The cost of no Schengen
Faced with a burgeoning problem of migration from neighbouring countries in the Middle East, coupled with questions of security and the integration of migrants, Europe’s leaders are seriously questioning the continued right of free movement within the Schengen area. This question has two dimensions. First, could the Member States re-introduce border controls that would be effective to prevent migrants from moving across internal frontiers? Second, if this can be done, what would it cost?
What’s the situation now?
At this point, provisional border controls have been introduced in Austria, Germany, Belgium, France, Sweden and Denmark, as well as Norway, which is also a member of the Schengen area. Moreover, Slovenia, Croatia and Hungary are looking to introduce measures at internal level and external borders to ensure that they do not become swamped by migrants that are prevented from passing through to other EU Member States.
Member States on the frontline, like Greece, are bearing the brunt of the pressure and unless there is a concerted European response, what we might end up with is a band-aid on a haemorrhage. The suggestion that the Schengen Agreement be suspended is a part of this process. At best, this would isolate the problem, primarily, to the countries of first contact.
Reintroducing border controls: questionable impact on reducing migration
Whether this works will depend, first and foremost, on whether it is possible to introduce effective border controls between Member States. To be effective, these controls would have to be very wide-ranging.
This is specific to land borders and here, again, one has to question whether it will be possible to introduce effective measures to prevent migration. Member States could start by implementing passport controls back at road and motorway crossings again, but doing so could be rendered ineffective if the migrants were to simply walk across country. In any event, sheer weight of numbers could result in such barriers being swept aside.
The next step would be to build fences along the whole length of the EU’s internal borders.
Talking numbers: the cost of going back on the Schengen Agreement
The re-establishment of manned border controls would cost around 27 billion euro per control station (based on the last reported cost of British border control in 2013). There are thousands of kilometres of internal borders within the EU and building an effective fence along these would cost 553 million euro per kilometre (based on the cost of the 97 billion euro per 175km fence constructed in Hungary).
We must add the economic costs and consequences. Estimates of these costs vary widely. The Financial Times has reported an estimate of the overall loss at 100 billion Euros, while the Bertelsmann Stiftung has offered a range of between 470 billion to 1.4 trillion Euros in GDP loss.
The costs are not purely financial
The European Parliament’s Committee on Internal Market and Consumer Protection has suggested that the results actually lie somewhere in between. According to their research, seven areas will be adversely affected: GDP, trade, Foreign Direct Investment, jobs, mobility, consumers and SMEs.
The restriction on free movement would reduce intra-EU trade, leading to a loss of GDP, which would have a knock-on effect on investment generally and foreign direct investment in particular. It was estimated that the cost of border delays to freight transport (checking truck drivers’ passports and trucks for stowaways) is 50–60 euros per hour plus any local fines for delays in delivery.
Cutting off the EU economy’s lifeline: SMEs
The consequences for consumers and SMEs were of particular concern. These account for 98% of the EU’s non-financial business economy, therefore causing a massive blow to the EU economy as a whole if penalised, which will be inevitable without Schengen. According to the Committee on Internal Market and Consumer Protection, the countries that will suffer most are smaller Member States reliant on intra-EU trade, such as Slovakia, the Czech Republic, Belgium, Hungary and the Netherlands, whose exports currently account for over 50% of their GDP. Greece and Cyprus, who are already struggling economically, will be the least affected, the calculated loss of GDP having been estimated at less than 10%.
Costs versus investment: a better way to manage migratory pressure
A suspension of the Schengen Agreement will not remove the pressure of migration nor prove to be a solution. There is no doubt that it could lead to substantial costs in terms of physical controls and economic effects while failing to solve the problem. It must be asked whether the same money would be better spent in trying to strengthen the external borders of the EU and to address the problem at source, i.e. to fight the root causes of migration: the war [in the Middle East], the region’s poverty, corruption, hunger and lack of opportunities.
Originally published at www.eppgroup.eu.