Opinion

European financing for the European refugee crisis

Protecting the EU's external borders is a shared task, which can be most effectively carried out if paid for with common funding. A tax on carbon combined with borrowing could fund refugee policy and also help the EU achieve its climate goals.

By: Date: May 11, 2016 Topic: European Macroeconomics & Governance

This op-ed was originally published in La RepubblicaEl Pais, and Naftemporiki. It will also appear in Frankfurter Allgemeine Zeitung, L’Opinion and Dienas Bizness.

La_Repubblica_logo

2000px-El_Pais_logo_2007.svg

faz

lopinion

Dienas Bizness logo

 

As countries are struggling to implement the EU-Turkey deal on refugees, the debate on how to finance EU migration policy is heating up. Italy has proposed issuing ’EU Migration Bonds’ to fund migration in EU countries, while Germany’s finance minister Wolfgang Schäuble has proposed that expenses related to migration, including enhanced European border controls, be financed with a commonly agreed tax on fuels.

Pooling resources to fund migration and border controls makes sense in an EU that has largely removed internal border checks. Protecting external borders is a shared task, which can be most effectively carried out if paid for with common funding. EU countries should also work with neighbouring countries to influence their policies, and cooperate on dealing with migrants.

This is what the EU has been doing in the deal with Turkey and is also discussing as regards Libya. Again, EU actions will be much more effective if different policies are closely coordinated between countries. Once the political and administrative capacity is in place, the EU’s external policies will also need their own source of funding.

The IMF has estimated the short-term fiscal costs of asylum seekers to be at an average of around 0.1% of GDP. However, some countries are spending significantly more. Added to the asylum costs are the costs of other policies, such as more effective policies outside the EU and funding Frontex, the EU’s external border control agency. Handling the refugee crisis and funding the response to it cannot be left to Greece, Italy and the other peripheral countries alone nor can Germany and Sweden accept and fund almost all refugees arriving. It must be a joint endeavour.

Common border controls and migration policy represent a permanent cost – as the Italian paper argues, migration flows towards the EU will likely continue. Permanent costs require permanent resources and cannot be funded by deficits. The idea to create a common tax to fund such costs is therefore welcome. Wolfgang Schäuble’s idea to use a petrol tax points in a sensible direction.

In fact, a tax on carbon at European level would also help achieve the EU’s climate goals agreed at the Paris summit. If Europe wants to take its commitments on climate policies seriously, it must re-activate the European Emission Trading System, but also raise taxes on greenhouse gas emissions that are not covered by the ETS. With about 1.5 million tons of oil consumed every day in the EU, a tax increase on oil could raise enough revenue to deal with the refugee crisis. Although the cost would be paid by the consumer, in the long run a properly functioning approach at the European level would save money.

Nevertheless, the Italian proposal rightly emphasizes the importance of borrowing. The costs of dealing with the refugee crisis will vary over time. Currently, there are significant one-off costs to build the necessary infrastructure, build-up Frontex, buy necessary equipment and so on. According to standard neoclassical economic theory, high costs that are temporary should be funded by borrowing, keeping the tax rate constant over time, to avoid inefficiencies and prevent wrong investment choices.

Both the Italian proposal and the German finance minister rightly point out that addressing the refugee crisis requires resources, and that a European approach to finding these resources is desirable. The German finance minister is right that tax resources are needed, and introducing a tax that contributes to achieving the climate goals makes sense. At the same time, it is useful to be able to complement tax revenues with borrowing in order to fund temporarily high expenditures.

To make this a workable proposition, it is important that the right legal and administrative framework is built. The EU treaties, in particular articles 191 and 192, allow for the creation of a tax to meaningfully achieve the EU’s environmental objectives. A carbon tax is internally recognized as the right tax to achieve the goal of preventing climate change. Since the EU would move into new territory with such a step, careful political and administrative planning is needed. But both climate change and migration policies are common public goods that need common resources to be most effective.

 

 


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint.

Due to copyright agreements we ask that you kindly email request to republish opinions that have appeared in print to communication@bruegel.org.

View comments
Read about event More on this topic

Past Event

Past Event

EU-Turkey energy and climate dialogues

This event is part of the joint Bruegel-IPC initiative European Neighbourhood Energy and Climate Dialogues. This is a closed door event, open only to Bruegel's members and a group of experts.

Speakers: Dirk Buschle, Ahmet Evin, Myriam Ferran, Philipp Godron, Daniel Grütjen, Sohbet Karbuz, Susanne Nies, Mehmet Oguctu, Megan Richards, John Roberts, Umit Sahin, Simone Tagliapietra and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 20, 2017
Read article More on this topic More by this author

Blog Post

Revision of the Posted Workers Directive misses the point

The Commission’s proposed revision of the Posted Workers Directive has been approved by the European Parliament’s Employment Committee, which welcomes the arrival of “equal pay for equal work”. But the revision will have little impact, and was largely unnecessary. Instead we should focus on the fight against bogus self-employment, social security fraud and undeclared work.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: October 18, 2017
Read about event More on this topic

Past Event

Past Event

EU - CELAC Economic Forum - Channels for a joint future

On 11 October Bruegel together with GIGA and Real Instituto Elcano will organise a conference on relations between the EU and the Community of Latin American and Caribbean States.

Speakers: Paola Amadei, Angel Badillo, Paulo Carreño King, Linda Corugedo Steneberg, Gonzalo de Castro, Gonzalo Gutiérrez, Bert Hoffmann, Edita Hrdá, Ramón Jáuregui, Emilio Lamo de Espinosa, Eduardo Levy Yeyati, Gabriel Lopez, Enrique Medina Malo, Maryleana Méndez Jiménez, Luicy Pedroza, Mario Pezzini, Mario Soares, Everton Vargas, Dylan Vernon and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 11, 2017
Read article More on this topic

Blog Post

Reinforcing the EU energy industry transformation: stronger policies needed

The European energy system is being transformed by three major forces, decarbonisation, digitalisation and decentralisation. Decarbonisation is changing the European energy mix, while innovation in digital technologies is enabling disruptive change in the way energy systems are operated.

