Another refugee summit in Brussels, and another dishearteningly confused set of conclusions. Which most likely leave everything more or less as it is.
ON THE POSITIVE SIDE: ASPIRATION
“Refugees need to be treated in a humane manner along the length of the Western Balkans route to avoid a humanitarian tragedy in Europe.”
That was the promise made by Juncker before the conference. If this would be realised, it would obviously be a very good thing: “Increasing the capacity to provide temporary shelter, food, health, water and sanitation to all in need.” A worthy aspiration.
How realistic are these commitments, though? It is the end of October. Some conclusions suggest that additional resources may not be available soon:
“Working with International Financial Institutions such as the European Investment Bank, the European Bank for Reconstruction and Development and the Development Bank of the Council of Europe which are ready to support financially efforts of the countries willing to make use of these resources”
Slovenia noted that 60,000 people arrived there in recent days. What does the summit do to help Slovenia, concretely, in the coming weeks? Or Croatia? Or Greece?
Is there a working group to determine where capacities for temporary shelter are most needed? In Slovenia? in Croatia? In Serbia? in Macedonia?
DREAMING AND REST
It would help to know where temporary shelters are needed, or exist now; or how many new ones have to be found. Perhaps this is known, but it is not stated in the conclusions:
“Greece to increase reception capacity to 30,000 places by the end of the year, and to support UNHCR to provide rent subsidies and host family programmes for at least 20,000 more – a pre-condition to make the emergency relocation scheme work; Financial support for Greece and UNHCR is expected”
Note; this does not say how many such places Greece has now. So it is not clear what “increasing” capacity to 30,000 means in terms of additional capacity. Which makes budgeting and raising funding for it tricky. Or assessing the meaning of this commitment.
Note also: this would be sufficient for the number of refugees who will arrive between today, Monday, and next Friday. By the end of the year, these refugees would unlikely still be in Greece.
Plus: these are still rest stations. Nobody will stay in any of these shelters one day longer than necessary. “Host families” for rest stations?
From here on the conclusions become ever less realistic:
“Working with the European Commission and Frontex to step up practical cooperation on readmission with third countries and intensifying cooperation in particular with Afghanistan, Bangladesh and Pakistan; Commission to work to implement existing readmission agreements fully and start work on new readmission agreements with relevant countries;”
Anybody who has examined the difficulties of readmitting even rejected Balkan asylum seekers from Germany to Western Balkans countries – which do not oppose taking back their citizens – knows that expecting to do this, on a large scale, with Pakistan or Afghanistan is not a plan, but closer to day dreaming.
This is the least serious part of the conclusions.
“- Finalising and implementing the EU-Turkey Action Plan;
– Making full use of the potential of the EU-Turkey readmission agreement and the visa liberalisation roadmap;”
Turkey was not even invited to this summit. The EU-Turkey Action Plan is empty of content. “Making full use of the visa liberalisation roadmap” means what concretely? We have to wait for another summit.
“- Upscaling the Poseidon Sea Joint Operation in Greece;
– Reinforcing Frontex support at the border between Bulgaria and Turkey;”
What is this supposed to achieve? How will it make any difference?
“- Strengthening border cooperation between Greece and the former Yugoslav Republic of Macedonia, with increased UNHCR engagement;
– Greece and the former Yugoslav Republic of Macedonia and Albania will strengthen the management of the external land border, with Frontex to support registration in Greece;”
Is the aim to slow down people leaving Greece … and has Greece agreed to this? Where would those who are made to stay longer stay in Greece?
Or is the idea to register everyone in Greece … and people then move on? What difference would this make?
“- Working together with Frontex to monitor border crossings and support registration and fingerprinting at the Croatian-Serbian border crossing points;
– Deploying in Slovenia 400 police officers and essential equipment within a week, through bilateral support;
– Strengthening the Frontex Western Balkans Risk Analysis Network with intensified reporting from all participants;”
So there will be more Frontex and more reporting, everywhere! But Frontex is essentially just other European border guards, not magicians or super-heroes. And this seems to assume that the problem in Slovenia or Croatia is a lack of people.
“14. Reconfirming the principle of refusing entry to third country nationals who do not confirm a wish to apply for international protection (in line with international and EU refugee law and subject to prior non-refoulement and proportionality checks);”
How many of those who reach the EU’s borders do NOT wish to apply for international protection? ANYBODY?
Finally, there is this:
“Under the current circumstances, we will discourage the movement of refugees or migrants to the border of another country of the region. A policy of waving through refugees without informing a neighbouring country is not acceptable. This should apply to all countries along the route.”
This either means a dramatic change which will likely cause the humanitarian tragedy Juncker wanted to avoid or it means that waving through refugees should happen “while informing a neighbouring country” a little better. Most likely – and fortunately – it is the second.
If this is what the countries most concerned by this crisis come up with as their operational conclusions we know that there is no plan. It was another summit without a serious discussion. Another missed opportunity.
The political scientist Gerald Knaus on working together with Turkey, border controls and Germany’s role in receiving refugees.
DIE ZEIT: Mr Knaus, while Germany finds itself confronted with one million refugees, you are calling for taking in another 500,000.
Gerald Knaus: This is not as absurd as it looks at first sight. After helpless politicians proposed many faulty solutions in the past few weeks, chancellor Merkel needs to present something credible and tangible.
ZEIT: The plan that Angela Merkel will bring to Ankara comes close to a proposal you made already weeks ago – and now it became EU foreign policy. What exactly did you propose?
Knaus: Greece declares Turkey a safe third country. Turkey commits to readmitting all refugees that reach Greek islands through the Aegean, from a point in time to be specified. In return, Germany commits to granting asylum to 500,000 Syrian refugees from Turkey in the next twelve months. In addition, the EU visa requirement for Turkish nationals will be waived next year.
