Europe’s man on the moon moment: the Green Deal

The creation

First presented in December 2019, the European Green Deal is the EU’s current most ambitious project or, as Ursula von der Leyen – European Commission’s President – called it, “Europe’s man on the moon moment”. Aimed at transforming Europe into the first climate neutral continent by 2050, simply put, the Green Deal is the EU’s new growth strategy. It’s designed to transform Europe into a modern, resource-efficient and competitive economy, a roadmap to make the EU’s economy sustainable.

[Read more about the policies that are being adopted here]. 

But what’s so different from all the previous attempts to tackle climate change?

  1. The EU is finally transforming all its climate promises into legal obligations for member states (European Climate Law)

  2. It was finally understood that, rather than being mitigated by focusing only on certain industries and a few isolated measures, climate change requires an articulated and integrated system that considers a product’s life cycle, strengthens competitiveness while protecting the environment, gives new rights to consumers and tries to ensure that the resources used are kept in the EU economy for as long as possible (Circular Economy Action Plan)

  3. Because it’s imperative that all European countries take part in this initiative, the Green Deal predicts financial assistance to those countries that face various limitations in the green transition, (European Green Deal Investment Plan and the Just Transition Mechanism) in an attempt to ensure that everything runs smoothly and that all member states are on board.


The  transition 

Despite its idealistic goals, the Green Deal has been suffering severe criticism and has been presented with various obstacles to its achievement. 

What was initially designed as an incentive to make industrial and coal-intensive countries (e.g. Poland, Romania, Germany) sign up the EU’s 2050 climate targets, turned now into one of the most defining features of the European Green Deal: the Just Transition Mechanism, designed to help coal-dependent workers and regions transition to new areas of economic activity. Still, Poland has repeatedly refused to sign the climate targets and take part in this environmental initiative, thus jeopardizing its eligibility to the financial aid provided through this Mechanism.

 A list of 100 regions eligible for this financial aid has already been published, with Germany topping the list, followed by Poland.  These regions meet criteria based on carbon-intensive jobs, fossil fuel industrial activity and GDP per capita. But another potential threat arises: how can the EU guarantee that funds aren’t misused by national governments in projects that serve their own interests, risking these regions’ access to the funding? 

Even though the Green Deal is a priority for the EU, it certainly isn’t for some relatively poorer member states, such as Romania, whose priorities concern infrastructure, education and health systems. Other countries might feel the same way, leading to tensions and conflicts of interest inside the Union, with the possibility of not being able to cope with targets (and most likely sanctions) imposed by the EU later on. 

Unfortunately, this doesn’t stop here. Between extractive, energy-intensive and automobile industries, 11 million jobs will be directly impacted by this Deal, even if they don’t necessarily disappear. Clear directions and measures are needed (which don’t yet exist), especially if most of these jobs are concentrated in Eastern Europe, which could cause a migration wave in the next decades, possibly deepening the existing gap along the East-West divide, increasing social and economic discrepancies and escalating tensions inside Europe. On the other hand, the reality is that markets are changing – and fast. A new green industry revolution is coming and the likelihood of coal mining in Europe being economically viable by 2050 is indeed very small. 


The funding

No matter how badly the European Commission wants to achieve carbon-neutrality while leaving no  country behind, it’s not possible to do so without funding. Essentially, this financing would come from five different sources: 

a) EU budget: the Commission will allocate 25% (compared to the previous 20%) of its budget to climate and environmental expenditures, aiming to raise approximately €503 billion in this decade. 

b) National co-financing: the Commission hopes that this money mobilization will trigger national governments to unleash an additional €114 billion on environmental projects over the next ten years. 

c) InvestEU: It’s estimated to raise around €279 billion, throughout this decade, through private and public investments, thanks to an EU Budget guarantee to the European Investment Bank and other national promotional banks when they invest in “green” projects. 

d) EU Emissions Trading System funds: the Union proposes to devote 20% of the revenues from the auctioning of EU Emissions Trading System (ETS) to the EU budget, for an estimated value of €25 billion over the next 10 years.

e) Just Transition Mechanism: it’s expected to generate around €145 billion until 2030, plus there’s €7.5 billion of “fresh money” already available. 

However much the European Commission is moving in the right direction, it may have been too unrealistic when presenting these numbers: many specialists agree that €500 billion is a bit of a stretch and an amount that couldn’t possibly close the investment gap. Some even believe that this can hardly be called “investment” since much of the funding will be spent on traditional policies (such as farm subsidies) and there is little oversight and almost no room for innovation in this budget. On top of that, the current methodology of how expenditures are accounted for as contributing to climate targets is very flawed and needs to be reviewed.

 InvestEU- the Green Deal’s main funding source- possesses some hitches worth highlighting: given that the EIB has already committed to increase its climate-related financing from 25% to 50%, it’s worth considering the opportunity cost in allocating further funds to it, as these funds could be better used by other EU programmes. Let’s also not forget that there is always the possibility that carbon financiers game the system, meaning EU cash fails to trigger truly green investment from the private sector. 

Finally, as for national co-funding, there might not be many incentives for countries to increase their financing towards green projects. If countries are finding it hard to stay on track with the 2050 climate neutrality objective, how will they be able to divert funds to co-fund the Green Deal? 

Overall, by itself, the plan will most probably not be sufficient to deliver the investments needed for the European Green Deal. Nevertheless, the Green Deal is still a work in progress and in a very early stage of implementation; only the next months will tell how the Commission will further develop, adapt and implement this initiative. Until then, stay tuned, stay informed, stay aware.  

