An Unprofessional Immigration Policy plus a Dangerous European Election Setup Undermine Germany and the EU

Prof. Dr. Paul J.J. Welfens

President of the European Institute for International Economic Relations (EIIW) at the University of Wuppertal; Professor in Macroeconomics and Jean Monnet Chair in European Economic Integration at the Schumpeter School of Business and Economics, University of Wuppertal and Research Fellow at IZA, Bonn; Non-resident Senior Fellow, AICGS/Johns Hopkins University, Washington DC. EIIW 2015 = 20 years of award-winning research




Jan. 21, 2016


An Unprofessional Immigration Policy plus a Dangerous European Election Setup Undermine Germany and the EU

There are many good arguments which support the view that in the summer of 2015 Germany’s government should react and behave generously when the EU faced an unprecedented wave of refugees arriving from Syria, Iraq and several other countries. During 2015, circa 1.1 million refugees/asylum seekers came to Germany (Germany’s own population in 2014 was about 82 million). This number is about 1/3rd higher than the maximum number who sought asylum in Germany during the Balkan wars in the 1990s, when the Federal Republic of Germany joined allied forces in its first military intervention since 1945: As Bodo Hombach – then the Balkans High Commissioner for the European Commission (before he was head of the chancellor’s office) – once explained in Washington D.C., during a seminar sponsored by the German Marshall Fund, that it was a fear of more asylum seekers and refugees from the Balkans which tipped the political balance in Berlin in favor of joining the US and other countries in the Kosovo War. Absorbing a large number of refugees is a challenge to every society and the problems encountered in Germany in 2015 were considerable for many reasons. If there would be an EU consensus for allocating refugees within an integrated concept it would also become clear that the 1.4 million refugees are not really a big number – relative to 520 million people in the EU (0.3%).

Germany’s government – obviously poorly organized in terms of intelligence services and an anticipation of refugee problems – was largely overwhelmed by the refugee wave which arrived in 2015 with most refugees coming via Turkey and entering the EU in Greece; a smaller part entered the EU via Italy. With the Greek economy in the seventh year of a record-breaking (in terms of duration) recession and the country in political turmoil, respectively, it was clear that the Greek government would be neither able nor willing to follow the Dublin framework which would have required Greece to handle more than half a million asylum seekers coming across the Mediterranean Sea to the shores of Greece. The Dublin rules put too much burden on the border countries of the EU and better rules should be considered.

The situation for refugees in Greece was so desparate that the European Court of Human Rights decided in 2014 that asylum seekers who had left Greece and entered any other EU country could not be sent back to Greece. Germany’s government was still eager to teach Greece a hard lesson regarding stability policy in 2015 and refused any debt cutting for contradictory reasons: It was argued by the Ministry of Finance that forgiving part of Greek debt was impossible, although renowned legal experts from several German universities had a different view.

Some concessions were considered with respect to debt maturity and the interest rate, but Germany did not really help Greece to get out of a very dangerous economic situation. Hence there was a choatic situation in Greece with no implementation of the EU’s Dublin rules relevant for refugees/asylum seekers in the EU and the refugees, often having escaped dangerous situations in their home countries, moved to Germany and other countries in an uncontrolled way – naturally, not all of the refugees were asylum seekers (the asylum seeker status is an invididual status given to those that obviously have to fear political prosecution or face risk of life in their respective home country). More than half a million asylum seekers passed through Hungary and very many continued on to Austria, Germany and Sweden. The EU situation partly reflected the inconsistent situation of both external EU borders which are not being sufficiently controlled and the Schengen Accord which allows free movement of people within continental EU countries. If the EU’s external borders cannot be protected the Schengen Accord might no longer be implemented; this will impair not only the movement of labor but also make the exchange of goods in the EU single market more complex – hence there will be negative welfare cost of giving up the Schengen Accord.

As Germany lost, in summer 2015, the control over its borders, the government indirectly undermined security not only in Germany but in the whole EU; the German government partly does not really know who has come to Germany and where the refugees are living – if there should be any obvious terrorists among them and they commit terrorist attacks in Europe, Germany’s government will be held responsible for this. Most likey for more than 99% of all refugees the main motive in coming to Europe was the willingness to survive as individuals or with their family. Many people in all EU countries generously helped the refugees and even in poor Greece many people showed a strong humanitarian commitment. There is reason to be proud about this, but there is also reason to critically highlight the problems and policy reactions of 2015 in Germany and the EU. Germany’s problems in coping with the refugee wave has revealed considerable institutional weaknesses, including understaffing of the policy and the legal system as well as excessive bureaucracy and poor organization of government institutions.