ZEIT: Why should this reduce the number of refugees who want to come to Europe?
Knaus: This offer is only for refugees who are already registered in Turkey. Thus no new incentives for refugees to travel to Turkey would be created by this plan. Then refugee families – half of the Syrians in Turkey are children – would no longer need to make the dangerous trip across the sea and the Balkans. This would quickly reduce the number of boats heading towards the Greek coast. The result would be what Angela Merkel and Horst Seehofer both demand: control of the external borders and an orderly process – and German emergency relief for refugees in a real crisis situation.
ZEIT: But Turkey is currently reeling from a terrorist attack of which nobody knows who was behind it. Kurds and members of the opposition are brutally persecuted. How is one supposed to declare such a country a safe third country?
Knaus: You have to differentiate between a safe third country and a safe country of origin. For refugees Turkey is a safe third country – even if it is not necessarily a country of safe origin for its own citizens. Currently, these two things are often confused. Under the new Turkish asylum law, refugees can apply for asylum, are not persecuted in Turkey, and are also not deported to Syria. And that’s decisive for this proposal. Whether the EU should declare Turkey a safe country of origin as the EU Commission suggested, raises doubts indeed.
ZEIT: But is it wise to demonstrate to an autocrat like Erdoğan in the run up to the elections how much one is dependent on him?
Knaus: Even Erdoğan needs Germany. Turkey finds itself in the biggest security crisis since the end of the Cold War. Russia is waging war north of Turkey, in Ukraine. The Russian air force is bombing Turkish allies in Syria in an alliance with Assad and Iran, both adversaries of Turkey. And Turkey itself is at war with the »Islamic State« and the PKK. The economy is no longer growing as it was in the last decade, and taking care of two million Syrian refugees is not easy. The refugee issue plays hardly any role in the electoral campaign.
ZEIT: Part of your proposal is visa free travel for Turkish nationals to the EU – what effects would this have in practice?
Knaus: I do not believe in a mass exodus of Turks. In the past few years the trend went the other way; especially from Germany more Turks immigrated to Turkey than did immigrate to Germany. For the young generation in Turkey, Europe only has a real meaning if they can actually travel there. The only danger that I see is if the situation in Southeast Turkey would descend into a full blown war like in the 90s.
ZEIT: But in the current political climate it is completely unthinkable that the chancellor would speak about a number of 500,000 she actively wants to bring to Germany.
Knaus: I know that in the first moment this sounds counterproductive. But you can make it clear to people that without an agreement more refugees are to be expected. Even now there is talk of one million. And in talk shows superficial solutions like fighting root causes, solving the situation in Syria and Libya, or sharing the burden in the EU are being floated.
ZEIT: What about the magic formula “transit zones”?
Knaus: What the German federal minister of the interior proposes would indeed reduce the number of applicants from Balkan countries who are being rejected anyway – but this is not about them. Above all, it is about civil war refugees. Often people will say that the EU needs to better secure its borders, introduce stricter border controls and better equip refugee camps in the region. But none of these proposals will solve our most acute problem: How to reduce the number of refugees reaching the external borders of the EU. No Frontex mission, no European quota, no perfectly equipped refugee camp will stop the desperate from trying to flee to Europe. But if there’s an impression in the public debate that there’s no limit at all for the number of refugees, then soon the readiness to help will turn into fear. That’s why I believe that we need to move fast. Angela Merkel and her political allies in Europe need to show that they – and not the extreme right – have a real solution to offer.
ZEIT: Why should European solidarity suddenly work now if there was already a lack of it in past months?
Knaus: If hundreds of thousands of Syrian children grow up without schooling and without perspective, if we lose an entire generation, this will not be without consequence for European security. There’s a helplessness among the political elite in the entire EU, from Greece to Sweden, nobody has an idea what to do. And extreme right parties profit from this, while having no real solutions to offer either. In this situation Germany is the only country that has the political credibility and economic clout to take the initiative. If Germany can’t deal with the problem, nobody else will manage to do so. But if Germany takes the lead, countries like Austria, Italy, France and Sweden will follow.
ZEIT: Viktor Orban accuses Angela Merkel of moral imperialism. This argument also goes down well with many Germans.
Knaus: Orban is right if he calls the hitherto existing international refugee policy hypocritical. On paper there’s a generous right to asylum. But at the same time everything has been done to prevent refugees from claiming this asylum. In recent years, UNHCR resettled only 100,000 refugees worldwide per year to wealthy countries. That’s of course a ridiculously low figure. But Orban’s response to this is to by de facto get rid of the right to asylum altogether. He regards refugees as criminals, as enemies, and refers to Hungarian experiences with the Ottomans, as if they were an invading army. He also says that the refugee crisis is a good opportunity to overcome the “liberal age of human rights.” Le Pen in France, Strache in Austria and others join in into that chorus. In the general helplessness such slogans are becoming more and more appealing.
ZEIT: The right and the left claim that 60 million people are fleeing and that we are only talking about a fraction.
Knaus: That figure is totally misleading. The biggest part of all refugees worldwide stay within their home countries. Syria is the biggest disaster. One fourth of all refugees outside of their home country are Syrians. Most of them now live in Turkey, in Jordan, and in Lebanon. Only a few years ago the number of migrants who tried to enter the EU illegally was 72,000. So this is not about a massive migration of the planet’s poor to the rich North that has been going on for a long time and will never end. This is a specific emergency situation.
ZEIT: Why should erecting borders not work?
Knaus: Angela Merkel said that she has lived behind a fence long enough and she knows that fences won’t help. At first sight that’s a strange argument: The Iron Curtain and the Berlin Wall worked very well and repelled refugees for decades. But for that you need a death strip and a firing order. And even that could not deter many desperate people to try nevertheless. Merkel made it clear that she will not build this kind of fence. You could militarise your borders and regard refugees as enemies. But then you would need to give up European asylum law as we know it.
