Schengen has some inconvenient consequences

While Europe’s ongoing economic crisis has revealed fundamental construction errors of the economic and monetary union, the migrant crisis reveals similar faults with Europe’s borders-be-gone Schengen scheme. If the Schengen accords are to survive – and by all means they should – we have to come to terms with the consequences of near-abolishing all internal borders, even if they are hard to accept for politicians and voters. Until now, these consequences were either unknown or ignored, a laziness we can no longer afford. Schengen is an integral, visible and practical part of the peaceful European unification and has to be preserved for practical, political and economic reasons. The pursuit of ever-closer union entails costs, some of them political, such are Schengen’s costs. But as the personal and economic benefits of the accords greatly outweigh the costs, European politics and voters must accept a certain sovereignty loss. Although Schengen is over twenty years old, its completion was not pressing until last year’s onset of the migrant crisis – or it was not seen as pressing. However, it is pressing now. Continue reading Schengen has some inconvenient consequences

The IMF, Greece and the ECB

There have been leaks of alleged minutes of an IMF high rank conference call about Greece. Allegedly, Poul Thomsen, Director of the IMF’s European Department and his colleagues agreed that Greece only decides on the brink of default (p. 6). While Thomsen is right that Greek decisions are taken in the most effective way only close to default, there is little the fund could do about it. Greece is technically insolvent and is only able to keep on going with the extensive support of the ECB (and the ESM), in fact it is only political will that keeps Greece afloat, so the whole arrangement is near-default anyway. So, the only institution able to exert influence on Greece is the ECB. But the fund is not at all in a position to have a sizeable influence on the developments in Greece anyway, neither economically, since the Greek debt is guaranteed by the ECB’s various unconventional monetary policy programmes, nor politically, since they are currently not taking part in the “rescue” programme. The IMF wants a debt cut (which German chancellor Angela Merkel refuses) and will until then stand on the sideline. Continue reading The IMF, Greece and the ECB