CEE most exposed to potential Schengen suspension suggests analysis

By bne IntelliNews March 2, 2016

Central Europe and the Baltics are most exposed to any potential suspension of the borderless Shengen zone, analysts at Morgan Stanley claim.

The influx of migrants to Europe has put Schengen at risk. EU officials have threatened the free-travel zone could end if Turkey does not take measures to reduce the number of migrants entering the EU via Greece. Brussels and Ankara will hold a summit on the crisis on March 7.

CEE states have led the opposition in the EU to helping relieve the pressure on frontline states, but they stand to lose most from the effects of the reintroduction of borders on trade, transport and tourism, the report finds. Hungary, which has done most to block Brussels' efforts to spread the pressure across the bloc, is the most vulnerable.

"The main risk associated with the suspension of Schengen would be a reduction of intra-European trade, causing the benefits of the single market, e.g. product specialisation, economies of scale, and institutional competition, to be reversed," the analysis shows, according to Portfolio.hu.

Hungary's deep integration into European trade and tourism links is the key to its exposure. The country's degree of openness to international goods trade is the second largest in the bloc. It would also suffer from a hit to tourism and cross border commuters.

Slovakia, whose economy relies mostly on car and electronics production, has the biggest degree of openness to international trade. However, the country's relative lack of tourism trade reduces its vulnerability; it is ranked as the sixth most affected country. Bratislava is another fierce opponent of EU efforts to spread the impact of the migrant crisis.

While Croatia's exposure to international goods trade is not deep, it is rated the second-most exposed due to its heavy reliance on overseas tourists. The country, is not, however, in the Schengen zone currently.

Estonia ranked third in the Morgan Stanley analysis due to its high openness to international trade and impact on tourism. The Czech Republic would be the 10th most impacted state, while Poland ranked 19th.

Related Articles

Lithuania calls for further committments from Gazprom to end EU anti-trust case

Gazprom’s commitments to lessen the impact of its dominant position as a supplier of gas to Lithuania and other CEE countries are not sufficient and the European Commission should ensure they are ... more

Russia offers Latvian port a slice of the Nord Stream pie

The Latvian port of Ventspils has been asked to store and handle delivery of pipes for Nord Stream 2, the controversial Russian gas pipeline project, the chairman of the port said on April 20. The ... more

Latvia opens its gas market as it seizes control from Russia

The Latvian gas market opened up to liberalisation on April 3 following entry into force of a number of legal changes. Riga has fought hard to end control of the gas transmission and storage ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss