Regional Inequality in the EU: A Risk to Enlargement?
The European Union’s enlargement policy “aims to unite European countries in a common political and economic project”. According to the European Parliament, enlargement “has proved to be one of the most successful tools in promoting political, economic, and social reforms”. Indeed, this is largely true: EU citizens are able to move freely for business, education, and leisure within the bloc; the EU has a robust uniform trade strategy, and above all, the EU has largely consolidated peace in Europe since its inception.
However, according to Emil Boc, the EU’s free movement policy suffers from a serious macroeconomic limitation: brain drain. The former Romanian prime minister – now mayor of Cluj-Napoca – has been actively raising awareness of this issue. Emil Boc recognises the issue is at the intersection of regional integration and national-level macroeconomic conditions. Simply put, the fundamental right to freedom of movement within the EU and adverse macroeconomic conditions in various Member States lead to talent from those Member States leaving to wealthier Member States or indeed leaving the EU altogether. A 2018 report by the European Committee of the Regions shows that the vast majority of ‘sending regions’ can be found in Southern Europe and in Eastern Europe, whereas ‘receiving regions’ were largely concentrated in Northern Europe and most of Italy. This iterates the systemic nature of the problem within the EU. Although there is yet no formal policy dedicated to addressing brain drain within the EU, the issue has gained salience over the last few years. Emil Boc was the Rapporteur for an official opinion published by the European Committee of the Regions, calling for a local government approach to tackle the issue. Similarly, over the last year, the European Commission has formally recognised the issue.
An intra-European brain drain may not seem at prima facie as a policy issue that ought to be addressed at the European level, it must definitely is. The reasoning is two-fold: firstly, brain drain means that periphery countries and ‘sending’ regions do not grow at the same pace as wealthier countries or regions which can drive euroscepticism. Secondly, for prospective countries looking to join the EU, the prospect of having talented members of the workforce emigrate might hamper enlargement.
Perhaps the second risk is more hypothetical than the first, the link between poor macroeconomic conditions (i.e. push factors for talented workers) and anti-EU sentiment and poor integration is well-documented in ‘sending’ regions and countries. Indeed, it is not a coincidence that Hungarians, Italians, Poles, and Slovaks have all elected outspoken Euroskeptics as head of government – for a long time those countries faced stagnating economic conditions and brain drain – now their governments are willing to challenge Brussels on core elements of foreign and internal policies.
Cocaine and Canals: The Risk of Drug Trafficking for Businesses Operating in Belgian and Dutch Ports.
Over the last decade, the centre of European drug trafficking has shifted from Southern Italy to Northern Europe. This is largely due to the FBI's crackdown on Mexican drug lords and their Italian affiliates. Since then, Southern American suppliers, like Peru and Colombia, have sought other partners, which they have found in the criminal networks of northern Europe, particularly the Benelux countries. Antwerp and Rotterdam are the ports of choice for drug trafficking.
A new generation of criminals seized this opportunity and took the drug market by storm, cooperating with the Italian ‘Ndrangheta and Camorra clans, the Irish Kinahan group, and Balkan clans in what has been dubbed a “super cartel”. Because of its markedly multicultural make-up, the Dutch chapter of this super cartel has been called the “Mocro Maffia”. It is in fact a collection of different drug trafficking groups that emerged at the same time in the Netherlands and Belgium, giving these two countries the status of Europe’s leading drug hub. As a result, the Benelux has reached new levels of violence, threats and criminal influence, with some commentators referring to “narco states”. Although many high-ranking members have been arrested and are currently before the courts, their operations remain uninterrupted. The organisation is even held responsible for the assassination of lawyers and journalists from prison. This Spotlight assesses the influence of this situation on Benelux societies and economies, focusing on firms working with and in the ports of Antwerp and Rotterdam.