Gerald Knaus is chairman of the European Stability Initiative, a think tank advocating unconventional solutions to European crises.
Solange die Türkei nicht kooperiert, wird der Migrationsstrom nach Europa nicht beherrschbar sein / Von Michael Martens
ATHEN, 16. September. Auf dem Meer kann man keine Mauer bauen. Mit diesem simplen Satz ließe sich ein an diesem Donnerstag erscheinendes Positionspapier der „Europäischen Stabilitätsinitiative“ (ESI) zusammenfassen, einer Denkfabrik mit Hauptsitz in Berlin, deren Studien und Analysen seit 1999 die Debatte zu politischen Schlüsselthemen in Europa bereichern. In dem Aufsatz „Warum in der Ägäis Menschen ertrinken. Ein Vorschlag zu Grenzkontrolle und Asyl“ unterbreitet ESI-Chef Gerald Knaus einen Vorschlag, der helfen soll, die Masseneinwanderung nach Europa beherrschbar zu machen. Der Vorstoß lässt viele Fragen offen und wird nicht ohne Einwände bleiben, spricht aber einige wichtige Punkte an. Der wichtigste: Ohne die Mitarbeit der Türkei, die Europa nicht umsonst bekommen wird, können die Europäer noch so viele Mauern bauen, Polizisten oder gar Soldaten an ihre Grenzen schicken, Kontrollen einführen – es wird wenig ändern. Zwar können physische Demarkationen durchaus Teil einer Lösung sein und dürften es künftig in wachsendem Maße auch werden – doch sie ändern nichts an der topographischen Realität, die Griechenlands ostägäische Inseln bei der muslimischen Masseneinwanderung nach Europa spielen. „Die griechische Regierung kann nicht Schiffe versenken oder sie von den Küsten abdrängen. Das wäre illegal und gefährlich. Sie kann also nur warten, bis die Migranten ankommen; und sie muss sie retten, wenn sie auf See in Gefahr sind”, schreibt Knaus.
Damit ist die Ausgangslage beschrieben. Ein Zaun in der pannonischen Tiefebene oder ein Großaufgebot des in Bayern ändern zunächst einmal gar nichts daran, dass wie zuletzt im August mehr als 20.000 Migranten auf Lesbos, Kos und den anderen Inseln in Sichtweise der türkischen Küste anlanden. Um das zu verdeutlichen, lässt Knaus seinen Text am anderen Ende des Kontinents beginnen, in Finnland, dem EU-Mitglied mit der längsten Landaußengrenze des Schengen-Zone: 1340 Kilometer zu Russland. Finnlands Grenzschutz gilt als vorbildlich in Europa. Gesichtserkennungssoftware, modernste Methoden zum Erkennen gefälschter Pässe, umfassender Datenabgleich zwischen den Behörden, Bewegungsmelder, lückenlose Überwachung des Schiffsverkehrs in der Ostsee. So wurden 2013 denn auch nur 18 illegale Grenzübertritte in Finnland registriert. Nur war der Grund dafür nicht finnische Hochtechnologie sondern – Russland. Dort stehen noch aus Sowjetzeiten zwei je vier Meter hohe Grenzzäune, der Geheimdienst überwacht das Gebiet. Zäune machen also, im Unterschied zu dem, was meist behauptet wird, durchaus einen Unterschied – zumindest an Land und zumindest, solange Russland das will. Doch selbst wenn man den gesamten finnischen Grenzschutz nach Griechenland versetzt, wird der mit all seiner Technik nicht viel ändern können. Er wird die Migranten nur früher kommen sehen. „Letztlich hängt die Grenzkontrolle vor allem von den Nachbarn der EU ab und davon, ob diese willens und fähig dazu sind, potentielle illegale Migranten daran zu hindern, die Grenzen der EU überhaupt erst zu erreichen“, schlussfolgert Knaus.
Da kommt die Türkei ins Spiel. Das Land hat schon seit 2002 ein Rückführungsabkommen mit Griechenland, also einen Vertrag, der die türkischen Behörden verpflichtet, illegale Einwanderer, die aus der Türkei kommend griechischen Boden betreten haben, zurückzunehmen. Freilich weigert sich die Türkei, den Vertrag einzuhalten. Mehr als 9600 Anträge auf Rücknahme eines illegalen Einwanderers stellten griechischen Behörden 2014. Die Türkei nahm 6 (in Worten: sechs) zurück.
Doch ist das so unverständlich? Die Türkei, hat fast zwei Millionen Flüchtlinge aus Syrien aufgenommen, manche beherbergt sie seit Jahren. Die Vorstellung, dass die Türkei, die mehr syrische Flüchtlinge aufgenommen hat als ganz Europa zusammen, nun auch noch Zehntausende aus der EU zurücknimmt, nennt Knaus „vollkommen unrealistisch.“ Es sei denn die EU mache der Türkei ein außergewöhnliches Angebot. Knaus schlägt vor: „Die EU“ erklärt sich bereit, in den kommenden 12 Monaten eine Million Flüchtlinge aus Syrien (und nur von dort) aufzunehmen, die ihre Asylanträge noch in der Türkei abgeben können. Sie könnten dann legal mit dem Flugzeug nach Europa kommen statt ihr Leben auf Schlauchbooten zu riskieren. Die Türkei würde sich im Gegenzug verpflichten, das ab 2017 voll in Kraft tretende Rücknahmeabkommen mit der EU sofort anzuwenden. „Das bedeutet, sie würde jeden, der aus der Türkei kommend Lesbos oder Kos erreicht, am folgenden Tag zurücknehmen.“ Diese Doppellösung, so Knaus, würde das Geschäftsmodell der Menschenschmuggler in kurzer Zeit zerstören. Doch wie werden die Menschen in der EU verteilt? Und würde die Türkei ihren Part eines solchen Abkommens erfüllen? Wer traut noch dem Wort des Autokraten von Ankara, Tayyip Erdogan – selbst wenn der sein Wort gäbe? Solche und andere Einwände liegen auf der Hand. Klar ist aber auch, so Knaus: „Der Schlüssel, um die unkontrollierte Ankunft Hunderttausender Migranten und Asylbewerber in der EU zu stoppen, wird von der Türkei gehalten. Nur eine Strategie, die auf dieser Tatsache aufbaut, kann den Notstand beenden.“
The situation on the European Union’s external borders in the Eastern Mediterranean is out of control. In the first eight months of 2015, an estimated 433,000 migrants and refugees have reached the EU by sea, most of them – 310,000 – via Greece. The island of Lesbos alone, lying a scant 15 kilometres off the Turkish coast and with population of 86,000, received 114,000 people between January and August. And the numbers keep rising. The vast majority of people arriving in Greece during this period were Syrians (175,000). They are all likely to be given refugee status in the EU if they reach it; in 2014, the recognition rate of Syrian asylum applications was above 95 percent. But to claim asylum in the EU, they need to undertake a perilous journey by land and sea.