By: Simone Tagliapietra and Georg Zachmann Topic: Energy & Climate Date: September 21, 2017
Read about event

Past Event

Past Event

Bruegel Annual Meetings 2017

The Annual Meetings are Bruegel’s flagship event. They offer a mixture of large public debates and small private sessions about key issues in European and global economics. In a series of high-level discussions, Bruegel’s scholars, members and stakeholders will address the economic policy challenges facing Europe.

Speakers: Carlos Sallé Alonso, José Antonio Álvarez Álvarez, Agnès Bénassy-Quéré, Pervenche Béres, Matthias Buck, Grégory Claeys, Zsolt Darvas, Jean Luc Demarty, Maria Demertzis, Anna Ekström, Lowri Evans, Ferdinando Giugliano, Sandro Gozi, Peter Grünenfelder, Reiner Hoffmann, Levin Holle, Kate Kalutkiewicz, Steffen Kampeter, Peter Kažimír, Emmanuel Lagarrigue, Matti Maasikas, Steven Maijoor, Reza Moghadam, Nathalie Moll, James Murray, Johan Van Overtveldt, Julia Reinaud, André Sapir, Dirk Schoenmaker, Mateusz Szczurek, Marianne Thyssen, Jean-Claude Trichet, Reinhilde Veugelers, Nicolas Véron, Ida Wolden Bache, Liviu Voinea, Guntram B. Wolff and Georg Zachmann Topic: Energy & Climate, European Macroeconomics & Governance, Finance & Financial Regulation, Global Economics & Governance, Innovation & Competition Policy Location: Square - Brussels Meeting Centre Date: September 7, 2017
Read article More on this topic More by this author

Blog Post

EU posted workers: separating fact and fiction

After President Macron’s recent tour of Central and Eastern European countries, EU posted workers are getting a lot of attention. However, a major reform of the system is already underway and we should not confuse posted workers with long-term labour migrants. Posted workers are a small part of the labour force, and their labour market impact is likely to be minor.

By: Uuriintuya Batsaikhan Topic: European Macroeconomics & Governance Date: August 31, 2017
Read article Download PDF More by this author

Parliamentary Testimony

European Parliament

Could revising the posted workers directive improve social conditions?

This presentation was delivered in Brussels on 31 January 2017 at a hearing of think-tanks, to advise the European Parliament on the revision of the Posting of Workers Directive.

By: Zsolt Darvas Topic: European Macroeconomics & Governance, European Parliament, Testimonies Date: August 29, 2017
Read article More on this topic

Blog Post

Low carbon technology exports: the race is still open

A country’s relative strength in exporting a certain product is likely to persist. But it is easier to gain a comparative advantage in exporting low carbon products. When it comes to R+D, strength in a certain technological field is much less linked to past specialisation. This also holds for low carbon technologies. Finally, our preliminary findings are consistent with the view that R+D can help a country specialise in clean technology exports. However, we are not yet able to show that policy action supporting R+D in clean technologies is a sensible way to develop a comparative export advantage in these sectors.

By: Georg Zachmann and Enrico Nano Topic: Innovation & Competition Policy Date: August 24, 2017
Read article Download PDF More on this topic

Book/Special report

Towards EU-MENA Shared Prosperity

Endowed with half of the world’s known oil and gas reserves, the Middle East and North Africa (MENA) region has become a cornerstone of the global energy architecture. This architecture is currently undergoing a structural transformation, prompted by two different forces: decarbonisation policies and low-carbon technology advancements. This book seeks to address the following research question: are MENA oil-exporting countries equipped to prosper in times of global decarbonisation?

By: Simone Tagliapietra, Abdelhak Bassou, Marion Jansen, Yassine Msadfa, Mario Filadoro and Larabi Jaidi Topic: Energy & Climate Date: August 17, 2017
Read article More on this topic

Blog Post

Building positive incentives: the potential of coalitions for sustainable finance

We need to move towards more sustainable, long-term thinking in the corporate and financial worlds. Coalitions of willing actors could play a role in driving this process. But what makes for an effective coalition, and how can this be measured? The authors assess existing coalitions for sustainable finance and business, and argue that well-functioning coalitions can positively reinforce social and government action.

By: Enrico Nano and Dirk Schoenmaker Topic: Finance & Financial Regulation Date: July 18, 2017
Read article More by this author

Blog Post

How to make finance a force for sustainability

Traditional finance focuses on financial return, considering the financial sector separate from both society and the environment. In contrast, sustainable finance considers financial, social and environmental returns in combination. In a new essay, Dirk Schoenmaker provides a framework for sustainable finance highlighting the move from the narrow shareholder model to a broader stakeholder model. Here he presents the key arguments.

By: Dirk Schoenmaker Topic: Energy & Climate, Finance & Financial Regulation Date: July 12, 2017
Read article Download PDF More by this author

Essay / Lecture

Investing for the common good: a sustainable finance framework

Traditional finance focuses solely on financial return and risk. By contrast, sustainable finance considers financial, social and environmental returns in combination. This essay provides a new framework for sustainable finance highlighting the move from the narrow shareholder model to the broader stakeholder model, aimed at long-term value creation for the wider community. Major obstacles to sustainable finance are short-termism and insufficient private efforts. To overcome these obstacles, this essay develops guidelines for governing sustainable finance.

By: Dirk Schoenmaker Topic: Energy & Climate, Finance & Financial Regulation Date: July 11, 2017
Load more posts