For many refugees the situation is dramatic and the unclear status of many is also a problem. The relevant public authorities in Germany were so poorly organized and so seriously unterstaffed that in 2015 only about 60% of all asylum applications could be formally started (the Eurostat statistics which show about 1 million asylum-seekers for the whole EU is therefore quite misleading, since those refugees who did not submit an application are not counted). About 400,000 people could not even submit an application in Germany in 2015. For Germany’s public authorities the situation, with more than 1 million refugees arriving in 2015, was apparently impossible to handle and the various software systems used by both the sixteen federal states and the national government were so poor (and mostly incompatible with each other) that it lead to the absurd situation that some refugees could easily obtain several identities. The man who tried to kill several policemen in Paris in early January 2016 had previously been living as an asylum seeker in the German city of Recklinghausen and he is said to have had seven identities – so he had given his finger print seven times but the German software incompatability problems are so enormous that his scheming was not recognized by any of the many public authorities involved in the asylum process; this is a very dangerous pitfall of Germany’s public authorities and it will take years to remedy this problem. This testifies to the fact that German authorities might have at least half a million refugees whose identities are not clear and who are not definitively known to the authorities. In the era of international terrorism such a situation is totally irresponsible.

The mantra of Chancellor Merkel that there is no upper limit on the number of incoming refugees is inadequate since competing legal requirements and political goals automatically imply that there is indeed a critical upper limit. It is fairly clear that one million refugees a year would not come to Germany if the UNHCR refugee camps were not in such a disastrous situation as a result of major UN member countries having not paid normal contributions for many years – the US and Kuwait are two of the leading culprits here – however, the German government is totally silent on this. These wealthy countries and other non-payers are responsible for the fact that many UNHCR refugee camps can spend only 40% of the standard requirement per refugee. It is also fairly obvious that €10 billion spent by the German government on refugees in Germany would buy the equivalent of about three times this amount in low-income Arab countries: So building and modernizing refugee camps in these countries and in Turkey in order to help the many refugees from Syria and Iraq would be much more effective than the current strange open door policy of the German government. Turkey is a key partner for Germany/the EU and certainly could help to reduce the refugee wave to Europe.

That refugees from as far afield as Afghanistan are fleeing to Germany is also not a welcome situation, they should be encouraged to find neighboring countries that could give them support and shelter. Many refugees from Islamic countries have a very different cultural background than the populations of western countries, and this often includes a considerable emotional and intellectual distance to the Western values – this, of course, is understandable since the French Revolution and the Glorious Revolution took place in France and England, not in Arab countries. One should not rule out that in the long run many young immigrants will be able to adjust to the Western world, so that cultural as well as economic integration could be possible (and Europe received Greek classical ideas actually via Arab philosophers). However, it is not realistic to assume that this is a standard case. The Arab world consists of many different intellectual currents, with Islamistic voices gaining weight sind 1979.

It should also be emphasized that massive youth unemployment in certain EU countries, for example France and Belgium, is not the fault of young immigrants; rather, in both countries, irresponsible minimum wage legislation has brought these countries youth unemployment rates double that of the Germany and triple that of Switzerland. The successful integration of immigrants and foreign refugees without finding adequate jobs for all the young people is impossible.

The situation in France under President Hollande is strange and irresponsible: The government knows that the minimum wage of nearly €10 per hour is much too high as a national minimum wage, but instead of lowering the excessive minimum wage, government pays firms employing people on the minimum wage massive subsidies which cost the equivalent of 1% of GDP – the implication is that the income tax has to be raised by 1 percentage point (or the deficit-GDP ratio has to be increased by 1% which implies with a 1.5% trend output growth rate that the long term debt-GDP ratio from this subsidy alone will amount to 67%: more than the upper limit set out in the Stability and Growth Pact!) and this in turn reduces the level of the growth path by half a percentage point. Some countries face serious problems, but if politicians do not have the courage and capability to adopt adequate reforms then social and political instability will follow; it would not really be difficult to introduce a regionally differentiated minimum wage system and thus to get rid of the subsidies – output would increase, unemployment rates would fall.

