Allgemein, Economic Forecasting, Economics, European integration, International Market Dynamics, New Political Economy

European Terror Crisis: Relocating EU Institutions from Brussels and Improving Security in Europe

Prof. Dr. Paul J.J. Welfens, President of the European Institute for International Economic Relations (EIIW) at the University of Wuppertal; Professor in Macroeconomics and Jean Monnet Chair in European Economic Integration at the Schumpeter School of Business and Economics, University of Wuppertal and Research Fellow at IZA, Bonn; Non-resident Senior Fellow, AICGS/Johns Hopkins University, Washington DC. EIIW 2015 = 20 years of award-winning research


April, 5, 2016 (BrusselsEUterrorcrisis2016ENG)


The EU of 2016 is facing a fundamental crisis. The UK leaving after June 23 would deal a major blow to the process of EU integration and indeed the Juncker Commission – that Commission President Juncker has not made even one visit to London before June (in contrast to US President Obama) is an historical sign of weakness for which the whole Commission should be ashamed. What’s more, EU integration is facing a major security challenge from Brussels itself where dozens of ISIS supporters and several terrorists are living in the EU’s quasi-capital and the capital of Belgium, respectively. The terror attacks in Belgium on March 22 – at the Brussels airport and the Maelbeek metro station which is right in the centre of Brussels and just 400 meters away from top EU institutions – reveal the enormous weakness of the Belgian security forces. More than 30 dead and over 100 injured in March 2016 testify to the fact that the Belgian capital is not safe – Islamist terror groups can easily hide in Brussels; and it is also well known that several of the Islamist terrorists behind the brutal attacks in Paris in November 2015 also came from Brussels.

After almost two weeks, the closed Brussels airport could be reopened on April 3, however at a much reduced capacity, but Brussels still has a deeply rooted security problem which is visible in the form of the understaffing of security forces, a lack of cooperation between various police groups and security forces in Brussels in particular and in Belgium in general with its complex federal structure. Moreover, Belgium is similar to France, i.e. in a structurally bad position, since its youth unemployment rate has been twice as high as that of Germany for two decades and three times as high as in Switzerland. Terror experts have shown that Jihadists, to a considerable extent, are engineers or former students from technical fields on the one hand, while on the other hand they stem from petty criminal groups. High youth unemployment rates are a key driver of criminal careers of young men and this in turn implies that France and Belgium have a structural terror threat problem that is deeply rooted. The high youth unemployment rate in France and Belgium is large due to an excessively high minimum wage rate – the youth unemployment rate has been twice as high as in Germany for about two decades (see appendix).

There are several conclusions to be drawn if one wants to achieve full security in line with US or British standards: (1) massive investment in and a modernization of the Belgian security forces and enhanced cooperation in the EU; however, there is large mistrust of EU member countries amongst each other and the reputation of the EU – in the (likely) BREXIT year of 2016 – is very poor.

(2) As security in Brussels cannot be assured for many years to come, the EU’s main institutions should be relocated to Luxembourg or another major city (e.g. Trier which also could cooperate with Luxembourg); Luxembourg has the problem that about ½ of its labor force is from France (70 000 commuters per day), Belgium (70 000 commuters per day) and Germany (35 000 commuters per day). If border controls would be reimposed – possibly a necessary step after a terrorist attack – the economy of Luxembourg could collapse. The European Parliament has a second seat in Strasbourg, but this city in France does not seem any safer than Paris. Every year thousands of ordinary people visit the EU institutions and several dozen universities in Europe have a tradition of sending groups of students on excursions to EU institutions in Brussels. Millions of people visit Brussels as tourists, business people or as invited experts to the EU each year, but again security problems will remain unsolved for many years in Brussels. This also means that the many thousands of employees and civil servants working at the European Commission’s main institutions in Brussels face a threat to life when using the metro or using the airport in the future. The Belgian capital cannot be the capital of Europe – enjoying considerable economic benefits from this status – while not providing decent security for its own citizens, the people working in Brussels and the millions of visitors to Brussels every year. The reputation of the EU institutions has already weakened much since the Euro crisis and the younger generations will not broadly support EU integration if one cannot even visit the key EU institutions safely.

(3) Belgium must reduce the excessive minimum wage immediately and become much more serious in fighting youth unemployment; the same must be expected from France. For several years the borders with Belgium and France should be strictly controlled, the Schengen Treaty, meaning passport-free travel within the Schengen area, should be, in part, no longer applied.