Sources: Euractiv, Bruegel, The Guardian, Financial Times, European Commission

From Hero to Zero: the Spitzenkandidat System

In late January, MEP Nigel Farage, leader of the Brexit Party, bid farewell to the European Parliament (EP), with a speech in which he accused the EU of being “anti-democratic” and giving “people power without accountability”. His speech is just the latest to add voice to the chorus of criticism pointing fingers at the EU’s democratic deficit. Critics condemn the lack of transparency in the dubious process by which top posts in the EU are chosen, which is decided behind closed doors and backroom deals, and compromises the democratic legitimacy of the EU’s governing bodies. As a result, many have been the appeals to reform the current electoral system of the Union. One of the most daring attempts came in 2014.

For years, as long as a candidate was acceptable by Parliament, the Council could pick anyone they wished for the post of Commission President, without ever presenting that candidate to the electorate prior to the elections. In the 2014 European elections, Martin Schulz, leader of the European Socialists, challenged this idea. His suggestion was that, similarly to any national parliamentary election, each European parliamentary group would pick a Spitzenkandidat (German for lead candidate) prior to the elections, and if the parliamentary group with most seats was able to secure a majority, then the corresponding Spitzenkandidat would be nominated Commission President. This meant that nominees for Commission presidency were picked a priori, rather than a posteriori to the elections, allowing the electorate to get to know the candidates for Europe’s top post and vote accordingly.

This idea gained huge support from Parliament. A broad coalition of the Communists, Socialists, Greens, Liberals and the centre-right EPP all nominated their Spitzenkandidat for the 2014 elections, firmly stating that they would reject any nomination by EU national leaders that wasn’t one of these lead candidates.

The five 2014 Spitzenkandidaten. From left to right: Alexis Tsipras (Communists), Ska Keller (Greens), Martin Schulz (Socialists), Jean-Claude Juncker (EPP) and Guy Verhofstadt (Liberals)

The five 2014 Spitzenkandidaten. From left to right: Alexis Tsipras (Communists), Ska Keller (Greens), Martin Schulz (Socialists), Jean-Claude Juncker (EPP) and Guy Verhofstadt (Liberals)

The scheme was a great success. The EPP emerged victorious with 29% of votes and, with the backing of the Socialists and the Liberals, guaranteed a majority supporting their lead candidate, Jean-Claude Juncker. The Council was caught off-guard, having no choice but to nominate Juncker. For the first time since European elections began in 1979, the electorate’s vote influenced the composition of Europe’s executive branch.

Manfred Weber, the fallen Spitzenkandidat

Manfred Weber, the fallen Spitzenkandidat

However, the euphoria surrounding this apparent victory for European democracy was short-lived. Five years later, in 2019, the Council refused to nominate Manfred Weber as Commission President, the lead candidate for the once-more-victorious EPP. Instead, it picked Ursula von der Leyen, someone relatively unknown to voters and who had not stood in the elections, marking the death of Spitzenkandidat.


So, what caused this demise?

Despite Juncker’s election being regarded as a success for Parliament, there was a general consensus that the system needed improvement in preparation for the 2019 elections. Critics of Spitzenkandidat pointed to the fact that turnout had reached an all-time low of 43%, while a survey revealed that only 5% of people voted to influence the Commission presidency. This effectively meant that only 2% of eligible voters adhered to the Spitzenkandidat system, and solely 0.6% of the voting-age population consciously voted to give the presidency to Juncker, obviously raising doubts on whether the system did indeed increase the Commission’s democratic legitimacy.

Furthermore, as constituencies for European elections respect national borders, this meant that Juncker only appeared on the ballot paper for the 260 thousand Luxembourger registered voters, and the remaining electorate could only vote for him indirectly. To solve this, in 2018 the EP proposed the creation of a transnational European constituency, which would give each voter two votes: one for their national representatives and one direct vote for their preferred Spitzenkandidat. The rejection of this proposal ultimately led some EP groups to retract their support for the system, meaning that, unlike in 2014, the EP wasn’t united behind Spitzenkandidat in the build-up to the 2019 elections.

Simultaneously, EU national leaders, still bitter over being upstaged in 2014, also warned that they refused to relinquish control over choosing who would lead the Commission in 2019. This resulted in an institutional power struggle between Council and Parliament, undermining the entire system.

Ironically enough, non-Spitzenkandidat Ursula von der Leyen has come out in support of the system and has vowed to reform and reinstate it within her mandate.

Truth be told, as flawed as it was, Spitzenkandidat was a boost to European democracy. In a Eurobarometer survey performed in 2018, 57% of respondents stated that they were more likely to go to the polls in the upcoming elections because of the Spitzenkandidat system. Coincidence or not, in 2019 turnout for the European elections increased for the first time in history, from 43% to 51%.

However, for a similar system to be re-established in the future, the electorate must be aware of who they can choose from to steer Europe’s future. Even when it was still intact, very few voters were conscious of the magnitude with which the Spitzenkandidat system amplified their voice in choosing the Commission President (a mere 8% in 2019). In 2019, when Germany was home to two Spitzenkandidaten, Manfred Weber for the EPP and Ska Keller for the European Greens, their media coverage was so low, that only 26% and 7% of Germans knew who these two lead candidates were, respectively.

Furthermore, a survey exposed that 77% of people believe that the lead candidate system “only makes sense if it is accompanied by a real debate about European issues”. Currently, it’s tremendously unclear whether European elections truly exist, or whether instead we have 28 simultaneous national elections. Pre-elections campaigns are typically dominated by national issues rather than European ones, where political opportunism from national parties who want to promote their domestic agenda is abundant. In 2019, Prime Minister António Costa stated that the European elections were to be treated as a confidence vote on his party’s domestic governance. In Germany, in the 2014 EP elections, the CDU’s billboards featured Angela Merkel, rather than her party’s candidate to the European Parliament. Since lead candidates represent EP groups rather than national parties, awareness of the European allegiances of national parties is also crucial for Spitzenkandidat to ever work again, as the electorate must be conscious of how their vote influences the composition of the Commission.