Scope
The strength of Northern Europe’s trade infrastructure is a double-edged sword. While it enables large-scale trade, it also makes it vulnerable to exploitation by criminals. This is the case for the ports of Rotterdam and Antwerp, respectively the largest and second largest in Europe. Rotterdam processes about 9 million containers a year, while Antwerp processes nearly 7.5 million. This is where Europe gets its supplies of raw materials, high-tech products and, above all, foodstuffs. This legal economy is exploited by its illegal counterpart, helped by the high-quality infrastructure, good connections with the rest of Europe and impressive processing speed of these ports. Cocaine in particular, with its high profit margins, is placed illegally in containers at the originating destination, to be picked up by traffickers in the port. The ever-increasing demand for cocaine in the European party scene is driving up profits. Currently, only about 1% of all the containers, or 10 per-cent of the fruit containers from Latin America, are scanned. As these are perishable goods and controls take time, it is challenging to check more containers. Additionally, drug traffickers are creative in finding new goods and new ways of transporting their drugs, for example by concealing them inside pineapples. Simultaneously, corruption and extortion among customs officers and port officials are commonplace. Due to the very nature of corruption, exact figures are unknown, but examples of corrupt customs officers in ports abound.
Threat to businesses
This endemic drug trade represents a growing risk for businesses. The first risk is that businesses are used as cover for drug trafficking, which can have devastating effects on them. When cocaine is placed in a company's container and the authorities suspect attempted trafficking, the cargo will inevitably be delayed due to extended searches of the goods and background checks on staff. This has a negative impact on commercial relations. In the case of perishable goods, the delay is even more detrimental. Customers can invoke a breach of contract if they have not received their goods on time. Claims and additional costs are therefore to be expected.
Another consequence is the possibility of a fine. Take the example of MSC, the world's largest shipping company. Over the years, large quantities of cocaine have been found in its cargo. In one major operation, 20 tonnes of cocaine with a street value of $1 billion were seized from the MSC Gayane, one of the largest ships sailing the oceans today. It was found that many crew members were complicit in the trafficking, including the chief mate. Most of them had been recruited by the Balkan Cartel. These shipments usually make a stopover in the United States before continuing on to Rotterdam and Antwerp. This time, the stop was made in Philadelphia, Pennsylvania, where the American authorities seized the drugs. To set an example and out of frustration at what the American authorities considered to be insufficient efforts on the part of MSC to prevent drug trafficking, the company was fined $600 million. In addition, the Gayane was temporarily seized. Companies face a permanent risk of confiscation.
Businesses can also be subject to threats, extortion, and even violence from drug gangs if their trafficking activities are hindered by the companies affected by the trafficking. The case of fruit importer De Groot in May 2019 is a case in point. their smuggling of 400kg of cocaine. Employees found the drugs and called the police to report it. What should have been the end of the matter was the beginning of two disastrous years for the company. Shortly after the police found the drugs, the director began receiving threatening text messages demanding compensation. In a year-long campaign, (former) employees were threatened, their homes were set on fire, shots were fired and, on one occasion, a grenade was left at an apartment complex.
Finally, companies can also suffer reputational damage. In the case of De Groot, the media and the perpetrators themselves raised the suspicion that the company director was complicit in the trafficking. But even when rumours are not actively spread, companies can still suffer reputational damage. It is not always a question of a normative judgement on the association with drugs. Even the practical consequences of delays due to drug checks and seizures can deter companies from doing business with the company concerned, such as MSC, which was simply unable to handle its normal quantities of cargo because one of its largest ships was confiscated.
Outlook
The growing drug trade in Northern European ports is creating major risks for companies operating with or through these ports. The increasingly reckless behaviour of drug traffickers is putting businesses at risk. Companies need to be aware of this, and prepare accordingly. Measures that can be taken to mitigate the risks range from hiring security guards to minimise the risk of drug gangs placing drugs in containers, to working closely together with authorities and customs officials. Perhaps the most important thing is to exercise caution when recruiting staff. Thorough security checks must become company standards to minimise the effect of corruption. The reasons for engaging in corruption should also be considered. If they are financial, companies could consider increasing their employees' salaries to make them less vulnerable to offers from drug gangs. Investments in legal teams in case of a drug seizure will also prove beneficial.
In conclusion, the global trade that passes through the ports of the Benelux contains a dark side that threatens the economic structures it exploits. There is no straightforward solution to this problem, as the highly profitable drug trade has proved to be adaptable and creative. However, precautionary measures can be taken to minimise the impact on businesses operating legally. This might not dry up European ports of cocaine, but it can keep businesses and drug traffickers on separate lanes.