In the face of this massive movement of people – the largest in Europe since the end of the Second World War – there have been two diametrically opposed responses.
Germany has responded with open arms to the tide of Syrian refugees pouring into its train stations. At the beginning of the year, Germany anticipated some 300,000 asylum claims. By May, this prediction had been revised to 450,000. The German ministries of interior and social affairs are now making preparations for 800,000 this year. The German vice chancellor and Social Democrat Party leader has stated that Germany can cope with a half a million refugees a year for the coming years. Angela Merkel, the German chancellor, has become the face of this generous asylum policy. She has been widely hailed for her moral leadership; but she has also been accused by other EU leaders of making the situation worse, by luring ever more refugees into the EU.
A radically opposed agenda has been pushed by Viktor Orban, the Hungarian prime minister. In early 2015, Orban vowed that Hungary would not let any Muslim refugees enter, making this promise in the wake of the Charlie Hebdo massacre in Paris. He repeated this pledge in May, when the EU discussed quotas for sharing the refugee burden among member states. He warned in a speech in July that Europe was facing “an existential crisis.” He blames the refugees themselves, whom he labels economic migrants, and EU migration policy for the current crisis. And he does not mince his words: quotas for refugees are “madness”; “people in Europe are full of fear because we see that the European leaders, among them the prime ministers, are not able to control the situation”; European leaders live in a dream world, failing to recognise that the very “survival of European values and nations” is at stake. Orban declared the issue a matter of national security, ordered a fence to be built, deployed the military, used teargas and passed legislation to criminalize irregular migration. He has also taken this message to the country at the core of the refugee debate, Germany, convinced that before long German public opinion will force Merkel and her allies around to his way of thinking.
In reality, neither the German nor the Hungarian approaches offer a solution to the ever-increasing numbers of Syrian refugees crossing into Greece and on through the Balkans. Neither a liberal asylum policy nor a wire fence will prevent people from drowning in the Aegean. Although they are diametrically opposed in their views of the Syrian refugee crisis, neither approach is sustainable. This is because it is not the EU but Turkey that determines what happens at Europe’s southeastern borders. Without the active support of the Turkish authorities, the EU has only two options – to welcome the refugees or try – futilely – to stop them.
ESI proposes an agreement between the EU and Turkey to restore control of the EU’s external border while simultaneously addressing the vast humanitarian crisis. Rather than waiting for 500,000 people to make their way to Germany, Berlin should commit to taking 500,000 Syrian refugees directly from Turkey in the coming twelve months. While this would be an extraordinary measure, it is a recognition that the Syrian crisis is genuinely unique, creating a humanitarian crisis on a scale not seen in Europe since the Second World War.
It is essential that these 500,000 asylum seekers are accepted from Turkey, before they take to boats to cross the Aegean. As a quid pro quo, it is also essential that Turkey agrees to take back all the refugees that reach Greece, from the moment the deal is signed. It is the combination of these measures that will cut the ground from under the feet of the people smugglers. If Syrian refugees have a safe and realistic option for claiming asylum in the EU in Turkey, and if they face certain return back to Turkey if they cross illegally, the incentive to risk their lives on the Aegean will disappear.
These two measures would restore the European Union’s control over its borders. It would provide much-needed relief and support to Syrian refugees. And by closing off a main illegal migration route into the EU, it would reduce the flood of people now trying to reach Turkey from as far away as Central Asia. This would help to manage the huge burden currently faced by Turkey.
This proposal would take Germany’s readiness to welcome hundreds of thousands of refugees and redirect it into an orderly process where refugees no longer have to take their lives into their hands in order to claim asylum. At the same time, it would stop the uncontrolled flood of people across Europe, something Orban’s fence can never do.
If this agreement could be put in place quickly, before the seas get even rougher and the cold season closes in on the Balkans, it could save untold lives.
What might work: a two-pronged strategy
We therefore propose the following two-pronged strategy for addressing the refugee crisis.
First, Germany should commit to taking 500,000 Syrians over the next 12 months, with asylum applications made in an orderly way made from Turkey. The German government is already anticipating and preparing for this number of arrivals. But instead of waiting for them to make the sea and land journey, with all its hazards, they should accept claims from Turkey and bring successful claimants to Germany by air. Of course, Germany cannot, and should not, bear the whole refugee burden. Germany’s offer must be matched by other European nations – ideally through a burden-sharing arrangement agreed at EU level. It may make sense for the EU itself to manage the asylum application process. But such agreements take time to achieve.