Germany, having made bold reforms under Chancellor Schröder in the labor market and in cutting part of social security, has found – albeit benefitting from other reforms as well – the way back to full employment: This now makes Germany the most desired destination country for millions of people, either migrating or considering it, in the world. If Germany would be able to organize immigration and refugee streams in a realistic and sustainable way, the German economy and its political system could benefit in the long run. There is, however, also a need to define new rules of representation at the European Parliament that so far is not reflecting demographic and immigration dynamics in an adequate way (this situation is much in contrast to the US and its representation of the population in the Congress and the parliament, respectively).

The first democratic new requirement for the European Parliament should be that the number of seats for Germany – and other countries with populations increasing relatively quickly – should be raised adequately. Such a rule would encourage timely economic reforms and greater political wisdom in the EU; the reform laggards in Greece, Portugal and other countries would finally pay a political price, namely less political power in Brussels. Major immigration countries such as Germany, France, Spain, Italy, the Netherlands, Belgium and Sweden stand to benefit. Looking towards a Euro Political Union in the medium term should bring these questions onto the political agenda in Europe; countries which are not willing to accept this basic principle of democracy cannot be considered as strategic partners of Germany, France, Italy and Spain.

The western world (broadly defined in geographical terms) has faced an enormous lack of political discipline since the end of the Cold War. Never would a conservative Greek government have made the attempt during the Cold War period to inform the European Commisison that the country would have a 4% deficit-GDP ratio and then implement expenditure and revenue schedules in an election year (2009) resulting in the end in an actual deficit-GDP ratio of 15.6%; the fact that this could happen in an EU country but could never happen in the US (as a political union) in turn indicates how much stronger the US is, institutionally speaking, than the EU. To date, a repetition of such a Greek deficit fraud is still possible. On the other hand, Germany, the UK and France have not helped Greece to avoid the plague of seven consecutive years of recession and a cumulated output decline of 25% – as big as occurred in the US in the early 1930s in four consecutive recession years. The IMF has imposed an austerity policy that was very strict and due to overindebtedness of government this was partly necessary. However, due to a rather high negative fiscal multiplier (in an environment of very low ECB interest rates; see IMF working paper of Blanchard/Leigh, WP 13/1) this has reduced output and employment dramatically. Fiscal consolidation was necessary, but the better alternative – actually a complementary measure – would have been broad privatization that was not much considered by the IMF despite the fact that in late 2010 the value of government assets clearly exceed that of Greek government debt. Greek governments were very reluctant to privatize at all and this points to institutional problems with the euro area’s institutional architecture. The EU is facing serious challenges (including the risk that the UK could leave the EU after a referendum on EU membership in 2016)

The economic collapse in Greece has all but destroyed the political system and the economic costs of this are enormous for the EU in general and Germany in particular. The Dublin framework for refugees and asylum seekers thus is not implemented and a lack of political will in Germany to forgive Greece some of its debt is responsible for an unsustainble situation for Greece and the EU.

With the critical accentuation of the German refugee crisis in 2015, it has been revealed that Germany is rather politically isolated in the EU. The euro crisis to some extent has reinforced this unpleasant position of Germany. Instead of accepting that the Greek debt could be reduced by €100 billion in a conditional deal (with about 30% taken by Germany which would be 1% of annual GDP) which would impose on Greece the task of returning to the implementation of the Dublin regime, which requires that refugees have to submit a request for asylum in the first EU country that they enter (and finger prints have to be taken), the German government is behaving stubbornly and rather seems to be willing to impose very high costs in the context of uncontrolled refugee immigration on Germany over many years. The economic and social cost of uncontrolled immigration into the EU and Germany, respectively, could easily exceed €50 billion for Germany alone within a few years and this would be well above the share of Germany for a Greek debt reduction. Even with a large number of incoming refugees there is no reason to rush to contradictory conclusions – although a more intensive debate on policy aspects is necessary. Working or living together with people from other cultures is a great experience: millions of workers, employees and entrepreneurs in Germany and other EU countries can testify to this. Powerful countries such as the US, Canada, Australia as well as Germany owe much to centuries of successful immigration.

If several million Muslim immigrants should come to Germany in the future, the values emphasized by the society will shift: the support for the Constitution as it is now will be much weakened. The German democracy and the people of Germany have a fundamental right to control who is coming to Germany and to consider what would be the consequences of mass immigration from countries with a very different culture – where people do not emphasize western values but other values. This statement does not mean to overlook that millions of Muslim people have well integrated into European countries and certainly within Muslim communities there are different views about values: Discussing at an individual level is important and looking at the individual is quite important.

