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How Europe’s refugee and Euro crises are linked

Ever since the euro crisis began six years ago, Germany’s leadership has repeatedly emphasized that EU member states have to solve their own problems writes Hans Kundnani. As far as many Germans were concerned, the euro crisis was a debt crisis that was caused by fiscal irresponsibility in individual member states such as Greece. While many elsewhere have argued that the euro crisis cannot be resolved until there is a mutualization of eurozone debt, Germans feared this would take the pressure off the crisis countries to undertake necessary structural reforms.

However, the rhetoric has changed since last summer, when it became apparent that a million people would seek asylum in Germany in 2015. Instead of emphasizing self-reliance, German politicians and officials can now be heard talking up a collective responsibility to solve European problems. They say the refugee crisis, which European heads of government will discuss in Brussels this week, is a European problem —not, as Hungarian Prime Minister Viktor Orbán said, a “German problem.” In other words, in the context of the refugee crisis, they are now saying what many elsewhere have long been saying about the euro crisis. In the euro crisis, it was the indebted southern member states that wanted Germany to show “solidarity.” Now, however, as hundreds of thousands of refugees seek to make their way to Germany, it is Germany that needs “solidarity” from other member states — in the form of accepting their “fair share” of asylum seekers.

This new dynamic could have been an opportunity for Europe. Germans could have begun to understand how it feels to need help from their European Union partners. This could have led to greater empathy for the economic plight of countries such as Greece and a shift in policy that would help them grow their way out of the crisis — if only to get their help in addressing the refugee crisis. But with other EU member states opposing Merkel’s plans, Germans increasingly believe that while they showed solidarity with countries such as Greece during the euro crisis, they are not receiving solidarity in return on the refugee crisis. Indeed, Germans talk of an “Entsolidarisierung,” or a withdrawal of solidarity. The danger is that many Germans may conclude that they are being exploited in the EU and turn against it.

The refugee crisis and the euro crisis are therefore inextricably linked. Since the euro crisis began, the EU has been divided into a booming core — led by Germany — and an impoverished periphery. That so many of the hundreds of thousands of refugees making their way to Europe from war-torn regions around the world — Syria, above all — want to come to Germany is itself an illustration of the reality of the new Europe.

Moreover, part of the reason why EU member states such as Greece have been unable to cope with the influx of refugees over the last few years — and ultimately were unable to prevent them travelling further north and west to countries like Germany and Sweden — is that the state has been weakened by the deep and prolonged austerity imposed by Germany and other fiscally hawkish northern European countries since 2010. Indeed, in the fraught discussion about Greek debt in the summer, many Germans did not want to throw good money after bad because they saw Greece as a failed state.

Germany’s approach now is to get other EU member states to take on their fair share of asylum seekers without further implications for the euro crisis. In particular, officials in Berlin worry that in order to solve the refugee crisis, the EU budget rules in which they have invested will have to be loosened. For example, German Finance Minister Wolfgang Schäuble has insisted that the refugee crisis should not be “instrumentalized” in debates about member states’ deficits. Thus the German strategy is to prevent linkages between the euro and refugee crises.

But the refugee and euro crises cannot be resolved separately. What is needed is to make the “solidarity union” that some in Germany talk about a reality. What that means in practice is that the EU member states that are part of the euro and Schengen areas — a kind of de facto “core” Europe — need to develop a shared understanding of their rights and responsibilities. In other words, what is sorely needed is a package deal in which they simultaneously agree how far they want to go in the mutualization of debt as well as refugees.

Hans Kundnani is a senior transatlantic fellow with German Marshal Fund’s (GMF) Europe program, based in Berlin. -This article was first published by the German Marshal fund GMF. The views expressed in GMF publications and commentary are the views of the author alone. – See more at: http://www.gmfus.org/blog/2016/02/16/how-europe%E2%80%99s-refugee-and-euro-crises-are-linked#sthash.JePWDHbS.dpuf

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