Dubbed “Denmark’s Australia” by its critics, the idea of ‘offshore processing’ was first put forward by the leader of Denmark’s second largest political party DPP, Kenneth Kristensen Berth. To some, an offshore processing plan was a novel idea; an innovative solution to the sums of migrants entering the European Union. However, to the majority, its downfall was the radical rhetoric and lack of a viable course of action. It did not extend beyond suggesting to send asylum-seekers to Denmark’s constituent Greenland.
The argument at hand was that Denmark is the worst country in Europe for asylum seekers to be integrated. This is due to the existence of an incentive whereby one is paid to leave by the government of Denmark if one is unable to integrate effectively. Fortunately, a more convincing argument for the Greenland programme now exists. In the end, it was just a nationalist idea that received less than ample press coverage- which is why you have probably never heard about it, until now.
Influx in Applications
The developing Syrian conflict has led to an influx of asylum applications to the EU, just under 1.4 million last year alone. The number attempting to make the treacherous journey over is considerably greater.
First, consider why they are seeking asylum in Europe. The simple answer is twofold; political stability and economic opportunity beyond their wildest dreams. Their reasons, for the most part, are understandable. If their home is embroiled in a civil war or persecutes them for freedoms we take as given here in Europe, who can blame them for not wanting to stay in their home countries.
So when does the problem arise? Why a “crisis” if migration is well documented to be a positive phenomenon, both economically and politically. Indeed, if integrated effectively, immigrants are seen as more entrepreneurial and stimulating to the local economy per household than their native counterparts.
Ineffective Immigration Methods
The crisis, therefore, is a result of ineffective integration methods. When thousands of asylum seekers are secluded in ‘asylum-homes’ with little to no exposure to the surrounding environment and its customs, they are unable to adapt. When thousands of asylum-seekers spend months living off state hand-outs because of painstakingly slow registration processes prohibiting them from work, they become habituated. They either become accustomed to surviving off state support, or they clash with the local population.
There are countless examples of this – particularly in Turkey as of late. Most recently there were days of rioting after a Turkish man was killed trying to stop a group of Syrian assailants harassing local girls. Unfortunately, the lengthy processes preventing these men from working can result in them occupying themselves in less than desirable ways. To quote Murat Erdogan, a migration expert at Hacettepe University, “If we can turn them from being dependant on aid to earning a living, they would be less exposed to resentment by locals”. This presents a catch-22 when thousands of migrants are at countries’ borders desperately in need of integration, but nationalist fervour simmers among the electorate. In the current political climate, an immigration policy mistake can be a very costly one.
Halfway across the Atlantic lies an island covered with glaciers and ice caps. Only a fifth of it is habitable. This fifth equals to almost the entire surface area of Sweden. Despite this, the population of Greenland is a mere 0.5% of Sweden’s 10 million. This is not without cause, of course. Amongst other reasons, there has been a considerable slow-down in an industry that comprises 90% of Greenland’s exports; shrimp-fishing. In a 2014 interview, Peter Beck of Greenland’s finance ministry highlighted the crucial importance of moving away from this 90% figure.
The answer, as a Guardian article earlier this year claimed, lies in mining. Although the most lucrative type, Uranium mining, has been banned since 1988, there are still 56 active exploration licenses at the time of writing. It is likely that this figure will only increase as the country “refuses to be the victimised people of climate change”. Ib Laursen, a Dane who was lived in Narsaq for over a decade and is the operations manager of the Kvanefjeld mine, promises 2000 construction and 800 permanent jobs per mine in Greenland. Whilst Uranium has been given a bad reputation by China (producing 90% of the worlds Uranium) the Organisation for Economic Co-operation and Development (OECD) claims that growing awareness makes it “the most regulated and one of the safest forms of mining in the world”.
Greenland Minerals and Energy (GME) of Australia, the company employing Ib, has an elaborate mitigation plan that is as transparent as Greenland’s institutions to quell the qualms of environmentalists. In turn, they counter argue by claiming that these mines can be exhausted within 40 years, and are therefore not worth the environmental damage caused.
Even if that were to be the case, one must consider the United Arab Emirates wherein 40 years worth of rare earth mineral revenues were enough to transform the desert economy and infrastructure into an exemplary case for any natural resource rich state. There is a smaller local group of scattered sheep farmers and hotel owners that also oppose on environmental grounds. They are employed, albeit for now, so they have the luxury of being able to protest knowing they will still have an income.
Change Needed for Greenland?
The reality is that the majority of the country struggles with rising unemployment, suicide rates, and a staggering 10% emigration record in the past decade. It is not just the country’s exports that need diversifying; all aspects of life are stagnating. As the ice melts, and it inevitably will, more resources will present themselves as readily available for extraction. By taking advantage of climate change rather than stagnating as a quasi-nature-reserve-constituent-country within the Kingdom of Denmark, Greenland offers a revolutionary opportunity for both locals and immigrants.
It is undeniable and at the moment irreversible; Greenland is suffering from a dwindling population. If it is to remain an inhabited landmass for centuries to come, it desperately needs repopulating. Not just any kind, but with a purpose. Thousands of families and even more young men are seeking asylum in Europe away from their war-torn homelands. Effective asylum gives these people a purpose, and an opportunity to build an independent life as well as contribute to the community that they now call home.
Greenland’s mining capacity presents a supply for their demand of employment. Whole communities could be rejuvenated as refugees settle, take part in essential training and set to work alongside the locals. It is a viable opportunity for all; it is not just offering refuge to those who seeking it, but also offering an opportunity to contribute to the local community that their ancestors can later call home.