Second, from the date that the new asylum claims process is announced, any refugees reaching Lesbos, Samos, Kos or other Greek islands should be returned back to Turkey based on a new Turkey-EU agreement. Initially, there would be huge numbers of readmissions – tens of thousands – presenting a major logistical challenge. But once it is clear that (i) the route through Greece is closed, and (ii) there is a real and immediate prospect of gaining asylum from Turkey, the incentives for the vast majority of people to pay smugglers and risk their lives at sea would disappear. Within a few months, the numbers passing through Greece would fall dramatically.
There are many reasons why this two-pronged strategy is the most credible solution to the crisis. It would place a cap on the number of Syrian refugees accepted into Germany. While amounting to an extremely generous response, it would not be the open-ended commitment that Merkel’s critics fear. It would enable the German government to assure the public that the crisis is under control, helping to prevent public support from being eroded.
It would provide Merkel with a ready answer to Orban’s criticism. The asylum process, while generous and humane, would no longer be generating incentives for desperate people to risk their lives at sea. Hungary and other transit countries would be relieved of the security challenge – and the political pressure – created by the mass movement of refugees, taking the heat out of the debate. It would destroy the business model of the whole criminal underworld of human traffickers.
Finally, it would relieve Turkey of a major part of its refugee burden. Furthermore, with the route into Greece closed, Turkey would cease to be a magnet for migrants from as far away as Central Asia. This would relieve the pressure building up on Turkey’s eastern borders. With Europe finally making a genuine effort to share the burden with Turkey, it can legitimately ask for more cooperation on managing the remaining migration flows.
In the interim, the solution is in the hands of Germany and Turkey. And a quick solution is sorely needed, before the seas grow even rougher and the cold season closes in on hundreds of thousands of desperate refugees seeking a route across the Balkans.
Presentation of these ideas on Austrian public television: http://tvthek.orf.at/program/ZIB-2/1211/ZIB-2/10595483/Gespraech-mit-Tuerkei-Experten-Gerald-Knaus/10595689
“People only accept change in necessity and see necessity only in crisis.”
This weekend Greeks vote in a referendum whose outcome could have dramatic consequences for their country. Polls show that the result is on a knife-edge. Every vote counts. The stakes for Greece could not be higher.
Please find the full ESI newsletter on the Greek Referendum here:
“The truth is that the recession in Greece has little to do with an excessive debt burden. Until 2014, the country did not pay, in net terms, a single euro in interest: it borrowed enough from official sources at subsidized rates to pay 100% of its interest bill and then some. This situation supposedly changed a bit in 2014, the first year that the country made a small contribution to its interest bill, having run a primary surplus of barely 0.8% of GDP (or 0.5% of its debt of 170% of GDP).
To watch “One Step Ahead” (on the 2010 Thessaloniki elections) go here.
When the Syriza government fails this must not mean that the only alternative are the neo-Nazis of Golden Dawn.
There are pro-European and pro-reform Greeks who will make their voice heard. And there would be a huge reservoir of good-will across Europe for a Greek government that is serious about reforms, does not blame outside forces for its problems and really designs credible reform strategies to replace inchoate reforms proposed by foreigners.
Imagine the next Greek prime minister speaking like this, in Athens as well as in Berlin, in Thessaloniki as well as in Brussels, and also in Riga, Vilnius, Warsaw and Bratislava:
“As you all know Greece is going through an excruciating financial crisis. Under these conditions we need common sense …
… in Greece we are still hesitant to liberate the administration from the rule of the politicians. We are all embedded in a culture which resists the separation between politics and administration.
In the Greek state as a whole, this is the most important reform which is desperately needed. Unfortunately, in reality it has not advanced much.
The current system of a strikingly unreliable administration tends to reproduce itself. And this is clearly the responsibility of both the Greek government as well as of the EU since it hasn’t touched upon this during the last 34 years.
I dare to say that reforms and changes are not enough in the case of the Greek state. We need to revamp the state and its mentality almost from scratch! A new political culture needs to emerge in order to host a genuine separation of powers within the state.
The current institutional framework under which we operate is excessively centralist and any effort of decentralisation has proved to be inefficient. We are still unable to cooperate effectively with the private sector and increase our productivity. An inextricable web of laws determines the framework within which we are forced to operate.
The state needs to stop being hostile to its citizens. We need a government that will stop fooling citizens and proceeds immediately to some common sense action.
Greece is going through a crucial phase. After the biggest recession ever experienced by a developed country in the post-war period, people are in despair.
Political forces must form a united front on certain fundamental issues – like the state’s modernisation – and negotiate from a better position the country’s future.
The view that we can resort to excessive public spending in order to revive the prosperity of the past is not only surreal; it also ignores the current balance of power in our continent.
In order to distribute wealth you need to create favourable conditions in order to produce it. Unfortunately, there are too many Greek politicians suggesting that sustainable growth can come without radical reforms but in some magic way.
What Greece desperately needs, is radical transformation of its state which can in turn bring change to its political culture. This will be our task.”
PS: Note: this speech was actually delivered by a Greek politician in 2014. A politician who was elected on this platform in 2010 and reelected in 2014 in Greece’s second biggest city.
” … we have an obligation to act in order to preserve Greece’s stability and prosperity. This can only be attained within the Eurozone and the EU. In the unfortunate event that things will go astray, we should all unite and protect the people’s well-being from irresponsible political manoeuvring. Greece cannot afford to waste more time and consume itself in endless and irrational political conflict. I will do whatever I can in my power to avert this. If we manage to pass the dire straits of the immediate future, I am hopeful that our country will enter a phase of creative reform and sustainable growth. Greece has demonstrated in the past and Greeks have demonstrated abroad that if they work under decent conditions, they can definitely thrive.”
“NERP” sounds like “NERD”: may this contrast – or this photo – help you remember this particular acronym. NERP stands for National Economic Reform Programme. Last year the European Commission asked all Western Balkan governments to produce one NERP a year. (Proposed on page 8 here). The 2015 Kosovo NERP report is in fact different from the nerdish, impenetrable language of many economic analyses published on the Balkans in recent years. It deserves to be read widely.
