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Business News/ Opinion / Online-views/  Skeletons in the cupboard

Skeletons in the cupboard

The Europe refugee crisis highlights how dominant industrial powers have singularly failed to live up to their promises and commitments on both political and economic fronts

Photo: AFPPremium
Photo: AFP

Waves of refugees seeking shelter in Europe have enabled the hard right to capture power. On 18 October, Switzerland witnessed a rightward shift after the Swiss People’s Party registered major gains in the parliamentary elections. Avowedly right-wing parties, espousing anti-immigration policies, captured 101 of 200 seats in the Swiss lower house of parliament. The Alpine country, with over six million people, has been almost untouched by the exodus of refugees and economic migrants until now.

But the flood of images of hapless victims from Syria, Iraq, Afghanistan and parts of Africa queuing up at the borders of Austria and Germany helped the Schweizerische Volkspartei, or the Swiss People’s Party, increase its strength to 65—almost one-third of the Swiss lower house. The People’s Party made gains in the Swiss countryside by promising to pursue a strong asylum policy. The day-to-day business in the Swiss parliament is bound to be dominated by a mix of immigration and austerity policy initiatives.

Clearly, the emergence of the right in several European countries, with Poland being the latest to join the bandwagon, has more to do with the failed political and economic policies of the West. It is an open secret that the migrants seeking shelter in Europe are the innocent victims of the disastrous “shock-and-awe" policies pursued since 2001. “I apologize for some of the mistakes in planning and, certainly, our mistake in our understanding of what would happen once you removed the regime (in Iraq in 2001)," said Tony Blair, former British prime minister, in an interview to Fareed Zakaria on CNN on Sunday.

Because of the (former US president George) Bush-Blair policies, the world is paying a heavy price for the invasion of Afghanistan and Iraq. Several estimates suggest that hundreds of thousands of civilians were killed as part of the collateral damage, along with soldiers. These wars have created a perpetual cycle of chaos and insecurity across the world. It is highly unlikely that both Bush and Blair will ever stand trial on war crime charges. Leading social critic Noam Chomsky has repeatedly called for trying both Bush and Blair for their war crimes under the Nuremberg principles.

With immigration policies among the hottest political issues in many industrial countries, new efforts to open labour markets might appear ill-advised. But Geneva-based International Organization for Migration (IOM) has highlighted substantial gains that would accrue from migration. Despite the growing paranoia in many countries, including India, about economic migrants from neighbouring countries, IOM said migrants will bring diverse skills to the economy. “Diversity arising from the presence of migrants is shown to increase productivity and be of benefit to urban areas, if strategically managed," IOM argued in its latest report Migrants and Cities: New Partnerships to Manage Mobility.

“As in informal settlements, immigrants play a vital role in creating economically vibrant, competitive cities as they contribute to a dynamic labour force and spur economic growth," the agency maintained. Immigrants, according to IOM, are more likely to start businesses and create jobs in their cities. The report said “immigrants have added $3.7 trillion to the housing wealth in the US".

In Switzerland, the canton of Vaud has the highest proportion of foreign residents (32%), after the cantons of Geneva and Basel City (which headquarters leading pharmaceutical companies Roche and Novartis). While Switzerland is not a member of the European Union (EU), it is a signatory to the Schengen visa-free travel zone. Nevertheless, Switzerland has imposed immigration limits on EU citizens following a referendum last year. More importantly, the movement of capital across borders has witnessed the elimination of barriers on a war-footing since the early 1990s. The developing countries all along argued that their comparative advantage lay in the movement of skilled and semi-skilled short-term services providers such as doctors, IT professionals, engineers and architects. When the Uruguay Round of trade negotiations concluded in 1993, trade in services came under the GATS (General Agreement on Trade in Services) scaffolding. Services trade was defined in the agreement as capable of supply from one World Trade Organization (WTO) member country to another (cross-border), by consumption overseas, by setting up commercial presence, and by the presence of “natural persons" in the territory of other WTO members.

The fourth possibility—generally referred to as “Mode 4" in trade terminology—can comprise the delivery of services like those of software professionals, architects or unskilled or semi-skilled labourers through temporary entry into another country. At the low-skill end of the spectrum, movement is related to labour shortages and wage differentials. At the other end, highly skilled managers or professionals can be required in relation, for instance, for commercial establishments where new entries to the market must ensure brand name compatibility.

While WTO members’ GATS schedules of commitments reveal varying levels of commitments under each of the modes of supply, the restrictions placed on “Mode 4", for the temporary movement of personnel, are usually significantly more restrictive than those for the other three modes of supply.

There is a pronounced asymmetry between what the industrialized countries managed to secure for their movement of capital in “Mode 3", relating to commercial presence, and what they were prepared to give under “Mode 4". The failure to secure real labour access through “Mode 4" commitments stands out as an eyesore in globalization. Even the recent regional and bilateral trade initiatives, including the Trans-Pacific Partnership Agreement, have offered close to zero benefits for “Mode 4" supply of services.

In a nutshell, on both political and economic fronts, the dominant industrial powers have singularly failed to live up to their promises and commitments. Whether it is the reform of the United Nations, the Kyoto Protocol of common but differential commitments to address climate change, the much-promised developmental dividends of the Doha Development Agenda negotiations, and now the migrant crisis, they all point towards skeletons in the cupboard.

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Updated: 27 Oct 2015, 12:53 AM IST
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