In trying to curb immigration, Sweden and Denmark risk trade ties

In trying to curb immigration, Sweden and Denmark risk trade ties
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Trying to crack down on illegal immigration, Sweden and Denmark recently imposed border checks. But unpredictable border management modifications around the EU bear the risk of obstructing the ease of trade between Denmark, Sweden and Germany, and ultimately within the Schengen area.

Sweden imposed ID checks at the border with Denmark on January 4, aiming to curb illegal migration amidst increased asylum seeker and migrant flows in 2015. Denmark followed suit later several hours later, setting up random border checks at the southern border to Germany, concerned that the same populations would enter Denmark and be unable to continue.

Sweden and Denmark are a contrast in asylum laws. Sweden accepted up to 190,000 individuals in 2015, while Denmark accepted 18,000. Sweden promotes intercultural exchanges and is frequently referred to as a refugee-friendly country. Denmark has taken flak in recent months for anti-immigration stances, backed by the rise of the political right.

Border checks impact not only those who are fleeing hardship, but also the moral high ground of these Nordic countries. It would be unfortunate to weaken the international community’s respect over measures that could also harm local interests.

The installation of border checks drives several perceptibly negative ramifications for Denmark and Sweden, as well as the European Union (EU) at large. More specifically, they impact the smooth flow of goods and services and thereby have repercussions on the prosperity of cross-border trade and service.

Impact of immigration on commuters

Commuters that live and work between Germany and Denmark, and Sweden and Denmark, are facing the brunt of the burden of these policies. From the Swedish city of Malmö to Copenhagen, the 9,000 Swedes that work in Denmark (and reverse commuters as well, amounting to up to 20,000 a day total) will experience projected 30-minute delays due to newly established ID checks. Each day, approximately 74,900 people use the Øresund Bridge that connects the two cities.

The bridge initially cost over four billion dollars to construct, aiming to foster interaction and business growth between the two countries. While the Swedish checks have been extended into February, the Danish checks are initially set to last ten days. If this persists and is extended, the investment in linking the countries could be undermined, along with prosperity for business activities between the two locales. Livid commuters fought with authorities at an ID check at Copenhagen’s Kastrup airport on January 10, showing an escalation of the issue.

Supply chain interference and trade ramifications

At the southern border with Germany, Danish authorities are performing random checks; larger vehicles carrying loads and passengers alike are commonly investigated.

While the most likely vehicles to carry migrants and asylum seekers, they are also the types of vehicles that facilitate complex supply chains. Lengthier voyages lead to higher costs for multi-modal transport operators, truck drivers, and eventually, consumers.

Germany and Sweden were Denmark’s first and second (respectively) import and export partners in 2013.

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2013 Top export destinations for Denmark. Source: Observatory for Economic Complexity

For Sweden, Germany and Denmark were listed in the top three import and export partners in 2013.

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2013 Origins of import for Sweden. Source: Observatory for Economic Complexity

Because Germany exported only between 1-2% of goods to Sweden and Denmark in 2013, the bulk of the possible impacts of border checks fall inside Danish and Swedish lines.

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2013 Origins of export from Germany. Source: Observatory for Economic Complexity

The depth of the economic relationships between these three countries demonstrates how changes in border management tactics could impact the everyday operations of industries on the ground, were long-term changes to be implemented.

Therefore, the border checks present consequences for business operations and the timely flow of goods that constitute important trade links for Denmark and Sweden. Border management is a necessary component of the broader policies that together form a friendly environment for supply chains, and international trade in general. As companies must take border barriers into consideration at cost analysis, an environment with uncertain wait times could eventually alter business emphases.

Threat to Schengen?

Impact to business travellers and tourists are currently minimal. These measures pose concerns for everyday users of public transport between the countries in question, and most importantly, those on long journeys seeking respite from hardship. But the border checks reveal deeper issues with the Schengen area.

Indications that the Schengen area is in danger remain to be proven in coming months, though some believe that the risk is real. The principal EU migration issue remains concentrated on the external borders. As the IOM spokesperson projects a similar number (over one million) or more migrants to arrive in the EU in 2016, the need for an effective framework looms.

Unpredictable border management modifications around the EU, stemming from an immigration uptick, bear the risk of obstructing the ease of trade between Denmark, Sweden and Germany, and ultimately within the Schengen area.

Categories: Europe, Politics

About Author

Kira Munk

Kira Munk is a political risk analyst located in the DC Metro area, and has lived in Lebanon and Egypt and the UAE. Kira focuses on topics related to terrorism and counterterrorism, human rights, and the impacts of social and political developments in the MENA. She holds a Master's degree in Terrorism, Security & Society from the Department of War Studies at King's College London.