The 2015 Kosovo NERP is 129 pages. Probably few people intend to read it in full. This would be a pity, as it provides a good foundation for a serious debate. In fact, the report hides its radical implications with its first sentence:
“Kosovo has been one of the very few countries in Europe and the region of South Eastern Europe that had positive growth rates in every single year in the period since the 2008 outbreak of the global financial crisis.”
This is not wrong, but it is misleading, as the analysis itself quickly makes clear. While everyone knows that Kosovo is poor, exports little, attracts little foreign investment and creates few jobs the NERP tell a far more disturbing story.
Kosovo’s problem in six figures
The 2015 Kosovo NERP contains many numbers, but some that are particularly telling. Between them, these six numbers tell you (almost) everything you need to know about Kosovo’s economy.
305 million Euros – the total value of goods Kosovo exported in 2013
An annual export number of 305 million Euro is abysmally low. For comparison: Estonia exported goods worth 12.3 billion Euros in 2013. Estonia has a much smaller population than Kosovo. It is also worrying that in 2013 two thirds of these exports were “base metal and mineral products.” This means there are barely 100 million Euro of other exports (food, vegetables, plastics) that produce added value. Kosovo extracts minerals from the earth and sells them – but it produces very little.
2.3 billion Euros – the total value of goods Kosovo imported in 2013
This is very high compared to Kosovo’s exports. So how is the gap financed? How do Kosovo importers obtain these 2.3 billion Euros to import goods? One must assume that they obtain much of this from Kosovars who earn this money abroad.
The level of imports is directly linked to the third number:
1.3 billion Euros – total revenues (income) of the Kosovo government in 2013. No less than 871 million of this comes from border taxes on imports
This means that the state – 70 percent of its total revenues – depend on imports taxed at the border (customs, excises, and VAT on imported goods).
To maintain the current level of public spending, imports need to remain at least as high as they are now. If less money is transferred to Kosovo by Kosovars abroad, for whatever reason, government revenues will contract quickly. Even if government revenues and spending are in balance (with a low government deficit), and even if the debt of Kosovo’s government is relatively low as a share of GDP, the structure of public finances is very fragile.
The fact that Kosovo produces few goods, which people outside of Kosovo (low exports) or inside Kosovo want to buy translates into tragically low numbers of jobs. Here is the fourth number:
220,000 people – registered as employed in 2013
There is sometimes confusion in public debates about “employment.” They frequently get mixed up with debates on the distinction between the official and unofficial (grey) economy. In fact it is simple: there are two ways to measure how many people work, which always give different results as the meaning of “employed” is different in each case.
The first way is to look at registered jobs. These are jobs which are known to public authorities and which are taxed. The second way is to do a representative survey of the labour force, based on samples. In the Kosovo Labour Force Survey (LFS), or any other such survey elsewhere, this is how “employment” is defined:
“People aged 15-64 years who during the reference week performed some work for wage or salary, or profit or family gain, in cash or in kind or were temporarily absent from their jobs.” (LFS 2013, page 7)
This includes anyone in the family of that age who works “for family gain” on their small plot of land, milks the cow, looks after vegetables during the reference week, even if nothing is then sold for cash. In a country with a lot of subsistence farming this number is always much higher than registered employment. In Kosovo in 2013 this number was 338,000 people.
These two figures of employment allow us to estimate the size of the Kosovo private sector. There are 77,000 jobs in the public sector (paid by the state). This leaves 143,000 jobs in the registered private sector. Then there are another 118,000 people “employed” (LFS) without being registered.
Even added together, this number is shockingly low. Kosovo’s resident population of 1.8 million people divides into some 297,000 households (the average household has 6 members, still the largest households in Europe today). Even including all employment (per LFS definition), and all subsistence family farming on tiny plots, this yields barely one “employed” per household.
No wonder only slightly more than one in ten women of working age in Kosovo are “employed” (even by the LFS definition). No wonder Kosovo households have few savings: every employed person has to support five other people (dependents).
(5) FOREIGN DIRECT INVESTMENT
All of this raises the key development question: will Kosovo businesses – existing or new ones – develop more competitive products for new markets in the coming years?
Gaining market share in export markets requires competing successfully against businesses from other countries, from the EU, the Balkans, Turkey. This requires investment, such as new machinery. New or expanding businesses in Kosovo can be either foreign (through FDI) or domestic.
Here is the fifth number:
241 million Euros – Foreign Direct Investment (FDI) in 2014
This is very low by any standards: it means that very few foreign companies show any interest in using Kosovo as a base for their production and transfer their machinery and know-how here. And, as the NERP notes, FDI has been decreasing in recent years:
“Since 2007, net FDI inflows have been volatile and with an overall negative trend … the sectorial composition of FDI has shifted towards real estate and construction between 2009 and 2013.”
What the NERP does not give us is the value of all cumulative FDI (the FDI stock) in Kosovo. For comparison: in Estonia in 2014 this FDI stock is around 15.9 billion Euro. Kosovo’s total GDP is only 5.3 billion Euro.
(6) COST OF CREDIT
The sixth number tells us what opportunities existing Kosovo entrepreneurs have if they want to develop:
10 percent – the annual interest rate on loans in November 2014 (in November 2013 it was 12 percent)
This is very high. Again, look at Estonia (European Central Bank data): loans to non-financial corporations – depending on specific conditions – carry around 3 percent annual interest at the end of 2014.
What do these six numbers tell us about the Kosovo economy?
Export of goods is very low; given current trends of declining FDI and high costs of borrowing for businesses in Kosovo this is unlikely to change anytime soon. The NERP projects a best case scenario in which the export of goods increases from 305 million Euro to 441 million Euroby 2017.