It would be very strange if European countries would not be willing to help refugees on the one hand, but on the other hand it would be equally strange for European countries not to defend the current basic constitutional consensus which prevails within them. Refugees coming to Europe should be expected to return to their home countries within a few years, say within seven years or so (assuming that peace can be restored in the respective countries).

As law experts have emphasized for decades in the western world: The constitution is defended by nobody except the population and the values it emphasizes. Of course, there have been immigrants and refugees from all cultures and countries of the world who have adapted to US culture and its political values over the past 200 years or so, but the US clearly expects immigrants and refugees to integrate into the US society. Germany and other EU countries should follow the US example here. Respecting the constitution and the law are two necessary elements for a peaceful society. It is quite obvious that Germany’s reduction in the number of policemen and of other groups of civil servants in past years was inadequate: facing the refugee crisis, the course of policy in this regard should change quickly. It should also not be overlooked that the EU is facing the risk of terrorist attacks. Humanitarian aid is needed from the refugees’ perspective, but there are many ways in which, and countries from which, such support could be delivered. One should also not overlook the critical role of the internet and satellite TV which often makes the integration of immigrants rather difficult – one can live in Germany but never watch any German TV show or receive any German news information since digital technology allows a virtual cultural foreign identity to persist for many decades. The implication is that Germany and other EU countries should spend more on integration measures and should also finance more research on integration. More Arab language programs in the EU or in Germany, France, the UK etc. could also be a way to create a broader dialogue.

With three state elections coming in March 2016 – and federal elections in 2017 – the pressure on politicians of the ruling parties in Germany is enormous, not least in the wake of the incidents which occurred in Cologne during the 2015/2016 New Year’s Eve festivities (similar incidents were reported from Stuttgart and Hamburg). Right in front of the famous Cologne Cathedral about 1,000 men had gathered and many are said to have molested dozens of womens and stolen valuables from more than 500 people, mostly women. The police presence was poorly organized that evening in Cologne and they obviously tried to hide the fact that it was mainly young men from Maghreb countries who are suspected of having been the attackers and robbers. As reported by the Neue Züricher Zeiting on January 16 (p.1) – from twenty-one suspects indentified, nine were asylum seekers while a further nine were illegal immigrants from Maghreb countries.

There has been a huge public outrage about this incident which suggests that many young men from Arab countries do not have much respect for women; that equality between men and women is by and large not accepted in parts of the Muslim world makes the problems even more complex; in addition traditional sexual repression in many Maghreb countries of Northern Africa are part of the cultural background of many young men who immigrate into the EU. From this perspective, it is not convincing to argue that the incidents in Cologne stand for a general problem of sexism in Germany (although sexism, of course, is also a problem in the German stratae of the population in Germany) – there seems to be a broader problem with regards to the cultural background of some of the refugees, certainly only a minority but with more than one million refugees in Germany in 2015 this aspect should not be ignored.

It is rather unclear why thousands of young men from Tunisia and Morocco –some with long criminal records in Germany – have not been sent home to these countries; except for the fact that these countries refuse to take back their own citizens. Here there are considerable diplomatic challenges. Illegal immigration is, of course, a different challenge than refugees, but the fact that there are many illegal immigrants and refugees from Arab countries brings considerable confusion in the public. In the perception of the general public, the government in Germany is weak and there is an increasing fear that law and order are not implemented and this in turn undermines the acceptance of refugees and the refugee policy of the Merkel government, respectively. The reaction at upcoming elections will be a massive increase of right-wing parties’ voter shares (mainly the party AfD whose leading members have expressed racist attitudes in public – the party was initially founded as an anti-EU political party; one also should not overlook that violence against asylum homes has been encouraged by AfD politician).

Lack of legal immigration opportunities contribute to part of the problems in Germany, however, the most important challenge in many Northern African countries is poor economic policy – and the military conflicts among varioius Muslim groups – and thus the lack of prospects for job and prosperity. A modified neoclassical growth model suggests how to raise the level of the growth path and the trend growth rate which depends mainly on human capital formation and innovation dynamics. That Islamic radicalism is not a natural ingredient for more innovation, higher growth and better jobs might not be apparent to many; but the history of Western civilization shows that liberal economic and political approaches are needed for a process of economic taking-off. Incidentally, China’s economic catching-up process over four decades 1978-2016 has clearly shown key elements of successful economic development as well.