(4) EU countries should be much more selective in inviting preachers from North African countries or even from Saudi Arabia, Qatar (the latter two stand for radical Islamist beliefs and also the generous financing of ISIS in Syria) and other Arab countries. It is strange that the Valls government under President Hollande has invited many Islamic preachers from Tunisia, whereas creating a decent education for Muslim clergy in France – similar to that in Germany – is cleary a better approach. It is also strange that investment funds from certain countries are accepted by the German government and the EU, respectively, e.g. in Germany – Qatar is a major investor in Mercedes Benz.

(5) The chaotic immigration and refugee policy that Chancellor Merkel has imposed on EU countries in 2015 should be stopped and reformed immediately; there can be no responsible immigration policy that leaves things unclear in relation to many thousands of immigrants or refugees entering Germany and other EU countries, respectively. In 2015, the German security forces, organized in the 16 states of Germany, used identification software that suffered from incompatibility issues so that an immigrant could be registered several times and possibly also under different names. Such technical pitfalls are totally unacceptable and endanger the whole of Europe; one terrorist attacker in Paris in January 2016 came from Germany – where he had seven different identities; he was shot while attempting to kill two policemen in the French capital. EU countries also suffer from the problem that the transliteration of Arabic or other foreign names are different in different languages and, since EU security forces are not using a multi-language algorithm for transaliteration, a terror suspect identified by French police can travel to Germany, Italy or Spain, and the national security forces of those other countries will most likely not identify this indiviudal as that person who has already been identified as a suspect individual in France. This lack of security integration is a scandal and highly dangerous.

(6) Several EU countries, above all France and Belgium, will attract lower foreign direct investment inflows from the US, China, Japan and Korea – security issues always figure high on the checklists of multinational companies. Lower economic growth and higher unemployment rates, new social conflicts and more political instability are likely side effects of this. Hence the threat of terrorism should be taken much more seriously in the future in the EU.

The poor impression created by Germany’s, and indeed the wider EU’s, immigration policy of 2015 and the Brussels terror attacks of 2016 have reinforced the fear of immigration in the UK and to the extent that the BREXIT debate is shaped by a fear of immigration, Chancellor Merkel’s poor refugee policy and the security problems in Belgium have tipped the balance in favor of EU ‘leavers’ in the United Kingdom in early 2016.

With the UK leaving the European Community and Brussels having become the most unsafe capital in the EU, the European Union and EU integration, respectively, are facing a serious problem. A process of EU disintegration has started in 2016 and EU member countries are silently watching this historical disintegration process unfold. If EU disintegration should proceed, it will lead to massive economic nationalism in Europe and to higher military expenditures relative to GDP, while political destabilization will bring about reduced economic growth.

Fighting Islamist terrorism requires a multi-pronged approach. Reducing youth unemployment rates is one critical aspect; no longer publishing pictures of terrorist attacks and media from ISIS websites with their threats of further terror is a desirable element of counter-terrorist policy – all the pictures shown on TV and in newspapers are broad propaganda in favor of terrorism as the terrorist achieves at zero cost an advertising platform to frighten even more people which is the very goal of all terrorism. EU countries should take the new wave of terrorism very seriously. The Schengen countries’ security standards are much weaker than those of the US and the UK; any extension of the Schengen area – e.g., including Croatia with its weakly patrolled southern borders to other Balkan coutries – is irresponsible. The EU should also put much more pressure on all neighbouring countries to also fight Islamist terrorism. The new terror risk will affect economic growth perspectives across EU countries in an asymmetric way, so that pressure on raising EU funds will increase in order to avoid a decline of economic and social cohesion. The cost of terror-related risks are enormous – if reduced security of consumption (including tourism) in the EU is equivalent to 0.5% of GDP of the EU, this amounts to € 140 bill.; add to this the extra cost of increasing the budget of security forces and the economic loss of all those poor people who have either been killed or injured in terror attacks, then the bill of terrorism is certainly above € 140 bill. in the EU. Without an EU Political Union there can be no security and no stable European Union. If there is continued disintegration, Europe will fall back into the late 19th century. This certainly is not in the interests of the 510 million people in the EU.




Fig. 1: Youth Unemployment Rate in Selected EU Countries (Age Group 15-25 Years)

Source: Eurostat

Fig. 2: Unemployment Rate in Selected EU Countries (Age Group 15-39 Years)

Source: Eurostat


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