There is little structural change in the Kosovo economy compared to one decade ago. The GDP growth that has happened has been the result of households spending money (consumption) based on transfers from abroad and increases in public sector salaries (funded largely through border taxes on imports of goods, which are bought largely with money transferred from abroad).
The employment rate will remain very low in the foreseeable future. If new jobs are created in the next years in the private sector one might expect some subsistence farmers to turn away from non-cash production to other – regular – employment. In order to really increase employment rates and create new jobs Kosovo would need levels of investment and export growth that are simply not on the horizon for many years to come.
This makes public policy in many areas hard to formulate. Take the issue of skills needed for the labour market. What jobs does today’s generation of young Kosovars need to be prepared to take? What skills will they need? Unless there is a realistic job of more jobs in the foreseeable future this question is impossible to answer.
All of this is well set out in the NERP. At the same time it also underlines the main gap in the NERP analysis: the absence of any analysis of the economic impact of current and future migration flows.
While the word remittances appears many times, “migration” does not appear anywhere in the text. At the same time everything described in the NERP – the huge trade deficit, a public sector funded to 70 percent by border taxes, recent GDP growth – is the direct consequence of the migration that took place many years ago. There is no discussion of what policies – education, social and foreign policy – might make regular migration from Kosovo to the EU possible. This created the lifeline of remittances that keeps Kosovo households – and the public sector – afloat today. This is the lifeline that the EU has tried to cut since 1999, making it increasingly difficult for Kosovars to migrate to work.
“Promotion of Kosovo Diaspora and realization of objectives arising from Strategy on Diaspora and Migration 2013-2018, which is related to the preservation of national and cultural identity of Diaspora, to creation of conditions for the participation of Diaspora in the political and social life and their representation in decision-making institutions of the country, integrating them in countries where they live, as well as involvement of Diaspora in socioeconomic development of the country.“
This half sentence is not followed by any concrete policy measure.
The pressure on Kosovars to look (legally or illegally) for work and income elsewhere will grow ever stronger in coming years. How strong this pressure is already has recently become obvious to policy makers in the EU and in Kosovo.
ESI argues that the European Union, instead of simply opposing this pressure, should try to channel it in mutually beneficial ways. Illegal and irregular migration needs to be stopped, but opportunities for regular, or circular work migration need to be opened. This will also require a major effort on the part of Kosovo authorities in many policy fields, starting in education policy.
The first paragraph of the NERP euphemistically refers to “the country’s rather specific development model.”What is today specific about this model is that it is not about development in Kosovo at all. As the NERP notes, Kosovo experienced growth:
“… based on strong remittances and FDI inflows from diaspora that boost domestic demand through household consumption and investments channelled primarily into the non-tradable sector, such as real estate and services.”
This is growth dependent on wage earners in Germany, Switzerland or Austria with links to family members resident in Kosovo. The NERP refers to some risks:
“The existing growth model of the country based on large financial inflows is associated with significant risks. On the short run, the main risk factor would be a sudden fall of these inflows – caused by unfavourable economic developments in countries with the largest Kosovo diaspora – and its negative consequences for growth, public finances, and external and financial sector stability.”
But then it falls silent. It does not discuss the role of EU policies that try to prevent further migration.
Young Europeans – but not part of Europe today
The NERP is an interesting document. More will be said on this blog later on its recommendations to increase exports. But the main value of the NERP lies in showing what many prefer to forget: while migration alone is no development policy, without migration Kosovo has no medium term economic future. Simply put:
The Kosovo “growth model”
Workers abroad, with family in Kosovo
Money that fuels local consumption. This funds imports. Taxation of these imports is the core of public revenues
EU member state policy
STOP Kosovars moving abroad to work illegally
CLOSE most possibilities to move to work abroad legally
Greatest risk to Kosovo “growth model”
Current EU member state policy succeeding.
In order to develop a credible migration policy, the vital importance of migration needs to be acknowledged first, including in the NERP. It is never too late.
 The definition of FDI according to the World Bank: “Foreign direct investment are the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor.”
They are the two most memorable words for texts that are best forgotten: Gibberish and Gobbledygook.
“Gibberish or gobbledygook refer to speech or other use of language that is nonsense, or that appears to be nonsense. It may include speech sounds that are not actual words, or forms such as language games or highly specialized jargon that seems nonsensical to outsiders.” (Wikipedia)
As Glenn Seaborg explained one theory in 1980 in “Our heritage of the elements”:
“… gibberish comes from the name of the famous 8th-century Islamic alchemist Jābir ibn Hayyān, whose name was Latinized as “Geber”, thus the term “gibberish” arose as a reference to the incomprehensible technical jargon often used by Jabir and other alchemists who followed.”
Jabir ibn Hayyan alias Geber
There is no particular reason why texts about economic development should be either gibberish or gobbledygook. And yet, quite a lot of what was written by the European Commission on the economic development in the Balkans in recent years might qualify.
“The economic upturn throughout 2013 and the first quarter of 2014 came abruptly to a halt in the second quarter of 2014 mainly as a result of the heavy spring floods. Accordingly, GDP growth slipped into a negative territory by 0.5% y-o-y after expanding by 3.2% in the previous quarter. Going further, preliminary data for the third quarter released by the statistical agency indicate GDP growth to have marginally turned positive (0.6% y-o-y). Similarly, high-frequency indicators for July-October 2014 point towards a modest revival of economic activity with the country-wide industrial production up by 1% yo-y, before turning negative again in November. In particular, the mining and quarrying sector as well as the utility sector registered the largest output contraction y-o-y, -1% and 10.7%, respectively, while the manufacturing sector posted the largest output increase (4.4%). The slump of domestic demand in the second quarter of 2014 started to reverse in July September with the growth of retail sales speeding up by 2.1% y-o-y and even accelerate in October-November to 7.8% y-o-y, well above the expansion of 4.6% in 2013.”