CDU’s billboards for the 2014 European elections featured Angela Merkel, rather than their candidate David McAllister

CDU’s billboards for the 2014 European elections featured Angela Merkel, rather than their candidate David McAllister

There are many hurdles that must be cleared before von der Leyen succeeds in guaranteeing that your vote matters in the choice of who steers Europe’s ship in 2024. The first step should, however, be to increase the number of people aware of the Spitzenkandidat system. As Thomas Jefferson stated, one of the prerequisites for democracy is an informed electorate.

Sources: Politico Europe, European Parliament, Eurobarometer, European Commission, Vote Watch, Euractiv, CDU

Gilets Jaunes

Introduction

Gilets Jaunes, also known as the yellow vests movement, marked its one year anniversary by going out to the streets of Paris in the past November 16th.

This movement had its beginning in mid-November of 2018 (in several regions of France) and it soon called the attention of the media all across Europe, that insisted on following up each minute of the strikes. The famous protesters wearing yellow vests attracted a large audience in 2018 for their violent and destructive behaviour. They were characterized as an atypical movement, having no designated leader nor belonging to any particular political party.

Gilets Jaunes had the power to encourage other countries, other than France, to adopt the same initiative, attaining a worldwide dimension.


History/Origin

In the second half of 2018, there was a general rise in crude oil world prices. France was also affected by this rise (making the pump prices go up) and simultaneously there was an increase in the fuel tax. As shown in the graph below, France is the fourth country in Europe with the highest diesel tax, the British being those who have the highest tax burden within the EU.

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This measure was already expected to be implemented as part of the country’s long-term ecological plan and it was meant to move the country’s citizens away from fossil fuels, in particular, from diesel cars. This would then work as an incentive for people to opt for more environmentally-friendly alternatives.

However, in May, a young businesswoman, outraged at the rise in fuel taxes, decided to post an online petition demonstrating her discontent. Although this petition initially didn’t achieve much, it sparked what would become one of the most commented strikes of the last few decades.

Some months later in October, Eric Drouet, a lorry driver, saw this petition as an opportunity to confront the government with its most recent measure, deciding to contact the young woman and bolster her petition. He aspired to reach the highest possible number of citizens and for that, he shared and promoted the online petition. As the world oil prices were rising, petrol prices in France were constantly increasing and, meanwhile, the previously ignored online petition gained hundreds of thousands of signatures.

French people felt really wronged in relation to the tax imposed on fuel and more generally the high cost of living of the country. As a result, the resentment towards President Emmanuel Macron became more evident.

Additionally, another factor that contributed to the discontent among French citizens were the tax cuts on businesses, investors and wealth, which mainly benefited the richer families. Previous President Hollande had raised taxes for this upper class, which caused many investors to leave France forlower tax countries. Emmanuel Macron introduced this measure in an attempt to fix the previous situation and make the investors return to France. However, from the Gilets Jaunes’s point of view, since he first cut taxes for the rich and only then introduced the fuel tax, which mostly affected low-income families, they felt like there was an unbalanced distribution of wealth. This caused sentiments of social injustice, with opponents nicknaming Macron “the President of the rich”.

On November 17th the first protest occurred, mobilising approximately 285 thousand people all across France. Protesters were dressed with yellow jackets, that French motorists are obliged by law to have in their vehicles. Thus, being a common symbol for all French citizens, it made it easier for everyone interested to participate.

In mid-November, French citizens were far from knowing the dimension that this movement would conquer, which turned out to be the longest-running protest since the Second World War. It lasted 13 weeks, gathering people every Saturday. 

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The brutality of the yellow vests was undeniable: there were 11 deaths, around 4,400 injured (policemen and civilians) and 220 arrests.

The violence and chaos caused by these protests was particularly evident on December 1st: more than 100 cars were burned, several buildings were set on fire, Arc de Triomphe was vandalized, store upfronts were broken in the richest streets of Paris…

However, the brutality of this so called “Acte 3” was not fully supported by all the protesters. A poll conducted after this day of extremely aggressive action concluded that despite 72% of French people supporting the Gilets Jaunes, 85% of those supporters condemned such violent practices in Paris. This might explain the decline in the number of protesters from the third demonstration onwards.


Objectives

Initially, the yellow vests’ goal was to revert the fuel tax imposed by the government. However, as the weeks went by, they realized the huge power they had and started demanding for more. They elaborated a list with 40 requests which they planned on presenting to the government. Among these demands, they urged more economic concessions such as lower VAT, higher minimum wage (from €1,149 to net €1,300 per month) and higher pension (no lower than €1,200/month). Regarding political matters, they demanded an alteration of the Constitution, replacing representative democracy with a more popular government. More concretely, they suggested that petitions that gathered more than 700,000 signatures would automatically turn into proposals of law. This wouldtransfer more power from the parliament and the President to “the people”.


Impact/Consequences

In the final quarter of last year, the economic cost of the yellow-vest protests was estimated in 0.1% of national output (which amounts to 2 billion euros). Some businesses like cafes, restaurants and stores dropped their weekend revenues by 20 to 30 percent, since demonstrations took place every Saturday. There was a public cost for damaged property in the amount of 30 million euros, plus other unaccountedcosts concerning police overtime and traffic radars repair. 

