Category Archives: EU

About asylum seekers and the route of least resistance in the face of the suspension of Schengen

This morning I read this article from Dutch newspaper Trouw, entitled (translated) “The new route to Europe leads to Finland through Russia.”

First digression – did you know there is an European Asylum Support Office, and that it was led by a Dutch person (Robert Visser), whose five-year term is just over? Well, neither did I.

The second paragraph of the article reads (my translation):

“They arrive at the very Northernmost tip of Finland. That was not foreseen in any scenario. They all come via Russia. This is yet another indication that these movements are largely organized. You do not invent by yourself, if you are in the Middle east: I’m going to northern Russia and cross the border there. ”
The latest figures from the EU statistics agency Eurostat indeed show a huge increase in the number of asylum seekers in Finland. In January the figure was 305. In August 2890 arrived, followed by no less than 10 815 in September. Most of them (9090) were Iraqis. According to Visser  there is a ‘reasoned expectation ” that this trend continues.”

I am not concerned here with what the Finnish government did or did not say about the expected numbers; that is a matter of domestic politics (and also the reasons why Iraqis are coming). Rather, I want to draw attention to that map of Europe.

Apparently the goal of many asylum seekers is to arrive eventually in Germany – probably regarding the economic situation there or the relatively welcoming stance of the country.

Remember that a while ago some countries “temporarily” suspended the Schengen agreement? Well, look at those borders again. How many borders do you have to cross supposing Schengen is in force still, if you arrive in e.g. Italy or Greece and you want to go to Germany? Right, only the first border. Now the situation is different with Austria building fences and Slovenia in and Hungary fenced off. Look at this graph from the NY Times, which is already out of date of course.

So in a short time the numbers of borders that have to be crossed increased, and at each border the asylum seekers experience hardship. So look at that map again – if you leave from Northern Iraq or Syria through Turkey and then cross the borders in Georgia and Russia (or by boat straight from Turkey to Russia), then the route through Russia to Europe is entirely logical to end in Finland, especially given the attitudes of Eastern European countries towards asylum seekers.

I guess my broader point is that (obviously) shutting the borders doesn’t make the problem go away. It just forces the streams to find a less interrupted route. The point Visser makes about the “organized” nature of asylum seeker flows is important, but in my opinion flawed – it just takes information about the state of the borders and what obstacles asylum seekers may face. They will find their way – the example of biking across the border is instructive in this sense. They use information about the rules to their advantage.

In the context of this all, I would like to add that bombing traffickers is not the solution. The asylum seekers from Syria and Iraq leave because it is not safe there. They can come entirely over land if they wish – for instance to Finland.

Regarding reactions: this is a potential foreign policy issue for Finland regarding Russia. And no, building a fence is unlikely to succeed.

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Frances Coppola on Latvia – lessons for Finland as well!

Also in Finland Latvia is seen as an example, why a nation should implement harsh austerity (like the new Finnish government is going to). But Frances Coppola explains:

To me, Latvia resembles a puppet whose strings are controlled by large Scandinavian banks. The 2004-8 boom was caused by excessive lending by Scandinavian banks: the “sudden stop” in 2009 was caused by the failure of Scandinavian banks:the short-lived recovery was driven by Scandinavian bank lending: and the present stagnation is due to credit rationing by Scandinavian banks. Latvia is not going to experience any further recovery while its financial sector remains dominated by foreign banks who don’t want to lend cross-border. The Balkanisation of the European banking system has severe consequences for the Baltic states.

Latvia has little or no control of its monetary conditions, and now it has joined the Euro it doesn’t have much control of fiscal policy either. Its prosperity is entirely determined by the commercial interests of foreign banks and the attitude of their regulators. Is this really what the people of Latvia want?

I am really dumbfounded by the stupidity of the political class, and the apparent influence of the banks on economic policy. I will return to the lessons for Finland in more detail later, but this article on the Irish economic recovery holds some information. To wit – the choice is either to let (foreign) banks run the economy (like in Latvia) or big MNC’s (like in Ireland).

Greece and Finland in recession – Bill Mitchell discusses

From Bill Mitchell’s blog.

On Finland I want to highlight this quote, because I think this is very much what is happening in Finland, both at the political and at the public discussion level (because nearly all ‘economic wise men’ aka economists come from the same universities. Beyond that, Keynes has never gotten a foothold in Finland, I understand from all this.)

Finland, one of the fiercest supporters of austerity entered official recession. The Finnish response was they had to cut public spending harder because they would be in breach of the Stability and Growth Pact rules relating to size of the deficit and the volume outstanding public debt. These nations are so caught up in neo-liberal Groupthink that they cannot see how ridiculous their policies and supporting dialogue has become.

The ECB confirms the confidence fairy doesn’t exist

In this working paper, the ECB studies the ‘confidence effects’ of fiscal consolidation, or what many call austerity politics. There are some ifs and buts but by and large this study confirms what Keynesians warned about: budget cuts in the middle of crisis have great negative effects.

