By Miroslav Singer (The International Economy, Summer 2015 issue page 14)
As a central banker, I can’t claim to be much of an expert on immigration. Still, recent developments in the Schengen area have all too many similarities with past episodes in the eurozone. They reflect some unpleasant regularities of EU political processes on which I feel I can venture a few comments.
The recent history of Schengen is reminiscent of two eurozone stories: the weakening of the Stability and Growth Pact and the interpretation of Article 125 (the “nobailout clause”) on mutual financial aid. In both cases, the rules were “reinterpreted” to give eurozone sovereigns much more leeway. This required the consent of Germany. In the case of the Stability and Growth Pact, Germany was quite keen to agree, but in the case of mutual aid it was reluctant. In both cases new mechanisms were later needed to recapture some of the strictness of the original rules.
The immigration story is analogous. Again, it involves an exclusive club of EU countries – this time the Schengen Area rather than the eurozone. Again the rules were broken initially by Greece, which failed to protect the Schengen borders, and then by German Chancellor Angela Merkel, who invited everybody in need to Germany. We are now in a minor retreat phase in which the need to protect borders – even internal ones – is starting to prevail and there is growing recognition that many of the immigrants are economic migrants rather than refugees. In general, we in the European Union are too willing to build our institutions on bendable rules and Germany is too willing in troubled times to establish new rules rather than observe the existing ones.
However, there are new aspects to the latest crisis. Among the most notable is the recent ostracizing of Hungary for attempting to protect its Schengen borders, that is, for observing the current rules. Another is the breathtaking speed of demolition of the Dublin asylum rules and the more recent attempts to reverse that process. A third is the obviously futile measures proposed by the European Commission given the scale of the problem. As I write, Austria is building a border fence just a week or two after criticizing the Hungarian one, and the Commission is saying it will propose new rules as early as next spring.
What should be done? The first positive steps to contain the eurozone financial crisis were taken once the scale of the problem had been accepted and some initial attempts had been made to assess the situation in individual countries. The same should be done now. No one has any idea about the size of the problem in the transit countries or about the nationality composition of the migrants. In addition, measures should be taken on the Schengen borders to ensure that migrants enter in a controlled manner. And finally, containment of the problem should be allowed – if a country fails to protect the Schengen borders, those harmed by this fact should be able to treat it as a non-Schengen territory. New rules – and possibly also new institutions – will of course be prepared, but these will be steps equivalent to those that initially helped contain the eurozone banking crisis.