re­spect the four free­doms, in­clud­ing free­dom of move­ment.

EU coun­tries seem to be fail­ing in their agree­ment re­gard­ing the re­lo­ca­tion of refugees from Greece and Italy. What needs to be done?

The is­sue is wor­ry­ing, not just as it needs to be re­solved as an is­sue in its own right, but also be­cause mi­gra­tion will be with us for at least a gen­er­a­tion, per­haps two. If we don’t stick to­gether we will not be able to re­solve or con­trol this. We need to en­sure that re­lo­ca­tion works.

It’s been slow to start, and we know of the con­tro­ver­sies sur­round­ing some mem­ber states who don’t want to be a part of it, but it’s pick­ing up now. If we show re­sults, the mo­men­tum will gather pace as peo­ple will see it helps with get­ting the is­sue un­der con­trol. To me, it is un­ac­cept­able to aban­don Greece and Italy and not re­lo­cate peo­ple from those coun­tries who have a right to be re­lo­cated.

Turn­ing to the rise of xeno­pho­bia and far-right par­ties due to mi­gra­tion and ter­ror­ism, what ba­si­cally needs to be done to quell th­ese wor­ries?

The is­sue is much deeper than just in­se­cu­rity due to the mi­gra­tion cri­sis. There’s ter­ror­ism, of course, but we are also on the verge of the fourth in­dus­trial rev­o­lu­tion. Peo­ple feel this change com­ing and they are in­se­cure. Will I have a job, will my chil­dren have jobs? It’s also linked to the econ­omy af­ter the bank­ing cri­sis.

If you look at the num­bers, in­equal­i­ties have grown. To re­ally tackle the is­sue you need to tackle jobs and trans­form the econ­omy into a sus­tain­able one. This is the chal­lenge. The level of gover­nance you need to com­bine all th­ese things is huge. Peo­ple do not yet see Europe per­form­ing and so they are wary of giv­ing us that re­spon­si­bil­ity.

There are a num­ber of coun­tries and par­ties who have ex­pressed un­favourable ideas to­wards open bor­ders. You have to ad­mit, their fears are valid.

Of course, to some ex­tent all the fears are valid. But to trans­late those fears into ha­tred to­wards some­one who is dif­fer­ent is a fun­da­men­tally wrong re­sponse. It’s not a re­sponse we haven’t seen be­fore in Euro­pean his­tory, but it re­mains the wrong re­sponse. That doesn’t mean the fears are not jus­ti­fied. The world is chang­ing fast and the ques­tion is: what is my po­si­tion in that world?

Com­ing back to bor­ders, we speak about flex­i­ble sol­i­dar­ity. That means show­ing sol­i­dar­ity on the ba­sis of where you are and on what your po­lit­i­cal pri­or­i­ties are. It also means that one shows sol­i­dar­ity on all the is­sues that are part of the prob­lem. Flex­i­ble sol­i­dar­ity is not an ex­cuse to avoid tak­ing refugees, but rather is a means of cre­at­ing the right bal­ance in what you can and want to do so that ev­ery­one pulls their weight in this com­mon Euro­pean prob­lem. It’s not a la carte sol­i­dar­ity, you can’t pick and choose. You need to show sol­i­dar­ity on all fronts but the bal­ance whereby you do one thing or the other can be dif­fer­ent be­tween one mem­ber state and the next.

Let me be clear: if we be­gin cre­at­ing bor­ders in Europe, Schen­gen will not sur­vive. As a re­sult of that, the in­ter­nal mar­ket will not be able to func­tion and the eco­nomic price we will face will be huge. Ev­ery­one ad­vo­cat­ing in­ter­nal bor­ders, fences and walls should be very aware of the con­se­quences – and for them as well if the in­ter­nal mar­ket is the fi­nal vic­tim of this oper­a­tion.

What kind of reg­u­la­tions and rules could be changed in Europe fol­low­ing the Panama Pa­pers?

Two phe­nom­ena that have plagued us over the past decade are the risk of so­cial and fis­cal dump­ing. On both, the EU should cor­rect ex­cesses. I’m not against fis­cal com­pe­ti­tion, but it should be pos­si­ble to agree on a cor­po­rate tax base to al­low mem­ber states to have com­pe­ti­tion but to in­tro­duce a com­mon thresh­old, be­low which one could not go as that would be pure fis­cal dump­ing.