It is of course one thing to have these statements in a working paper. It would be quite something else for the ECB to admit it has been repeatedly wrong (remember Trichet?) and furthermore, fiscal policy considerations are not quite supposed to be the terrain of the ECB anyway. But they now can share their wisdom with ECOFIN and the Commission.

Bill Mitchell on the dishonest ‘analysis’ of the almost-Troika

On his blog. Here, I’d like to share the conclusion (my bold). The whole text is quite dense and in places technical, but worth a read, especially now when in Finland all the major political parties compete over how large budget cuts they intend to make after the elections.

The reason that unemployment rose so sharply in the Euro countries between 2008 and 2014 has nothing much to do so-called trade imbalances or differential ULCs.

Those imbalances (as they call them) and different ULCs are not new. What happened in 2008 was a major aggregate spending collapse which was then reinforced by the imposition of austerity.

If I graphed the change in fiscal position (as measured by the differential austerity imposed) and the change in the unemployment rate I would get a very strong positive relationship (more austerity, higher the rise in unemployment rates) which would have some meaning.

That should be the starting point for the European Council – but then that would require them to ask questions about their patently dysfunctional fiscal rules.

Simon Tilford: Debunking German arguments about trade surplus

In this article by Simon Tilford. This has a lot of relevance for me regarding on-going research on the topic of ‘competitivess.’

Eurokriisin kiero hoito

Olen työn parissa lukenut lukuisia tekstejä eurokriisistä, miten se syntyy, mitä on tehty väärin, mitä meidän pitäisi tehdä yms. Kriisin ymmärtämiseen keskeisimmät kirjoitukset ovat minulle olleet Jörg Bibow (2012), Richard Koo:n kirja ‘balance-sheet recessions’-aiheesta ja Paul de Grauwen tärkeä kirjoitus rahaliitosta.

Joskus tulee kuitenkin vastaan sellaisia kirjoituksia, että tekee mieli kiroilla ja huutaa ja näin, koska koko eurokriisin hoito perustuu virheisiin, valheisiin ja inkompetenssiin. Tämä haastattelu Philippe Legrainin kanssa on sellainen tapaus. Lukekaa sitä.

Tässä päävika: vuonna 2010, Deauvillessa, Ranskassa, Merkel ja Sarkozy päättivät, että pitää rikkoa ns. “no-bailout clause” joka oli euroalueen perustuskivi. He, ja heidän kanssa myös Komissio vaativat että Kreikan valtio pelastaa Kreikan kriisipankkeja. Syy siihen oli, että piti suojella ranskalaiset ja saksalaiset (ja alankomaalaiset) pankit.  Sen sijään, että vihdoin tehtiin jotain järkevää finanssijärjestelmän vikoihin, laitettiin kaikki ongelmat valtioon. [siihen tulee de Grauwen analyysia peliin].

Koska ei Kreikallakaan ollut hyvä tilanne valtion taloudella (ei olisi pitänyt päästä Euroon, mutta sekin oli poliittinen päätös), päätettiin ‘antaa’ ‘apupaketteja.’ Tästä tuli lopussa se, että Pohjois-Euroopan maissa erilaiset hallitukset ja oppositiopuolueet ja nimenomaan myös kansalaiset ovat hyvin taipuvaisia kieltää lisää ‘apua’ esim. Kreikalle. Ja tämä on ymmärrettävää. Samoin kuin kreikkalaiset ovat vihaisia siitä, että heidän pitää kärsiä siitä, kun huonot pankit ‘pelastettiin’ ja pankit eivät nähneet melkein mitään seurauksia, myös pohjois-eurooppalaiset ovat  vihaisia, että heidän verorahat käytetetään ‘tukemaan laiskoja etelä-eurooppalaisia’ tai “täyttämään mustaa aukkoa” [mutta lue myös tätä]. Pointti on se, että olisi pitänyt tapahtua pankkien velkajärjestelyä ja hoita pankkialan valvonta kuntoon sen sijaan että pankkeja tuetaan. Nyt meillä on zombiepankit.

Ymmärrän varsin hyvin kritiikkiä rahaliitosta ja eurosta, mutta Suomessa ja Saksassa alusta diskurssi on keskittynyt niin vahvasti moraalikysymykseen, eikä oikeaan kysymykseen (pankkijärjestelmä, Saksan ajama talouspolitiikka), että on tosi vaikeaa enää puhua järkevästi tästä asiasta. Nykyiset ja viimeaikaiset hallituspuolueet ovat leikkineet tulella keskittymällä väärään asiaan. Kreikka tarvitsee rahaa vaan siksi, että kriisin alussa tehtiin valtavia virheitä. Olisi jo aikaa myöntää, että eurokriisin hoito on ollut tosi kehno. Brysselillä, Saksalla, Alankomailla ja myös Suomella.