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Europe Faces Decision Time on Migration



Under pressure from waves of immigration and its own failure to act, the European Union is fast approaching a test of its political survival. Reintroducing national border controls across the Schengen Area, as now being contemplated, will be economically costly and threaten any pretense of solidarity in the face of this crisis. The EU Council will face critical decisions in its February and March meetings, though perhaps an additional emergency Council session will need to be scheduled so that it has time to deal with other urgent EU matters, including the threat of secession by the United Kingdom.

Migration levels have declined during the winter but are sure to increase. The United Nations High Commission for Refugees (UNHCR) estimates that daily sea arrivals in Greece in January 8–14 was more than 2,000 people, or 30,308 in January to date. In December there were 3,150 sea arrivals per day. 1 The European Union's regional Emergency Relocation Mechanism has been derisory. The mechanism committed to relocate up to 160,000 refugees across Europe, but only 338 were relocated as of January 20.2 My earlier expectation that a solution might take until late spring to solve the crisis was optimistic. As rotating EU president, Netherlands prime minister Mark Rutte and EU Council president Donald Tusk of Poland have suggested, Europe has only a couple months to get serious.

Several factors have heightened the need for urgent action, among them the recent attacks on women in Germany and elsewhere, which have caused even social liberals and progressives to lose faith in a policy welcoming migrants and to declare that enough is now enough. In addition, migrant numbers have become a potential crisis for fiscal policy and welfare-state financing. Short-term government expenditures to deal with the immediate costs of processing and housing large numbers of recent arrivals arguably amounts to a timely and relevant fiscal stimulus in several EU members. However, it is in the longer-term that potential problems emerge. It is well known that most European countries have a very poor track record (though less so in recent years in the largest destination countries Germany and the United Kingdom) of employing migrants from non-Western backgrounds of the kind now entering Europe.

These same countries are also unlikely (sadly) to liberalize their often sclerotic labor markets and enable the significantly larger wage inequality that would facilitate the employment of migrants, who are often less skilled, or at least less fluent and socially aware than natives. Failure to do so runs the grave risk that the many recent migrants will turn into a net long-term fiscal burden. While Europe's economy generally requires more migrant labor to sustain growth in the face of demographic stagnation, immigrants must be gainfully employed to do so. It is far from obvious that this will occur in many European economies.

On a continent where existing high debt levels, low future potential growth rates, and rising age-related expenditures put near permanent constraints on government welfare programs and spending, this risk looms large among the traditionally mostly center-left proponents of Europe's comprehensive welfare states. Faced with having to choose between scaling back existing social benefits and spending a lot more to successfully integrate recent migrants, Europe's center-left will overwhelmingly opt for the former. This will have the political effect of seeing a large part of the European political spectrum—traditionally welcoming towards migrants—quickly shift towards a much more restrictive migration policy. Because the sheer scale of recent migrants constrains fiscal resources, Europe's traditional proponents of the comprehensive welfare state find themselves favoring many of the same policies that Europe's xenophobic right-wing have long espoused for nativist and often outright racist reasons.

Germany remains the key country for European migration, as it was in the euro crisis. The Schengen open border system is fraying. Sweden and Denmark have recently reintroduced physical national border control, and Austria this year introduced a new cap on asylum seekers. But a possible unilateral decision in Berlin to cap asylum seekers would remove Germany as the "migrant destination country of last resort" in Europe and effectively doom Schengen. Migrants previously flooding into Germany would be stranded in other states that would be unable and unwilling to accommodate them. For Germany to reinstitute border controls to apprehend and deter would-be migrants is something hard to imagine. But 25 years after reunification, German soldiers might soon be guarding Germany's borders again. The broader economic and especially political effects on the European Union of such a development are hard to predict but potentially calamitous.

Chancellor Angela Merkel continues to resist such harsh steps. But three upcoming German state elections in March may force her hand. If the Christian Democratic Union (CDU) fails to regain control of its traditional bastion Baden-Wurttemberg, lost in the last election in 2011 to the Red-Green opposition for the first time since 1952, or if the new right-wing anti-immigration Alternative for Germany (AfD) party secures huge support in Sachsen-Anhalt, the pressure to institute an asylum cap might be too powerful to ignore.

One course might be for Merkel to issue an ultimatum—to close Germany's borders, perhaps temporarily, forcing migrants to seek shelter throughout the region if its European partners do not agree to common solutions that work. Such a take-it-or-leave-it approach by Germany would mirror some of the political tactics employed during the euro area crisis. German finance minister Wolfgang Schäuble's recent trial balloon interview in the Süddeutsche Zeitung on January 15 is one indication that such an approach may now be in the offing again.

Schäuble does not float such public proposals without a reason. In the interview, he said he did not wish to see "common European solutions" fail because of lack of resources, making it implicitly clear that the European Commission's recent proposals cannot succeed because there is not enough money in the EU budget.

Cheekily, he then suggested that member states could agree that members lacking money in their budgets could raise taxes on gasoline sold within their borders, in a proposal mirroring the US Highway Trust Fund. He was implying that Germany's fiscal position would be strong enough to avoid that step. By leaving it to each state to impose a gasoline tax, Schäuble skirted the issue of Germany and other member states having to transfer taxing power to the central EU institutions, knowing that politics make such a step impossible in the short term. The key political message from the German finance minister was, however, that more resources are needed to address Europe's migration crisis, and these resources can only come from member states themselves. The question in the coming months will be what it will take to compel enough member states to agree to cough up more money and other required resources for effective external border control.

In my earlier proposal for a European Migration and Mobility Union , I noted that credible solutions to Europe's migration crisis would be expensive, requiring new financing vehicles. I thus found Schäuble's comments encouraging.

Schäuble also said that if all 28 members of the European Union cannot come to an agreement, Berlin would seek a subset coalition of the willing to act, possibly under the EU Treaty provisions (articles 326ff in the Treaty on the Functioning of the European Union) for "enhanced cooperation" among a minimum of nine member states.

That the German government seems to have acknowledged that migration is not a policy subject that can likely be addressed at the EU-28 level, but only among a vanguard of countries, is another very welcome dose of political reality. As I pointed out in December, a Franco-German effort might well spur action by other member states.

Recent proposals to seal off Greece from the Schengen Area and block migrants at the Greek-Macedonian border appear poorly thought out and will have serious side effects. First, it is inherently unfair to unilaterally push out a member of the Schengen Area, when the rest of the members have yet to contribute the requested personnel for border control agency Frontex and the European Asylum Support Office to help register and process refugees. Second, a new line of defense may not deter many refugees, as they will likely still fancy their chances in reaching the rest of Europe over land and see themselves better off in Greece than in their countries of origin. And third, expelling Greece would surely cause the Greek Troika program to collapse in the medium-term, putting the hundreds of billions of euros lent by the euro area to Greece at risk. Regional finance ministers are hence likely to be fierce critics of this proposal. And it would be cruel irony for Europe to have spent five years trying to rescue Greece's economy, only to then doom it to a migration-related collapse.


1. UNHCR data for the period December 4–31, 2015, using weighted weekly average data from UNHCR's Europe Refugee Emergency Response #14,15, and 16.

2. Relocated refugees number 249 from Italy and 89 from Greece (data from the European Commission ).

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