09.09.

2015

ThedeadlydisunityoftheEuropeansFT.com

September6,20155:54pm

ThedeadlydisunityoftheEuropeans
WolfgangMnchau

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Aquotasystemistoocrudeandpoliticallyasunsustainableasfiscal
transfersamongcountries

Reuters

MigrantshopingtoreachGermanyorAustriaboardabusinBudapest

uropesmultiplecrisesshareacommontheme.Whetherwearetalkingaboutbanks,sovereign
debtor,asnowisthecase,refugees,theEUfindsithardtoact.Whatwehaveisaclassic
collectiveactionproblem,ofthekinddescribedbyMancurOlson,thepoliticaleconomist,inthe
1960s.Peoplehaveacommoninterestinactingbutfailtodosobecausevestedinterestsgetinthe
way.Eventheharrowingpicturesofthedeadyoungboywillnotresolvethecollectiveaction
problem.Allitwilldoistoproducevisiblehyperactivity.

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Thethreecrisesshareanothercommontheme:eachoneofthemisvirtuallyintractableifyoulook
atitfromamicroperspective,fromthevantagepointofaGreekbankorBudapestEasttrain
station.ButifyoulookatimmigrationfromanEUlevelperspective,thepictureismuchmore
nuanced.
TheEUhas500minhabitants.Settingasiderefugees,netimmigration
thedifferencebetweenthosecomingintoandthoseleavingtheEUwas539,000in2013,about
0.1percentofthetotalpopulation.Netimmigrationwashigherin2010,whenitstoodat750,000.
TheUNrefugeeagency(UNHCR)putsthenumberofrefugeesandmigrantswhocrossedthe
Mediterraneanat300,000betweenJanuaryandAugust,comparedwith219,000forthewholeof
2014.Ifyouextrapolatethisyearsnumbertothewholeof2015,yougettoaround450,000,an
extra230,000peoplecomparedwithlastyear.
Thesenumbersdonotcapturethewholestory:manyimmigrants,fromSyriainparticular,useland
routes.Netimmigrationthisyearmaythuswellendupbeingthehighestinrecentyears,butstill
tinycomparedwiththeEUstotalpopulation.Netimmigrationincludingrefugeesisclearlyrising.
Still,thisisnotanimmigrationcrisis.Itisacollectiveactioncrisis.
Itssolutionwouldbestraightforwardinthepresenceofacentralauthorityempoweredtotake
decisions.ButthisisnothowtheEUworks.Itworksthroughcoordinationandharmonisation
throughfiscalrules,bankingregulationandneighbourhoodpolicies.Butnoneofthemprevented
thecrisis,andnoneofthemhelpssolveit.Theproblemwasneveralackofrulesorpolicies.Itwas
thesimplefactthatcertainthingsinlifecannotjustbecoordinated.
NorarememberstatesbigenoughtoactontheirownnotevenGermany.AngelaMerkelis,for
once,ontherightsideoftheargument.ButGermanydoesnothavethecapacitytoabsorballthe
EUimmigrants.ViktorOrban,Hungaryspopulistprimeminister,producedagoodrenditionofthe
mindsetthatgivesrisetocollectiveactionproblems.HesaidlastweekthiswasnotaEuropean
crisis,butaGermancrisis,sincealltherefugeeswantedtogotoGermany.Germany,Iwouldadd,
actedinasimilarlycavalierfashionduringtheeurozonecrises.
Thecollectiveactionproblemisnobodysfaultinparticular.Itishardwiredintothesystem.The
EUsjobisnottopreventfinancialcrises,ortosavechildrenfromdrowningintheMediterranean
Sea.Itsjobistorunmarketintegrationprogrammes,ornegotiatecomplicatedtradeagreements.
Whenthereisacrisisoutsideitsnarrowreservation,itsinstinctistoforgeapoliticalcompromise.
Thisishowweendedupwiththerescueumbrellafortheeurozone,andanineffectivebank
resolutionregime.Theproposedquotasystemforimmigrantsisdrawnupinthesamespirit.
AngelUbidefromthePetersonInstitutioninWashingtonattributesthefailureoftheeurozones
bankinguniontoaprimacyofcoordinationovermutualisation.Ithinkthisgetstothecoreofthe
problem.Insteadofmutualising,orsharing,risks,EUmemberstatesonlyshareproceduresand
followcommonrules.Buttherisksremainwithinmemberstates.Therearemanyareaswherethis
approachispragmaticandsensible.Asuddenspikeinimmigrationisnotoneofthem.Aquota
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systemisfartoocrude,andpoliticallyasunsustainableasfiscaltransfersbetweencountries.Such
policiesbreedresentment,andultimatelyfail.Inaquotasystemyoudonotkickcansdownthe
road,butpeople.
Therealalternative,inthelongrun,isnotbetweencoordinationandmutualisation,butbetween
separationandmutualisation.ThosewhosupportfurtherEuropeanintegrationwillbeinaposition
tomakeapowerfulargumentthatonlytheEUisinapositiontosolvethecrises.Thedebatewillnot
beaboutatransferofpowerfromthecapitalstoBrussels.Itwillbeaboutwhetherweempowerthe
EUwithtasksthatnobodyelsecanhandleandwhetherwegiveitthenecessaryfinancialresources.
Ifearthisisnotgoingtohappenforalongtimefortworeasons.Thelessimportantoneisthat
thelikesofMrOrbanwillbeamongthosetotakethedecision.ThedeeperreasonisthatEuropeans
arenotyetdesperateenoughtoaccepttheLogicofCollectiveAction,thetitleofOlsons1965book.
munchau@eurointelligence.com
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