It is the task of the German government to organize a political deal resulting in these illegal immigrants being sent back to their home countries. The fact that many young people in Maghreb countries have poor economic prospects is no reason to accept illegal immigration from these countries, rather adequate economic policy reforms should be encouraged.

At the same time, it is clear that the broad aggressive missionary activities supported by Saudi Arabia have targeted Germany and many other EU countries for years – the textbooks of the Saudi Arabian-sponsored school in Bonn were sharply critizied by the German weekly DER SPIEGEL many years ago, but the then Foreign Minister Joschka Fischer refused to critize these intolerant and aggressive textbooks. Poorly judged political correctness has lead to many strange developments in Germany over the last number of decades. There is no reason not to respect people of the Muslim, Jewish, Christian etc. faiths, or indeed those with no religious affiliation at all, human rights are relevant for all people; and respect before the law should also be relevant for everybody.

In this respect, in some Arab countries Islamic preachers are often viewed to stand above the law and the judicial system – this is claimed as being the case in Algeria by Kamel Daoud who is an Algerian writer. In an interview in November 2015 with the French newspaper Le Monde, Daoud has argued that Islamist radicals are above the law. The courts have no courage to make any verdict against violations of laws by Islamic radicals. An erosion of the rule of law means legal uncertainty and new economic risk, weaker economic performance plus higher unemployment – and more illegal immigration to the EU. So this is all a serious problem not only for Algeria, but for the EU as well. The growing role of the internet is a difficult challenge since Arab immigrants in Germany and other EU countries are exposed to the digital radicalim of radical Muslim preachers: often with a religious ideology that implies that rights of women are much weaker than that of men. As regards long term integration there is a key task that immigrants learn the language of the respective host country – otherwise there are no prospects for immigrants to learn about the rules and laws in the EU; and in Germany about the special historical responsibility in the context of World War II.

The emphasis of chancellor Merkel that Germany has a special responsibility with respect to Israel and Jewish citizens living in Germany. With the mass immigration of Arab refugees this political mantra is getting doubtful. Many refugees might at present have no interest in the Arab-Israeli conflict, but there is not much doubt that in medium term the Jewish-Arab Middle East conflict is likely to spill-over to Germany/Europe more than before. This could imply that German and the EU will have to push Israel and key Arab countries more towards a peaceful settlement of the long-standing conflict – a very difficult challenge and not much discussed so far in the debate about refugees; the conflicts of reality will have to be considered in the refugee policy in Germany/the EU.

Islamic radicalism – and a lack of tolerance in some Arab countries and in Iran – prospers for several reasons: One reason is the popular confusion of religion and scientific truth; and the failure to translate Karl Popper’s famous book Logic of Scientific Discovery of 1934 which clearly explains the difference between the concept of empirically founded scientific truth (with empirical evidence corroborating certain hypotheses that are then accepted as temporary scientific truth) and religious beliefs. One should, however, not overlook that certain Arab countries have modern approaches to science, society and economic policy and certainly the Arab culture has a long history of scientific progress and certain periods in time and countries have represented examples of considerable tolerance as well. The Austrian and German governments would be wise to support an Arab translation of the famous Logic of Scientific Discovery by Popper. With low oil and gas prices the political situation in Algeria is likely to deteriorate and the unstable situation in Libya – caused by Western military intervention – further destabilized Algeria. If Algeria should fall into the hands of Islamic radicals, the stability of Morocco and Tunisia – the starting point of the Arab Spring – would be in serious danger.


Self-inflicted Political Radicalization through European Elections

France is a country in which mistakes in domestic economic policy and immigration problems have for many years contributed to a dramatic rise of the populist right-wing Front National under the leadership of Marine Le Pen. Her party did win the relative majority in France at the European elections in 2014. Moreover, a right-wing populist party in the UK – also a country with many immigration problems (and a lack of differentiated debates in the public, since it is clear that the UK not only has an immigration burden, but has actually massively benefitted in economic terms from immigration) – has also won the European elections in 2014. The German right-wing, anti-euro, populist party Alternative für Deutschland (AfD) obtained a considerable share of votes in 2014 at the European elections: It is a very young party that may be expected to win double digit voter shares in the regional elections in Germany in 2016. The incidents in Cologne and the generally falling confidence of voters in the Merkel government in 2015/2016 is likely to raise the AfD voting shares further in 2016/2017. For Germany, the combination of an unsolved mass refugee problem – related to the war in Syria, but also the instability in Iraq and Afghanistan from which many asylum seekers are coming – and the rise of the right-wing AfD is quite dangerous and could indeed destabilize the EU and contribute to its disintegration.