Regarding the political environment, statistics show that the President Emmanuel Macron’s disapproval rating increased significantly, by 25%, from the beginning of 2018 until the “Acte 3”, one of the most violent protests, in early December. At the moment of this event, there was a peak of the disapproval rate (73%) and from then on it has been slowly decreasing (currently at 64%).

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Marine Le Pen, the President of the National Rally (NR), was one of the first politicians to show support for the yellow vest movement. She may have taken advantage of the instability lived in France, during the action days, to slightly increase the NR’s position concerning the voting intention for the 2022 presidential election.


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In terms of political representation, the yellow vests failed in being heard. A couple of fully yellow-vests-composed lists applied as candidates to the last European elections in May, but they weren’t successful, winning a combined well below 1% of the votes.


Achievements

In the end, this movement achieved its main goal: it made the government postpone the planned eco-tax rise on fuel.

On top of this, Macron agreed to a reduction on taxes for lower-income families in the 2020 budget and the protesters also managed to get a tax cut for most pensionists.

Since the President, by imposing the fuel tax, had in sight the reduction of carbon emissions (aimed at a greener country), but, at the same time, knowing the tax would substantially harm the poorest, it is important to analyse this trade off: Is it better to improve France’s sustainability and thus contribute to a more conscious world or instead delay that matter and focus on the country’s internal social issues, such as wealth distribution?


 

Impact abroad

Even though this movement is predominantly French, it also had a relative impact abroad. Inspired by the protests in the neighbouring country, Belgium also had a protest on December 8th 2018, that gathered 1000 protesters and resulted in clashes with the police. Even though this turnout had a much lower scale than the one in France, their causes for discontent were very similar: high tax burden (tax-to-GDP ratio was 47,3% in 2017), that affects mainly the middle-lower income class. Also, even though nominal average wages have increased, the purchasing power of low income earners has shrunk, reflected in a decrease in real wages.

Besides Belgium, many other countries joined the movement, although having different goals than the ones in French and Belgian protests. For instance, unlike the French non-partisan movement, which defended changes in economic policy, taxation and rising fueling, in Canada the movement was tightly linked to far-right and alt-right initiatives, mainly focusing on anti-immigration and white supremacist rhetoric. Thus, the impact of the yellow vest movement abroad varies from country to country. Portugal also attempted similar protests on the 21st of December 2018, but it gathered just a few number of citizens in the streets.


Conclusion 

The Gilets Jaunes may have had good intentions at the beginning of the protests, when they claimed that the fuel tax would widen further the gap between rich and poor. But the strikes spinned out of control, especially upon the third action, when violence soared.

On the other hand, Macron implemented the tax for sustainability purposes and this measure was already scheduled according to the government’s plans. France’s President now needs to figure out how to impose ecological responsibility without being misinterpreted, that is, he must know how to state his political position and at the same time, raise awareness among French citizens for environmental concerns.

It’s good to reflect deeper on this topic and possible solutions to this problem: Is the fuel tax the only way to move consumers away from diesel to a more eco-friendly alternative? Shouldn’t Macron consider applying a subsidy on sustainable energies instead?


Article Written By:

 


Raquel Novo - Raquel Novo Rita Fernandes - Rita Fernandes

 

Catalonia and Europe: What’s next?

On October 14th 2019, nine of the 12 separatist leaders of Catalonia stood trial for their roles on the referendum of 2017- declared illegal by Madrid- receiving prison sentences from 9 to 13 years. The crimes that they were trialed on included sedition, misuse of public funding and civil “disobedience”. Almost immediately after the verdict was made public, protests sparked in Barcelona and later on, across the entire region. On October 19th 2019, more than 500,000 people attended the pro-independence peaceful rallies that quickly became violent. The feeling of resentment by some Catalans towards Madrid is nothing new and thus, their reaction comes with no surprise.

 

Historical Context

Indeed, the richest region of Spain has always had a turbulent past with the Spanish capital’s centralism. With the Spanish Civil War, which ended in 1936 with the victory of the Nationalists over Republicans (mainly supported by Catalans) led by Francisco Franco, the region lost its autonomy, and its culture was heavily repressed by the central government: the public use of Catalan was prohibited,  only allowed to be publicly and freely spoken in the Stadium of Barcelona, and, later, at the very well-known Camp Nou, FC Barcelona’s stadium and symbol of the independentist movement. Thus, there’s a historical resentment that arises every time the central government interferes some bit on regional matters. Also, the 2008 economic crisis contributed to the bitterness towards Madrid, as Catalans felt they had given more to the central government than what they had gotten back from it. In 2017, the region represented 20 percent of Spain’s total GDP.

 

2017 Referendum

The increasing discontempt in the region culminated on September 6th 2017 when Carles Puigdemont, President of Catalonia, announced to the government of Catalonia that a referendum would be held on the 1st of October 2017, questioning its citizens if they wanted Catalonia to become an independent state in the form of a republic. Unlike the 2014 referendum (which was merely informative), this one would be binding and it would be done with or without the approval of the central government. This sparked tensions between Madrid and the autonomous region, with the former declaring it illegal and denouncing the lack of democratic guarantees. Nevertheless, the referendum was held, amidst Spanish efforts to stop the voting. 90% of people who voted chose independence, even though only 43% of eligible voters actually participated. As a consequence, the central government triggered Article 155, dissolving the autonomy of the region.

 

An Independent Catalonia?