Already at first glance this breaks the basic rule of writing well: the writer is making the reader work too hard.
At second glance, once one begins to analyse this paragraph, it turns out that its meaning is elusive … or, in plain language, this makes little sense. Read this once, twice, three times, and then ask yourself: what has been happening in the Bosnian real sector in 2014, compared to 2013? There was a flood, and the economy suffered: but what do all these quarterly variations add up to? (Note that this paragraph is all the quarterly report tells the reader about the Bosnian real sector in late 2014.)
“Consumer prices started declining in December 2014 (-0.5% y/y) and continued on a downward trajectory by February (-0.2% y/y). The decline in the price index was almost completely influenced by decreasing prices of transport and education. On the other hand, 65.7% of the CPI components have actually been increasing; most notably food 2.1% y/y, energy 7.4% y/y etc.”
The reader understands that 65.7 percent of the prices of the components of the Consumer Price Index (CPI) have increased (one assumes in February), and (one assumes) 34.3 percent of the prices have not. One learns that there have been (monthly) decreases in the “prices of education” in January and February 2015, though what that means is elusive. There is no explanation which costs of education are included in the Consumer Price Index. Or why any of this matters and to whom. And what the etc. at the end refers to.
The economic sections of progress reports, which the European Commission publishes every autumn to evaluate accession countries, have also been written by ECFIN. The following paragraph is from the 2013 annual report on Macedonia. It invites readers to meditate on the meaning of words and numbers:
“Fiscal discipline was relaxed in 2012, and the quality of public spending deteriorated further. The general government budget deficit reached 3.8%, thus overshooting even the revised deficit target, which the authorities had raised by 1 percentage point to 3.5% in autumn. Another budget rebalancing reduced mainly investment spending, due to severe revenue shortfalls. Total expenditure as share of GDP rose from 31% in 2011 to 34% in 2012, and is estimated to reach 35% in 2013. The primary government budget deficit rose to 3.1% of GDP in 2012, compared to 1.7% in 2011. Capital spending was almost unchanged in 2012 compared to 2011, at 12% of total expenditure, or just over 4% of GDP, projected to decline to 11.3% of total expenditure in 2013, or 3.9% of GDP. The share of social transfers in total expenditure declined slightly in 2012, to 44.7% from 45.2% a year earlier, and is projected to stay largely unchanged in 2013. As a share of GDP, social transfers increased somewhat, to 15% of GDP, up by 0.4 percentage points.”
This creates an illusion of meaning. The reader is offered fourteen facts:
General government deficit target (2012)
Revised general government deficit target (2012)
Actual general government deficit (2012)
2.5 per cent
Total expenditure as share of GDP (2011)
Total expenditure as share of GDP (2012)
Total expenditure as share of GDP (2013 expected)
Primary government budget deficit (2011)
Primary government budget deficit (2012)
Capital spending as share of total spending (2011)
Capital spending as share of total spending (2012)
Capital spending as share of total spending (2013)
12 percent (4 percent of GDP)
11.3 percent (3.9 percent of GDP)
Social transfers in total expenditure (2011)
Social transfers in total expenditure (2012)
Social transfers in total expenditure (2013 projected)
What does all of this mean? The reader learns that
Fiscal discipline was relaxed and that “the general government deficit grew more than expected”; (two ways to say the same thing)
The reason for this: a severe revenue shortfall.
In response to this shortfall the government REDUCED investment spending but “capital spending was unchanged.”
Meanwhile total government expenditure ROSE.
And the share of social transfers in expenditure DECLINED.
So what actually happened in Macedonia?
The government did not collect as many revenues as it had planned. It then reduced investment spending. Social transfers declined as a share of expenditure. Total government expenditure rose. What type of spending increase explains the remarkable increase (by 3 per cent of total GDP!) in government spending? On this, there is nothing. We learn that the “quality of public spending deteriorated further,” a point that is never explained.
Lucid writing on economics
During such meetings I also quoted positive examples of good writing. Oxford professor and FT columnist John Kay on markets. My friend Felix Martin on money. The Dutch Central Bank, describing the “faltering Dutch economy” in its 2012 annual report (page 15). You do not need a PhD in economics to understand the annual reports by the European Central Bank either:
“The economic and financial crisis has reduced euro area potential output via two main channels: lower investment and higher structural unemployment.
First, during the most severe phase of the crisis, investment rates declined considerably, with financing conditions, such as terms and availability of credit, worsening in particular. Increased economic and political uncertainty and an unfavourable economic outlook made it more difficult to assess investment projects and lowered the expected rate of return on investments. High indebtedness of non-financial corporations in some euro area countries also made deleveraging necessary, further reducing credit demand.
Second, the crisis has also led to an increase in short to medium-term structural unemployment rates, indicated by the rise in long-term unemployment and an increase in skill mismatches. The unemployment rate of low-skilled workers has increased more than that of high-skilled workers, largely because the crisis triggered a sectoral relocation in many euro area economies, in particular a shift away from the construction sector. As it may be difficult for low-skilled workers dismissed from one sector to find jobs in other sectors, and as their human capital progressively erodes with the duration of unemployment, structural unemployment rates may remain elevated for an extended period.”
(ECB, 2014 Annual Report, page 23).
Fortunately, during 2014 awareness of the problem posed by unclear writing on economic trends has increased in many EU policy circles. There is good reason to expect that future writing by the European Commission (and ECFIN) on the economies of accession countries will be less impenetrable. (It may also be worth considering a thorough reform – or even a discontinuation – of these quarterly reports: http://ec.europa.eu/economy_finance/db_indicators/cpaceq/index_en.htm)
PS: To add one useful example when it comes to writing about economic trends in the Balkans – certainly for the economic section in the next Kosovo progress report of the European Commission – look here:2015 Kosovo NERP.