The rise of right-wing populist parties is, however, largely a self-inflicted problem of governments of EU countries which have created massive pitfalls with respect to European elections and the architecture of the EU. While in the US the federal level stands for government consumption of roughly 9% of GDP (and another 11% for social security), the supranational EU level in Brussel represents a ridiculously low 1% – having been reduced from 1.2% at the end of the banking crisis to just 1% currently.

Many politicians in Germany justify this on the basis of the principle of subsidiarity. However, it is a totally inadequate view to say that whatever the national policy layer can do as well as the supranational policy layer should remain at the national level. This is mainly an excuse not to shift the main parts of military expenditure, infrastructure expenditure and part of the unemployment insurance payments to Brussels and the current situation has the drastic consequence that voters indicate, for example in interviews with the German research group Forschungsgruppe Wahlen, that they have no idea what exactly the EU stands for in terms of competences and expenditures – by contrast, voters in Germany have a clear idea about the relevant topics at local, regional or national elections. At supranational elections, voters facing the low level of government activity in Brussels have no idea about key topics and thus declare that they are quite willing to cast an emotional vote and this even in the context of supporting small radical parties.

This same stupid political logic applies in the UK, France and in many other countries, so that European elections – with ever falling voter turnout (with an exception in 2014 that might not be of long term significance) have become a breeding ground for radical parties. The parties get money from Brussels for every vote received in the ballot box at the European Elections and so the small radical parties can use success at elections for the European Parliament to invest the money received from the EU on the next election campaign at the national level. Rarely has the modern world witnessed such political ineptitude as has continued now for so many years and could ultimately contribute to destroying the European Union from within: Through more anti-EU parties and political programs at the national level in EU member countries and through an outright anti-EU majority in a future EU Parliament. Moreover, the European Commission, with its dual role as an institution which plays both an executive role plus the role of a quasi-parliament with the right to initiate laws for the European Union, is a violation of the basic principles of a division of power in a modern democracy (the only country that finds this strange so far is the US whose government will have problems in the proposed Transatlantic Trade and Investment Partnership TTIP to engage in regulatory cooperation with the EU and the European Commision with its double nature as just described).

Given the inherent contradictions of Merkel’s immigration policy and the massive contradictions of European elections, it is only a question of time until Germany’s political and economic stability will seriously be endangered – unless major reforms are implemented in a timely fashion. One cannot rule out that within less than a decade autocratic and populist right-wing parties will dominate continental Europe and that the EU will disintegrate.

Even the fact that a leader of such a right-wing party as the Front National in France talks absolute nonsense in key political fields will obviously not undermine the political support for the Front National: In an interview with DER SPIEGEL in 2014 she called for France to once again become the leader of the Bloc-free Movement (a group of non-aligned countries which emphasized during the Cold War that neither a close cooperation with the US nor with the Soviet Union was their strategic interest); the fact of the matter is that not only was France not the leader of this bloc, it was never even a member country of the Bloc-free Movement – this is a typical example of the way right-wing populist party leaders seem to confuse reality and fiction in a very dangerous manner.


Complex Situation after the End of the Cold War

While the West won the Cold War and has enjoyed a feeling a certain level of triumph in many capitals, the sad truth is that the collapse of the East-West conflict has brought about a massive revival of religious radicalism and some elements of a clash of civilizations. The Islamist revival partly dates back to 1979 when the Ayatollah Khomeni replaced the Shah in Iran and organized an aggressive Shiite political and religious movement. In that very year the Great Mosque of Mecca in Saudi Arabia was attacked by hundreds of Islamic radicals and the militiary intervention of Saudi Arabia was at first a complete disaster. It was only with the help of French military experts that the government’s troops were able to reconquer the Great Mosque. Since then, Saudi Arabia has partly cooperated with the West and it has also made some progress in political modernization (for example in 2015 for the first time women were allow to vote and to be elected – at local elections), however, the country is also an aggressive counterpart of Iran.

