Refugees and re­form in Europe

Financial Mirror (Cyprus) - - FRONT PAGE -

There is a sim­ple truth be­neath the grow­ing hu­man tragedy of Europe’s refugee cri­sis, and the Euro­pean Union can­not ad­dress the mas­sive in­flux of ex­hausted, des­per­ate peo­ple in a man­ner com­pat­i­ble with its val­ues un­less gov­ern­ments and cit­i­zens ac­knowl­edge it. Sim­ply put, the his­toric chal­lenge con­fronting Europe also of­fers his­toric op­por­tu­ni­ties. The ques­tion is whether Europe’s politi­cians – who have failed to de­liver on far less com­pli­cated is­sues over which they had a lot more con­trol – can seize the mo­ment.

The scale of the chal­lenge is im­mense, with the flow of refugees ex­tremely dif­fi­cult to mon­i­tor and chan­nel, let alone limit. Flee­ing war and op­pres­sion, tens of thou­sands of peo­ple are risk­ing life and limb to find refuge in Europe – a phe­nom­e­non that will con­tinue as long as chaos per­sists in coun­tries of ori­gin, such as Syria, and coun­tries fa­cil­i­tat­ing transit, such as Iraq and Libya.

In the mean­time, Europe’s trans­port net­works are un­der stress, as are shel­ters, bor­der cross­ings, and reg­is­tra­tion cen­tres. Com­mon asy­lum poli­cies – in­clud­ing, for ex­am­ple, the ba­sic rule that asy­lum-seek­ers should be reg­is­tered at their point of en­try into the EU – are not func­tion­ing or are be­ing by­passed. And the cher­ished con­cept of ef­fort­less travel within the bor­der-free Schen­gen Area is un­der threat.

These prob­lems are ag­gra­vated by co­or­di­na­tion fail­ures. At­ti­tudes to­ward refugees vary widely across coun­tries, with Ger­many tak­ing a par­tic­u­larly en­light­ened ap­proach that con­trasts sharply with Hungary’s no­tably heart­less one. Some coun­tries, such as the Czech Re­pub­lic, have blocked deals to share the bur­den fairly among Euro­pean Union mem­bers, in­clud­ing through manda­tory quo­tas.

Add to that the pref­er­ences of the refugees – who, af­ter risk­ing ev­ery­thing to get to Europe, have strong feel­ings about where they would like to set­tle – and the pol­icy chal­lenges are enor­mous, par­tic­u­larly in the short run. Euro­pean politi­cians have yet to catch up with the re­al­ity on the ground, let alone get ahead of it. And their fail­ure is ex­ac­er­bat­ing the risks to the EU’s po­lit­i­cal co­he­sion that emerged over the Greek cri­sis.

Politi­cians have a pow­er­ful in­cen­tive to get Europe’s re­sponse to the refugee cri­sis right. Be­yond the need to al­le­vi­ate the hu­man mis­ery that fills tele­vi­sion screens and front pages of news­pa­pers lies the im­per­a­tive not to miss the sig­nif­i­cant medium-term op­por­tu­ni­ties that mi­gra­tion pro­vides.

Although there are pock­ets of high un­em­ploy­ment in Europe to­day, the ra­tio of work­ers to el­derly peo­ple will de­cline con­sid­er­ably in the longer term. And, al­ready, labour-mar­ket flex­i­bil­ity has been un­der­mined by struc­tural in­er­tia, in­clud­ing dif­fi­cul­ties in re­tool­ing and re­train­ing work­ers, par­tic­u­larly the long-term un­em­ployed.

As the Ger­man gov­ern­ment and some cor­po­rate lead­ers, in­clud­ing the CEO of Daim­ler-Benz, have al­ready recog­nised, an open-minded ap­proach to refugee ab­sorp­tion and in­te­gra­tion can help to mit­i­gate some of Europe’s pro­tracted struc­tural prob­lems. Af­ter all, a sig­nif­i­cant pro­por­tion of the in­com­ing refugee pop­u­la­tion is said to be ed­u­cated, mo­ti­vated, and com­mit­ted to build­ing a bet­ter fu­ture in their new homes. Cap­i­tal­is­ing on this, Euro­pean de­ci­sion­mak­ers can turn a se­vere short-term chal­lenge into a pow­er­ful long-term ad­van­tage.

An en­light­ened pol­icy re­sponse to the refugee cri­sis could help Europe in other ways as well. Al­ready, it is un­lock­ing ad­di­tional fis­cal out­lays in coun­tries like Ger­many – which, de­spite hav­ing the means, did not pre­vi­ously have the will to spend – thereby help­ing to al­le­vi­ate an ag­gre­gat­ede­mand im­bal­ance that, to­gether with struc­tural im­ped­i­ments to growth and ex­ces­sive in­debt­ed­ness in some coun­tries, has held back the re­gion’s re­cov­ery.

The cur­rent sit­u­a­tion could also pro­vide the cat­a­lyst needed to make decisive progress on the EU’s in­com­plete po­lit­i­cal, in­sti­tu­tional, and fi­nan­cial ar­chi­tec­ture. And it could com­pel Europe to over­come the po­lit­i­cal ob­sta­cles block­ing so­lu­tions to long­stand­ing prob­lems, such as pro­vid­ing the cover needed for cer­tain Euro­pean cred­i­tors to grant deeper debt re­lief for Greece, whose al­ready-mas­sive fis­cal and em­ploy­ment prob­lems are be­ing ex­ac­er­bated by the in­flux of refugees. It can even drive Europe to mod­ernise its gov­er­nance frame­work, which al­lows a few small coun­tries to de­rail de­ci­sions sup­ported by the vast ma­jor­ity of EU mem­bers.

Pes­simists would im­me­di­ately point out that Europe has strug­gled to come to­gether even on far less com­plex and more con­trol­lable is­sues, such as the pro­tracted eco­nomic and fi­nan­cial cri­sis in Greece. Yet history also sug­gests that shocks of the scale and scope of the cur­rent refugee cri­sis have the po­ten­tial to spur re­mark­able pol­icy re­sponses.

Europe has the op­por­tu­nity to turn to­day’s refugee cri­sis into a cat­a­lyst for re­newal and progress. Let us hope that its politi­cians stop bick­er­ing and start work­ing to­gether to take ad­van­tage of this open­ing. If they fail, the mo­men­tum be­hind re­gional in­te­gra­tion – which has brought peace, pros­per­ity, and hope to hun­dreds of mil­lions of peo­ple – will weaken con­sid­er­ably, to the detri­ment of all.

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