What would an independent Catalonia mean? To Spain, this situation would imply the loss of its most prosperous, innovative region. Regarding Catalonia, even though the region has almost complete autonomy (in economic, fiscal, social and cultural terms), the path to independence would have a major impact on many levels: firstly, its relationship with the European Union; the institution has been an important supporter of Spain’s monitoring of the situation and has declared that if Catalonia became independent, it would be automatically out. If it wanted to be part of it, it would have to join through the normal lengthy process, which could take years. Consequently, it would be out of the Europe Group and could not enjoy the backing of the ECB. Thus, the economic consequences of leaving the European Union are undeniable: with closed borders, tourism could be affected, as free movement would be constrained and demand for tourist activities could shift to other places; shipping costs would increase as well as the possibilities of tariffs, if no trade deal was struck. Jobs would, therefore, be affected. Also, foreign and internal investment would decrease, as companies would re-allocate their headquarters to more stable places. Indeed, over 2000 companies have already moved their fiscal quarters to other parts of Spain, due to the instability in the region. Thus, economically speaking, it seems that the negative effects of independence outweigh the positive ones.

 

Catalonia and the EU

Nevertheless, independently of the negative economic impact of leaving the EU, how do Catalonians actually feel about the institution? The support (or the lack of it) from the EU has been crucial in politically dividing separatists and unionists. The EU has actively supported Madrid and legitimized its action, which many consider “undemocratic” (as the exercise of voting was denied by the Spanish central government). On the separatist side, many have called for European mediation and action to protect fundamental rights (freedom of speech, the right to vote, which the separatist faction considers that it was not respected), which was denied by the EU.  The fact that the EU has supported the Spanish central government and didn’t attend the separatist demands reflects on the trust towards the institution. Knowing this, trust in the EU has risen to those who consider that Catalonia should be a region of Spain (with no autonomy) and those who defend the current situation (as an autonomous region). On the other hand, trust in the European institution has been steeply decreasing to those who think that Catalonia should be an independent state or should be a state within Spain. Thus, as the desire for autonomy increases, so does the mistrust towards the EU and the greater is the breach between unionists and separatists. This difference was particularly sharp in 2017, especially after the referendum on October 1st. The (in)action of the EU and the Spanish authorities aggravated even more the already existent fracture in Spanish society.

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Also, before 2017, Catalan regionalism and “nationalism” was very pro-Europe, unlike other nationalist movements. For instance, Catalan participation in the European elections was 13 pp above the European average. However, after 2017, the relationship with Europe has bittered. As shown by the increasing of eurosceptic electorate by the party, PDeCAT (Catalan European Democratic Party), the most pro-Europe party in the region in 2016 became the third most eurosceptic, in 2017, also, newly elected Catalan Members of the European Parliament Carles Puigdemont and former minister Toni Comín were among those whose access to the EP was denied after the 2019 European elections.  With this, Catalonians felt attacked by the EU, as the MEPs chosen by 1.7 million citizens to represent them were denied accessibility to exercise their democratic rights. Naturally, this situation changed the feelings of attachment to the EU, varying among territorial preferences. Due to the events of 2017, independentists and people who identified themselves as only Catalan have naturally grown resentment towards the EU, while unionists and people who identify as only Spanish have increased their European support. Thus, the region’s relationship towards the EU has definitely depreciated.

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Beyond borders

Besides having consequences within its own borders, Catalonia’s pro-independence movement could also have repercussions outside. This could strengthen other separatist movements, such as in Lombardy and Venice (in Italy), Flanders (in Belgium), Scotland, Northern Ireland and Wales (UK) or the Basque country (Spain, again). This would divide Europe even more (as the unity and cohesion of the continent is constantly being threatened  over the last few years,  with the growth of right-wing nationalist parties and most recently, with Brexit).  For instance, in Flanders, the New Flemish Alliance, a nationalist, conservative party which has a relevant representation in parliament has been striving for a gradual and peaceful secession of the region from Belgium. It has been reported that the party even hung a Catalonia flag to support its pro-independence cause. In Lombardy and Venice, there’s more of an autonomy issue, as the northern regions of Italy feel that their taxpayer money is being used to support the poorer south rather than investing in the regions. In 2014, a non-binding referendum was held in Venice, with 89% of voters voting for independence. In the case of Scotland, the country also held a binding referendum in 2014, with separatists losing, having 45% of total votes. Nevertheless, with Brexit and the will of Scotland to remain in the European Union, the independence issue is constantly arising. Thus, pro-independence movements are still alive and the example of Catalonia can have a propeller effect and expand to other regions that have the same sentiment.

 

EU’s position


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Generally speaking, the EU has been regarding secessionist movements as a domestic issue,  meaning that these matters are out of the EU’s competences scope. If a region wants to emancipate as independent and wishes to remain in the EU, it must take all the steps, which can be a lingering, lengthy and costly process, to both parties. However, nowadays, this impartiality has to be questioned. With the rise of right-wing nationalism and populism (started with the refugee crisis of 2015) and Brexit, the very own existence of the Union is  threatened, as Europe is more and more divided. Thus, an independence movement would only imply, in the short-run, a greater division and a fall-out of the ideal of a united Europe . This helps explain why the EU has been a strong supporter of Madrid and “closed its eyes” to some questionable methods used by the central government. It may explain why it didn’t let Catalonia MEPs enter the European Parliament, even though it assumed itself as “impartial” regarding the whole matter. Thus, when the unity of the EU is at stake, any domestic matter becomes a European one.

As for now, protests continue in Catalonia, whether in the form of rallies at the Plaça de la Universitat or by blocking the Spain-France highway. Scots, Venetians, Flemish and all other pro-independence regions watch carefully how the Catalonian story unfolds. Nationalist societies, such as Poland, Hungarians and Russians also observe attentively the whole situation. The rise of identity politics, on both sides of the political spectrum, is a reality that the European Union cannot ignore anymore.