Iraq is the victim of the ill-conceived US-UK military intevention and war against the dictator Saddam Hussein; with the collapse of stability in Iraq and Syria – the latter in the context of the Arab Spring and various interventions from abroad in support of various sides – the so-called Islamic State has spread and it is not just an informal network but indeed has quasi-governmental structures and vast amounts of money and funding, respectively.

Western countries and Arab allies should be able to fight IS successfully, provided that Russia is integrated in an adequate strategy. This in turn is quite important in reducing the number of refugees coming to the EU and Germany, respectively. However, one should not underestimate that the recent massive refugee wave is the first in the internet age and sustained migratory pressure could still be large even after a successful fight against IS. Germany and the EU will have to face the challenge of stabilizing Greece – an economic and political disaster which undermines the ability of the EU to control its external borders. Taking a closer look at the European Union it seems that the EU is rather weak, poor in delivering promises – hence not very credible – and lacking any consistent leadership from Germany and France. The EU has promised that 120,000 refugees would be reallocated within the EU as part of burden sharing, after more than six months less than 200 refugees have been reallocated to other EU countries.

In the period from 2008-2015, the EU economic growth gap vis-à-vis the US is 10%; for every citizen in the euro area this amounts to €3,000. The EU could be much stronger and it might indeed be a powerful “country” in the future. If EU member countries do not adopt reforms however, the EU will disintegrated – and become a very bad role model for many regional integration groups around the globe.

Germany is a key player in this critical situation but it is as yet quite unclear whether leadership from Berlin will be strong in the near future. Problems could be solved, but realism and the developing of a consistent concept is urgently required. The Grand Coalition is largely a failure, there is a lack of a strong opposition and the fact that no liberal party is represented in the German Parliament is also a very serious problem (the former liberal coalition partner in many former German governments, the FDP, lost most of its credibility in the context of the banking crisis for which they bear part responsibility by naively calling for a sweeping liberalization of the financial markets and allowing big banks to effectively live outside the rules of a true market economy – whether the new leaders of the liberal party in Germany have any understanding of what went wrong is unclear).

The Federal Republic of Germany, along with France, has for decades been a stable economic and political anchor in Europe. The latter has lost this role due to its serious economic problems; and Germany could itself, within a few years, face very serious instability in political and economic terms. One can only wonder why the US has left key EU countries make so many political mistakes in past years. The NATO that has served Western countries well – and prevented war between Greece and Turkey in the 1970s – will face a massive weakening if both Germany and France should fall into a sitution of instability and stagnation. The civil war in Syria is a dangerous situation that has not only contributed to expansion of the so-called Islamic State, it also has become the field of military intervention of several Nato countries plus Russia and this is conflict-prone in itself. Ending the war in Syria should be high on the agenda of the EU, but the ability of EU countries and the EU, respectively, to achieve a diplomatic solution for this very complex conflict obviously is limited.

Should the wave of refugees to the EU continue at the same level in 2016/2017 both Greece and Germany could be massively destabilized, and disintegration of the EU might start. The new government in Poland with its strange policy – removing the EU flag from the press room was a first initiative of the government – is setting the tone of a new nationalist policy and the conservate British government is not much better. The price of disintegration would be high: not only losing benefits from free trade and capital flows and labor migration, but military expenditures relative to GDP could return from 2% of GDP (or even less as in the case of Germany) to the level of 4% in big countries – the historical norm before World War I. The contradictions in the EU are big, and all this disunion becomes visible in a situation in which China and Asia, respectively, has been increasing its power over decades. The traditional ambition of the EU to shape the rules of globalization in the interest of the Community and its member countries looks increasingly illusory in a situation in which the EU cannot even shape Europe. All this happens in a situation in which immigration pressure from Africa is rising continuously. There the population of 1 billion in 2010 is expected to rise to 2.5 billion in 2050 – this could be the next field for which the EU has no concept. In the internet age information on migration routes and international income differentials are spreading at lightening speed. Slow policymakers so far are not up to the new challenges.

The refugee crisis of 2015 has been a wakeup call for many reasons: There is all the more need to develop a new concept in Germany and in the EU and to adopt diplomatic initiatives – which include Russia – to end the war in Syria quickly and to start reconcilation and rebuilding the country. Refugees in Germany and the EU should get continued support from European citizens, at the same time Germany and the EU are facing major political challenges for urgent reforms.


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