Moreover, as they seek refuge, their wage demands to companies such as GME will be incomparable to those of Australian or Chinese migrants. Most importantly, relief is offered to European countries under vast socio-economic pressure to deal with the thousands of asylum seekers, whilst not negating the quality of refuge offered.
Bayeux Tapestry on Loan
Emmanuel Macron has offered to loan the famous tapestry to the UK in an effort to improve relations.
Editor’s Remarks: The offer is expected to be announced this Thursday, when Macron will meet UK officials at the Anglo-French summit at Sandhurst. The Bayeux Tapestry was commission by William the Conquerer’s brother to celebrate his 1066 conquest of England and depicts the Norman king defeating the Anglo-Saxon ruler King Harold. Although it was made in England, the piece – which measures about 35 square metres – has remained in France for the past 940 years. At the upcoming summit, Macron is also expected to petition the UK to join his combined European military initiative – a move many expect Britain’s new defence secretary Gavin Williamson to push back on.
Read more on Europe:
Why 2018 Will Be the Year of European Stocks
2017 has been an incredible year for stock markets all over the world. 2018 will probably be the same. Last year, the MSCI Europe index rose 22%, compared to 19% for the S&P 500. In my opinion, 2018 will be an even better year for European stocks.
A Favourable Political Landscape
In the last years, European stock markets have suffered because of a very uncertain political environment. After surviving a number of difficult elections in 2017, the European political landscape now looks much more favourable. While some risks remain, with a particular focus on the Italian general elections in March, the chance of results that could rattle markets is very slim, as populist parties appear to have softened their rhetoric against the single currency or abandoned the plan to leave it altogether.
Positive Economic and Monetary Environment
The European economy is growing quite strongly. Real GDP is expected to grow by 2.1% in 2018, unemployment has reached the levels of 2009 and consumer confidence is well above pre-crisis numbers. The improving economy should boost EPS, making European stocks look relatively cheap compared to bonds.
“In Europe, the combination of easy credit conditions and falling unemployment should support confidence, earnings and equities […] An incredibly tight correlation has existed throughout history whereby rising consumer confidence in the euro zone boosts equity prices, and you get this virtuous cycle. We think that will continue.” Mike Bell, JP Morgan Asset Management
In addition to a recovering economy, the European Central Bank will keep buying bonds until at least September, continuing to support markets. Recovering European companies might use this cheap debt to complete cross-border mergers and acquisitions.
The Rising Euro
2018 is likely to be the year of the Euro as well. After an incredible 2017, where the currency strengthened considerably against the US dollar, many analysts predict that the EUR/USD exchange rate will reach 1.30 – a level not seen since 2014. Some suggest that the pair will end the year at 1.24.
Since the beginning of the year, the euro has already seen some interesting movements on the upside, thanks to Germany getting closer to a government, hawkish comments by the ECB and China suggesting that they might diversify their FX reserves. However, as a strong euro would not benefit European exporters, we can expect the ECB to act to weaken the currency, especially since inflation is expected to remain low for years.
Cyclical Sectors Look Particularly Interesting
Given the positive economic environment, cyclical stocks are attractive investments. In fact, in the first week of trading in 2018, cyclical stocks in the Stoxx 600 have performed much better than defensive ones.
“In an environment of solid growth and rising long-term yields in Europe, financials and value stocks in general are likely to outperform, as well as energy.” Valentin Bissat, Mirabaud Asset Management
However, UBS analysts warn that the European banking sector could suffer earnings downgrades due to risks generated by sluggish revenues, cost inflation and the threat of regulatory uncertainty. As a consequence, investments should be chosen very carefully, favouring cheaper banks with strong levels of free cash flow generation.
The Old-Economy Might Produce Healthy Returns As Well
After the financial crisis and the European sovereign-debt crisis, in old-economy industries, like building material manufacturers and homebuilders, firms have restructured their balance sheets and rationally changed their business models. As many weak companies have failed, there is less competition as well. With consumer and business confidence increasing quickly, demand for these businesses will increase as well. Those firms that have survived might even be able to raise prices, generating higher EPS.
European Stocks Are Just Cheaper than US Stocks
As said, fundamentals would justify a European equities rally in 2018. Although they are not cheap in absolute terms, they look particularly so when compared to US stocks, meaning that the Eurozone could be less vulnerable if a correction comes. In fact, the S&P 500’s forward P/E ratio is 18x, the highest since 2002, while the Stoxx 600 trades at 15x – below its 2015 peak. This same trend is confirmed by the price-to-book ratio: the Stoxx 600 trades at 2x, while the S&P 500 is trading at 3.4x – again, the highest level since 2002. The spread between the two has never been this high.
“There’s definitely less euphoria in European stocks at the moment […] Now the big question is: will European stocks be immune if there’s a correction on Wall Street?” Andrea Tueni, Saxo Banque France.
European Car Sales Surge as Consumer Confidence Grows
European car sales have reached a ten-year high as economic growth boosted consumer confidence.
According to the European Automobile Manufacturer’s Association (ACEA), car registrations were up 3.3% to 15.6m in 2017. The countries with the biggest increases were Italy (7.9%) and Spain (7.7%), followed by France (4.7%) and Germany (2.7%). New EU member states saw a 12.8% increase in registrations. In the UK car sales decreased by 5.7%, the first time in six years.
This is the fourth consecutive year that car sales have risen on the continent and the highest since 2007 when registrations were 16m. Analysts have suggested the car-market recovery could be attributed to the lowest unemployment rate since the financial crisis.
Car manufacturers which saw the highest increases in sales include Renault (6.7%) and Fiat Chrysler (5.2%), whose Alfa Romeo brand saw a 30% jump. The Japanese car company Toyota had a 12% caused by a 31% surge in purchases of its new hybrid SUV, the RAV4 crossover.
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