It’s the Com­mis­sion’s po­si­tion that we can come to an agree­ment on this. If you do bet­ter, if your in­fra­struc­ture is bet­ter, if you have lower taxes, that can all be fine. But there should be an agree­ment be­tween EU coun­tries to limit how low one can go with those lev­els, and agree­ing on a cor­po­rate tax base is a start­ing point for that.

In terms of so­cial dump­ing, you must en­sure that you don’t com­pete on wages if you have the same peo­ple in the same place do­ing the same job. It’s ab­so­lutely fair that two peo­ple work­ing on a scaf­fold, work­ing in the same place do­ing the same job also get paid the same, and we need to cor­rect in­jus­tices there.

Com­ing back to tax­a­tion, if one has low tax­a­tion, fine, but then one needs to ap­ply low tax­a­tion to all firms in the same sit­u­a­tion. Right now you can go into any EU city, with a huge in­ter­na­tional cof­fee chain near a lo­cal cof­fee shop, with the lo­cal shop pay­ing reg­u­lar taxes and the in­ter­na­tional chain not. That is un­fair.

The Com­mis­sion is not against com­pe­ti­tion on tax that has to do with wider is­sues of com­pe­ti­tion. But we are against tax dump­ing, as this un­der­mines the very tax­a­tion base on which so­cial states de­pend. If you have

Look­ing at what is on the ta­ble, mi­gra­tion will be a big is­sue, and so will Brexit. As far as we un­der­stand the Bri­tish Prime Min­is­ter, Brexit is bound to start dur­ing the Mal­tese Pres­i­dency This is our chal­lenge.

It’s the Com­mis­sion’s po­si­tion that we can come to an agree­ment on this. If you do bet­ter, if your in­fra­struc­ture is bet­ter, if you have lower taxes, that can all be fine

end­less com­pe­ti­tion on tax, then at the end of the day state rev­enues will be so low that you will have prob­lems with the ed­u­ca­tional sys­tem, the health­care sys­tem, pen­sions, etc. We need to un­der­score this and we need fair com­pe­ti­tion.

One of Malta’s Min­is­ters was men­tioned in the Panama Pa­pers. Does the Com­mis­sion have any views on this, given that Malta will hold the Pres­i­dency, and have there been any talks be­tween the Com­mis­sion and the Mal­tese gov­ern­ment on this, or any pres­sure from your side?

I’m aware of the Panama Pa­pers, but I’m not aware of any spe­cific is­sue per­tain­ing to spe­cific min­is­ters or politi­cians in mem­ber states.

Re­cently, ten­sions be­tween Rus­sia and the USA seem to be de­te­ri­o­rat­ing. Do you fore­see any con­se­quences for the EU?

The con­se­quences are clear, just look at the atroc­i­ties in Aleppo. We have be­come re­al­is­tic in our ex­pec­ta­tions of what Pres­i­dent Putin does, but even he sur­prises us when you see the level of atroc­i­ties the Rus­sians are pre­pared to go to in Syria right now. It deeply sad­dens us to see the civil­ian pop­u­la­tion re­lent­lessly bombed. Those con­se­quences are first felt in Europe, be­fore they are felt in Rus­sia or the USA, as it is hap­pen­ing in our neigh­bour­hood.

There is an arc of in­se­cu­rity go­ing all the way from the Bar­ents Sea next to Europe, to the West Coast of Africa. All across this arc there are chal­lenges to our way of life and threats to Euro­pean sta­bil­ity – some­times ide­o­log­i­cal, some­times eco­nomic. Rus­sia is part of this Euro­pean con­ti­nent, so we will have to come to terms with it sooner or later, but let’s not be naïve about what is hap­pen­ing in Rus­sia.

I’m all for di­a­logue and look­ing for com­mon so­lu­tions, but from a po­si­tion of strength. We need to see that there is a fun­da­men­tal ide­o­log­i­cal dif­fer­ence in how Mr Putin sees so­ci­ety and how EU na­tions see so­ci­ety. EU na­tions, I hope, will all con­tinue to choose for open, demo­cratic so­ci­eties where the rule of law and sep­a­ra­tion of pow­ers pre­vails, where the Pres­i­dent is not almighty but some­one to whom the rules also ap­ply.

Photo: James Bianchi

Frans Tim­mer­mans

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