Do you love Europe?

"If you love Europe, you should stop dreaming about further integration and start solving problems." This is how Mark Rutte, Prime Minister of the Netherlands, described the challenge for Europe’s elites.

His words help explain the political situation in the lead up to forthcoming elections. The polls show the party of Geert Wilders, a staunch critic of Muslim immigration to the Old Continent, gaining a growing advantage.

Is the European Union able to solve its problems? Will it do so in time to halt the progress of the eurosceptics in key EU countries? Two problems are now of primary importance: economic stagnation in the euro zone crisis and migration.

Enough austerity!

The first problem should be solved by moving away from austerity towards the redistribution of funds from countries with trade surpluses to those countries that have the greatest structural problems, unemployment and low growth levels.

A policy such as this one is not to the liking of the German taxpayer. Along with the changes on the national political scene, ideas of this type will be increasingly unpopular in Berlin. Another idea raised in discussions among economists is based on steering monetary expansion of the European Central Bank in the direction of fiscal policy, primarily for infrastructure investments in the weakest eurozone economies. Again, these ideas do not have the consent of Berlin.

Although the EU has cohesion policy and the so-called Juncker Fund at its disposal, both instruments do a poor job at stimulating the economic situation in the euro zone. That is why the Western European elite is promoting two alternative ideas to revive the economy. The first involves the deepening of integration in energy policy, which as a result of recent regulatory changes towards decarbonisation is aimed at forcing investment in the economy.

These will be investments financed primarily by businesses and households, with relatively little support from public funds. This means that the poorer the societies are or the weaker the companies’ access to credit is, the greater the cost of this transformation will be.

The costs will also be greater for those countries that have a negative energy balance and therefore a large amount of energy produced from hydrocarbons. However, benefiting from this will be those countries and corporations that have appropriate technologies and will be able to sell them to countries undergoing an energy transformation. So this is a policy that could potentially bring asymmetrical economic growth benefits across the EU. It does not guarantee that the weakest eurozone countries will be able to rebuild their own economy.

Weapon at hand

In recent months, the development of defence policy has been another idea for stimulating the economic situation in Europe. Here, one solution is to create a European Defence Fund, intended to finance research activities in the defence sector and finance arms purchases. This type of assistance will primarily benefit countries with the most developed defence industry. In addition, the direction of these reforms will be strengthened by changes to EU regulations that would limit the freedom of purchases of weapons by member states.

This will primarily hit those countries with weaker national armament sectors while at the same time treating them as an important way to improve the innovation of their own economy. Another problem lies in the fact that the fund will only start working in the next budget, namely after 2021. It will have fairly modest means at its disposal (approx. 0.5 billion euros annually for research and 5 billion euros to buy weapons) and in no way will be aimed at supporting the most vulnerable economies in the monetary union.

In this situation, the euro zone will in the near term remain an organism that is very sensitive to external shocks, as demonstrated by the latest difficulties experienced by Italian banks. There is no end in sight to the conclusion of negotiations aimed at extracting Greece from the brink of financial and economic collapse. The zone may therefore be the cause of economic and political upheaval with potentially serious consequences linked to disintegration.

The other problem plaguing Europe is migration. For a long time, European elites have focused on an irrelevant issue, namely the system of relocating asylum seekers within the EU. To this day, it sparks great excitement and has not been entirely forgotten by European Commission officials as well as German politicians who support this idea. The aforementioned actors are trying to wait out the period of greatest controversy, although from time to time the Commission reiterates the need to follow through the decision to relocate 160,000 refugees.

Can one stem the flow of refugees?

At the last summit of 2016, leaders of EU member states stressed the need to intensify the “Sofia” naval operation, in order for it to support the Libyan coastguard in curbing the flow of migrants to Europe. Assistance was also offered to migrants residing in Libya who were willing to return to their countries of origin. All of these efforts are aimed at tackling the immediate causes of the crisis and not only on the effects that is has on certain EU countries. These measure have been taken fairly late in the game and their effectiveness is still limited. It appears that one should have faced up to the crisis by above all closing the EU’s borders and discouraging migrants from setting out on their journeys.

The EU’s problem is that it does not have a coherent immigration policy. For at least ten years now, between 1.5 million and 2 million immigrants have made their way to Europe each year, mainly from former colonies. The EU has until now undertaken limited and not very successful regulation attempts, for example in the form of the blue card scheme aimed at attracting skilled workers to the EU. Most often, states have mainly applied liberal solutions.

As a result, the problem has become a time bomb. Now the politics of Western Europe are changing, as shown by the tightening of the criteria for granting asylum in Germany and reducing material assistance for asylum seekers. Re-admission efforts are being given greater attention, including to Greece where migrants crossed the EU border.

Poland is limited in the ways it can contribute to resolving the euro zone crisis. It can only prepare in advance for future trouble – by taking care of the stability of the budget and the financial system. It is, however, a participant in the migration crisis and it neighbours a country that is currently changing its approach to immigrants.

The Polish government recognizes that the primary challenge lies in protecting the EU's external borders. It does not want to participate in the relocation plans and instead offers other forms of assistance, for example in the form of material support for refugees in countries outside Europe - and the logistics in strengthening the EU's external borders.

A drawback is that Poland does not have an up-to-date strategy on immigration in response to the crisis. Poland should determine which immigrants are welcome and which ones are not. Among the former are, as it seems, many incoming Ukrainians, although one may need to enforce upper limits for their annual influx. Migration policy should also address the needs of the labour market. Poland should take heed of the problems that befell many countries in Western Europe and that remain a serious challenge for European integration.

TOMASZ GRZEGORZ GROSSE is is a professor at the Institute of European Studies, the article expresses the personal views of the author and not the institution with which he is associated.

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