Veni, vidi, Salvini: Consequences of the migration crisis in Italy

A Hungarian border fence built to stop migration flows, threatening the future integrity of Schengen. A founding member of the European Union, until very recently in the hands of far-right nationalists. A Mediterranean graveyard of 18,989 migrants who’ve drowned attempting to cross since 2014.

Facts don’t lie: more than poor, Europe’s handling of the migration crisis has been outright catastrophic.

Italy is always on the forefront whenever talking about the European migration crisis which started in 2014, both regarding the mass numbers of immigrants arriving at their shores and their controversial migration policies. Matteo Salvini is an unavoidable figure, steering Italy’s course on migration for over a year. It’s easy to point the finger at Salvini’s arguably inhumane practices. Nevertheless, Salvini is mostly a product, rather than the cause, of the lack of an effective European-wide response on migration.

With Salvini ousted from power in September, it’s important to reflect on his rise and migration policy, the real impact of immigration and what Europe can do to correct its past mistakes.

Salvini Ascending


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Discontent towards Europe was undoubtedly a major driver to Salvini’s successful result in the 2018 general election. Migration, although pivotal to that discontent, isn’t alone in making Italians increasingly critical of Brussels.

Italy has faced a long period of stagnation since the beginning of the century, with real GDP per capita having decreased 3% since 2000, leaving Italy behind relatively to its European peers. The role of the single currency in this stagnation is debatable, but this period of low growth coincides with the introduction of the euro in 1999. Many Italians blame it for their stagnant economy and Salvini has often used this anti-euro sentiment to his benefit. His slogan for the 2014 European elections was ‘Basta Euro’ (‘No More Euro), also campaigning against Brussel’s fiscal rules in 2018.

Italy has also faced en masse immigration, with a total of 656,040 migrants arriving to its shores since 2014. Simultaneously, anti-immigrant propaganda and fake news have swept the continent, fuelling hatred and mistrust towards foreigners. During the referendum campaign, Brexiteer Nigel Farage presented an anti-immigration billboard bearing a striking resemblance to a Nazi propaganda movie which described immigrants as ‘parasites undermining their host countries’ (Image1). In 2018, Orbán’s government sponsored a European-wide video, unfairly correlating refugees with the terrorist attacks across Europe. Even today, Ursula von der Leyen’s controversial choice to name the migration portfolio ‘Protecting our European way of life’ isn’t helping in preventing Europeans from regarding migrants as a threat.


Image 1: Nigel Farage presenting his anti-immigration billboard (left) and Nazi propaganda movie (right)

Image 1: Nigel Farage presenting his anti-immigration billboard (left) and Nazi propaganda movie (right)

The impact of this xenophobic rhetoric is difficult to measure. Coincidentally or not, however, the regions with a higher percentage of immigrant population were the ones where Salvini gained most support in 2018.


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The European Union, nonetheless, isn’t without blame in turning Italians against immigrants. Its current legislation on migration and asylum, the Dublin Regulation, defines that the first Member-State to which an asylum seeker arrives is solely responsible for their asylum application, giving all other Member-States the right to deport a refugee back to their EU country of arrival. Consequently, this places an unfair burden on border countries such as Italy, even though countries such as Germany receive more asylum applications. This has caused 24,000 deportations back to Italy from other EU countries between 2013 and 2018. Despite the EU recognising this as a major flaw, the reform of Dublin has been stuck in the Council since the crisis started, where the Visegrád Group (Hungary, Poland, Czech Republic and Slovakia) are blocking any reform which involves mandatory relocation quotas, refusing to host any refugees. The lack of a common European stance on migration left Italy with the full burden of dealing with this issue.

This sent Italians a clear message: if they were the ones responsible for all refugees arriving at their shores, they would no longer allow refugees to land. The path was open for someone with a hard stance on migration to step in.

Salvini Takes Action


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Salvini took office as Deputy Prime Minister and Interior Minister in June 2018 and his impact on Italy’s migration policy was highly noticeable. He quickly announced the closure of Italian ports to migrant vessels. 44,260 asylum requests were rejected. He shut an asylum centre in Sicily, one of the largest in Europe. He announced fines reaching €50,000 to rescue ships entering Italian waters. In September 2018, the Italian government approved the ‘Salvini Decree’ which, among other measures, removed the possibility of asylum applications being granted for ‘humanitarian protection’, which has been in recent years the most granted asylum type. This would greatly increase the number of rejected asylum applications and an estimated 670,000 immigrants would be living irregularly in Italy, essentially giving the Italian government the right to repatriate them.

Dismistifying Immigrants


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But are Italians and other Europeans right to fear the ‘invasion’ of immigrants? Public perception of immigrants often doesn’t correspond to reality. For instance, despite the sharp fall of 80% of immigrant arrivals by sea to Italy between 2017 and 2018 (partially due to Salvini’s measures), studies show that 51% of Italians still think this number is not decreasing. Moreover, an average Italian thinks that 26% of the country’s population is foreign, while the true figure is 9.5%.

It is also vital to distinguish between a regular immigrant and a refugee. A refugee is fleeing rather than voluntarily moving. These words are often used interchangeably but, in 2016, only 34% immigrants arrived to Italy due to humanitarian crises, while the others deslocated to Italy either for family reunification (45.1% of cases) or to look for better life conditions and employment.

Immigrants common desire for social mobility might explain their higher rate of entrepreneurship when compared to national residents in many European countries (although no data is available for Italy, the Global Entrepreneurship Monitor estimates this rate to be 12.5% for immigrants and 8.6% for national residents in the UK, 2017).

