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Wednesday, 13 December 2017

Schengen hanging by a thread

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  • Peters 475px June 2014

Anthony Peters on the problems with the EU’s internal borders.

Europe is in crisis! How often have we heard that over the past seven or eight years. We had the crisis in the European banking sector where greed, both in investment banks and commercial banks – the German Landesbanks with the flagrant misuse of their cheap, state guaranteed funding and with supervisory boards made up of tax hungry politicians and other worthies are a prize example – springs to mind. We had the sovereign debt crisis with the near collapse of Spain, Portugal and Ireland and the actual collapse of Greece and Cyprus. Now we have the migrant crisis and, following events in Paris last week, a security crisis to boot.

The big difference between the first two and the last two is that the former ones could be resolved by “political will” which is I suppose ultimately not much more than “eurospeak” for filleting hard-working taxpayers in wealthy, successful economies in order to bail out those in mismanaged ones. Thus, “whatever it takes” commits not the ECB’s or the Council of Ministers’ money but that of Fritz, Jeroen, Jorma and Jean-Jacques Six-Pack.

The latter two, on the other hand cannot be resolved by simply writing a cheque drawn on someone else’s account.

Not 36 hours before the terrorists hit Paris, the Muppet-in-Chief, Jean-Claude Juncker, warned in front of the European Parliament that the Schengen Agreement was in crisis. Not of course because there might be too many migrants randomly landing across the continent but because of the disparate methods of handling the situation by different members of the Union. Open borders and different asylum policies don’t make good bedfellows.

Students of Political Science learn in Politics 1.0.1 that nations are constituted of people with a common language, common culture and/or common history. Any two of the three can suffice to support a state. The slow and painful failing of the Grand European Project can therefore quite easily be put down to the absence of any one of the three elements resulting in an artificial political construct which lacks robustness. To date, the centripetal force which has held the thing together has been cash. The undisputed economic benefits have sufficed to fuse the many countries and cultures but beyond that, the aspirations of becoming one big happy borderless family don’t hold water.

It is every government’s first and overriding obligation to protect its citizens. The French, European integrationists of the first order, are now finding that protecting its citizens within its borders becomes tough if that border is suddenly a couple of thousand kilometres away in Greece where it is patrolled by some Stavros for whom France is nothing more than another one of those horrid rich countries which imposes austerity and which otherwise has no role other than as a provider of funds.

Britain chose not to join Schengen which was signed 30 years ago this past summer and it has been treated as though it was a naughty, spoilt child ever since. I lunched yesterday with a friend who is highly educated, has been very successful but who’s roots are in the East End of London. She spoke of how the traditionally white working-class part of town from where her ancestors had hailed was now firmly in the hands of Asian and African immigrants. My friend who has not a racist bone in her body – her two daughters-in-law are African and Indian respectively – asked, nevertheless, why we make such an effort, both morally and financially, to protect the cultures of others while doing so very little to protect our own?

As a first generation Englishman myself, I choose to proffer no opinion on the subject but these are questions being asked at the grass-roots and ones which are not receiving any answers. The lady in question is too well educated, too well read and too bright to be tempted to swing to the burgeoning xenophobic wing of 21st Century politics but lesser people will and are doing so. The debate must be held openly and without the usual instant cry of “You bloody racist!”

Drug running

Back in our world, Pfizer’s flirting with Allergan has prompted some action in Washington. The price of both stocks fell in New York trading after it became known that the prospect of Pfizer spending US$120bn in order to invoke an inversion and to take its tax residency out of the US and into Ireland. It paid 34% on its profits last year and Allergan paid 5%. It’s not a quiz. Not is it only not a quiz but is it not incumbent on the board to act not only within the law but also to strictly exercise its fiduciary responsibility to the benefit of the shareholders?

Anyhow, what Washington came up with is nothing more than a tightening of existing anti-tax inversion rules which at first sight seemingly would not apply to the Pfizer/Allergan deal. Both stocks ended down a couple of percentage points as the prospect looms of all-out war between the government, a significant client of Pfizer, and the company.

The US tax system is in dire need of a complete overhaul as it has amongst the highest corporation and lowest personal taxation on the planet. It has been out-braked by globalisation which is of its own making and now it is stuck. If it can self-immolate over a debt ceiling, what chance of a root-and-branch tax reform? Maybe one day Capitol Hill will acknowledge that it is not infallible and that there are some things it has got horribly wrong and that other countries which do things differently don’t do them exclusively to spite America.

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Alas, it is that time of the week again and all that remains is for me to wish you and yours a happy and peaceful week-end. This week we also bade farewell at the tender age of 40 to Jonah Lomu, one of the greatest and most transformational players ever to grace a rugby pitch. I had the privilege to both watch him play and to attend an event at which he spoke. A towering presence in both senses.

Onward and upward – five weeks until Christmas and five weeks less two days until most of us will do the bulk of our shopping. Yikes!

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