However, this is not the only way in which immigrants contribute towards their host country’s economy. An aging Europe desperately craves for rejuvenated workforce to sustain its social welfare systems, which are being stretched to their limits. Due to their younger age, in Italy, in 2008, 73.3% of immigrants belonged to the working-age population, compared to only 62.3% of Italians. Consequently, despite in the short-run receiving more in social benefits than they contribute with taxes, in the long-run their net contributions are positive, since they have a long working life ahead of them. In 2014, taxes paid by immigrant workers bore the cost of 600,000 pensions.

Studies also show that immigrants ultimately benefit the economy, decreasing unemployment and raising GDP per capita. While this verified in Italy since mass immigration began, it’s hard to quantify their contribution towards this, since it coincides with a period of overall economic recovery in Europe.


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On the other hand, less than 15% of non-EU immigrants in Italy have tertiary education. This results in more than 70% of them being employed as low-wage manual workers, which can cause salary degradation and competition with underqualified national workers, which often causes social tensions and feelings of resentment against immigrants.

Another preconceived idea is that refugees don’t make an effort to adapt to local culture and language. However, a 2014 study shows that 60% of refugees living in Italy had an advanced knowledge of Italian.

Second Chance

The ousting of Salvini presents a chance for Europe to show Italians it can smoothly integrate, absorb and redistribute immigrants in a better fashion than displayed so far.

A quick reform of the ineffective Dublin Regulation is desperately needed. This, however, will be difficult as the Visegrád group remains reluctant in accepting mandatory relocation quotas. A temporary solution is being discussed. Germany and France would each automatically accept 25% of arriving immigrants, with Italy only keeping 10% to compensate for recent years. Other EU countries, including Portugal, are also available to join this scheme. In return, Italian premier Conte has agreed to reopen the ports.

Many EU politicians have also called for EU-funded asylum centres in North Africa and Middle East. This would reduce the number of war-fleeing refugees risking the life-threatening Mediterranean crossing and the migrant pressure on southern European countries. A reinforcement of FRONTEX, the European Border and Coast Guard, which is severely understaffed, is of paramount urgency to combat illegal human trafficking and reduce the number of drownings.

There’s also too much media depicting refugees as dangerous criminals which must be countered, namely by raising public awareness and sensitivity towards their desperate situation. This has proven effective in the past, as is the case of the photograph of the dead Syrian infant found on the shore of western Turkey. When Aylan Kurdi’s picture became viral four years ago, the Swedish Red Cross saw a ten-fold increase in recurring monthly donations to their fund for Syrian refugees.

Despite overcoming the peak of the immigration crisis, Europe still needs to find a way to deal with this issue properly. Only a strong demonstration of solidarity and cooperation will prove to Italy that there’s no need for them to elect an ultra-nationalist again. Europe has been given a second chance to show it can do better. There might not be a third.

Deconstructing the perks of tourism, Portugal’s trendiest economic sector

It has become extremely rare to walk around in Portuguese streets without the constant presence of foreign languages. The country has become more busy and overcrowded, all due to a growing phenomenon in Portugal’s economic landscape – tourism. Wide-spread tourism is a relatively recent phenomena, which sprung to existence when the newly founded middle-class began displacing itself to places other than those where they lived, for less than one year. As previously stressed, this activity has suffered a huge expansion in the last decades, not only in the world, but also in Portugal. In 2017, tourism constituted 13,7% of the Portuguese GDP.

Although presenting many opportunities for economic expansion, this sector has a very strong seasonal component in many countries and regions. Thus, the aim of this article is to evaluate the dependence of this European nation on tourism, in other words, to quantify how much of the production comes from tourism-related activities, and to assess the effects of its instability on the economy.

 

Factors: what plays into this complex equation?

There are several factors that have a positive impact on tourism. While some countries receive millions of tourists per year, you may have realized that some go unnoticed, welcoming a very reduced number of visitors. Afterall, what characteristics are tourists looking for?

One of the things that they find crucial is the safety of the country of destination. Regarding this, Portugal is very appealing because it is considered the world’s third safest country according to the Global Peace Index. The tourist’s decision is also highly affected by weather conditions, attribute which is frequently mentioned as a key-element by those who come to Portugal. The fact that a country with these characteristics sits right in Europe’s backyard makes tourism from other EU countries extremely frequent. Moreover, a country that is culturally and historically rich is preferred to another one that has no noteworthy or perhaps well-known background. Certainly, a big part of a countries’ touristic appeal stems from its monuments, museums, and overall cultural offer, which Portugal has been working hard to both restore and improve. Gastronomy also plays an important role in the tourism sector, and it is perhaps the one in which the highest impact has been felt. For example, ten years ago, there were 7 Michelin-star restaurants in Portugal. This number has more than tripled since 2009 — today, there are 26 Michelin-star restaurants spread across the country. This shows that the effect of tourism goes both ways: on the one hand, better quality restaurants were born out of the increasing affluence of consumers with higher purchasing power, and on the other, they continued to grow in number since they also had the power of attracting generously- spending, food-driven visitors. Lastly, and probably one of the most important characteristics taken into account by tourists, is the cost of living in the country they plan to visit. It is natural that countries with lower accommodation prices, for example, attract more visitors. In Europe, the countries with a lower cost of living are located in the east (Poland, Romania, etc.) and in the Iberian Peninsula. Among the countries with the highest costs of living, we can find Switzerland and Norway, which have a harder time in receiving tourists with lower purchasing power. 

In contrast, there are some factors that negatively affect tourism as well. Being a very volatile sector, it is heavily influenced by external factors. Thus, if the economic cycle is at a low point, the affluence of tourism will inevitably be harmed. If the economy is experiencing a recession or reaching a trough, the decrease in the demand for trips and tourist services will inevitably harm a receiving country’s economy. Now, suppose that this happens in Portugal, where there is an increasing threat of a great dependence on tourism: a bad economic period leads to a decrease in one of the most significant sectors of production. Since this sector contributes to such a large part of the country’s GDP, the economy will suffer disproportionately more, creating a “snowball” effect.

Also, the political environment can affect tourism. For instance, the ongoing political impasse regarding Brexit (with the possibility of a no-deal exit) may create uncertainty among British consumers/travellers, and even create barriers to entry to the country in the long-run. This is a very applicable concern in Portugal, because most visitors come from the United Kingdom (representing 20,9% of total nights from non-residents). Also, due to Brexit, the pound sterling is depreciating against the euro, which makes travelling to Portugal more expensive in comparative terms. 

In addition, natural catastrophes as well as terrorist attacks are exogenous factors that, although they can be predicted to some extent, can’t always be controlled. Recall the terrorist attack in July of 2016 (Nice, France) when a truck was deliberately driven into crowds of people, if you may. Back then, France was the world’s most-visited country and tourism accounted for 7-8% of the french economy, so as you might expect the impact on business was quite large. While in 2015 the number of international tourists was 91,6 millions, in 2017 it was 82,9 millions, so the country faced a reduction of 9,5% in this variable.

In short, tourism’s reliability on external, uncertain factors makes it a very unsteady pilar for an economy to lean on.

 

Impact: the highs and the lows

Indeed, tourism has a huge impact on the economy and in society. Economically speaking, this sector creates jobs; for instance, in Portugal, 30,000 to 40,000 jobs were created between 2013 and 2018, leading to an overall of 328,500 jobs in the sector. The number of people in tourist accommodations has also been increasing, as well as the investment in local accommodations, rehabilitation of buildings and public expenditure on street cleaning. In Lisbon, urban rehabilitation reached a record-breaking value of 6000 million euros last year. Also, local accommodation in Portugal has been experiencing an exponential growth since 2013. Besides experiencing its own growth, tourism is positively impacting other businesses. The supply of private transportation (Uber, Taxis, etc) has been increasing to meet the rising demand, requiring these companies to provide better services. Restaurants, pastry shops and other local stores are benefiting from this boom. New ideas, new stores keep spreading across the cities (new trendy areas, such as Príncipe Real in Lisbon, present us with new concepts and stores). Moreover, with tourism, consumption has been rising, Government revenues have been growing (mainly through VAT and the housing market), foreign investment on the real estate market has been arising and the confidence by the Portuguese people in the economy is thriving (which explains the highest level of consumption since 1960). In short, the growing relevance of tourism in the Portuguese Economy (particularly in Lisbon and Porto) over the past 6 years is undeniable.

However, we must also analyse the pitfalls of this ongoing growth. Even though tourism is positively impacting our economy and leading it to growth, it may also harm us in the long-run. 

A very well-known situation is the inflation in the housing market. Indeed, this market has experienced significant rises in prices: in Lisbon, rents have been increasing at a rate of 8% per year, which might be prejudicial to the families with a tighter budget constraint. Algarve, one of the main tourist areas during summer, comes next, being the second most expensive place to buy a house. This was caused by the “plague” of local accommodation, which had a mere 1000 houses in 2013, growing almost to 3600 in 2018. This continuous growth in prices is becoming unbearable to the average Portuguese worker (whose average wage is 943€), leading to a decrease in the standards of living (for instance, salaries are not growing at the same pace as real estate prices, resulting in a decrease in real wages). 

Also, cities are becoming overcrowded, which is increasing petty-crimes, such as pickpocketing. To fight this, some cities are already imposing an overstaying tax. However, this doesn’t stop the general local discontent, as life conditions are significantly depreciating. For instance, in Barcelona, far-left organized groups have attacked hotels, restaurants and tourist areas to show their resentment regarding tourism and it’s somewhat uncontrolled growth.

What’s more, seasonality contributes to the instability of the sector: nearly one in four trips of EU residents were made in July and August; Europeans spent one third of their tourism nights in July or August. Also, since 2010, Algarve (southern region in Portugal) is the 11th region (considering 263 regions from all 28 member states) with the highest employment in the least number of sectors (mainly tourism). Adding to this, the region presents a very low employment in industrial sectors. Hence, reliance on tourism is a reality and this dependency might be harmful, when the economy is recessing. This comes to show the possibly harmful effects on excessive reliance on the sector.

 

What can we do about it?

All in all, Portugal is quite susceptible to a fall in this sector, mainly due to its unpredictability. For this reason, Portugal should make use of the current positive economic environment in order to be prepared for an eventual reduction in tourism revenues. How could it be? Could the Government be an active part on that? The answer is yes, the economy is influenced by fiscal, social and economic measures set by the politicians. One possible measure would be to use these revenues to invest in clean energy from wind and solar sources which are certainly abundant resources. This would reduce imports of energy from foreign countries and at the same time it would lower the energy prices for portuguese consumers. Additionally, the resulting amount of this policy could be saved, so that in a period with high rates of unemployment, the savings could be used to pay unemployment subsidies, for example.

Another plausible measure would be to use tourism revenues to reduce the tax burden on private companies, enabling other economic sectors to grow and gain prominence. In turn, this would allow the Portuguese firms to invest in new technologies, innovate their products and processes and train their employees, reaching a higher level of competitiveness.

To conclude, the more the different sectors that contribute to GDP, the lower is the risk of a country being undermined by a reduction in tourism. Like all of what is good in life, tourism can have excellent benefits – in moderation.