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Goodbye Nation State?

As the EU debate this week focussed on the economy, the opinion polls showed a surge amongst voters for leaving the EU. The Bank of England governor, Mark Carney, claimed that being in the EU helped the ‘dynamism and openness’ of the economy. The former Chancellor of the Exchequer, Lord Lawson, who thought Carney had gone beyond his brief by ‘wading in’ to the political debate, disagreed: if membership had been beneficial, then it should have helped all Eurozone members, though they were ‘among the worst performing’.

The migration challenge for the UK is not primarily a national question that can be solved by any degree of resolution and determination. It is a European issue and demands European answers. A great deal of discussion in the UK is unfortunately focused on an argument that if only Britain cut itself off from the rest of the world, and Europe, its problems would go away. Similar cases are made in some other European countries and in the United States: Donald Trump is building an apparently very successful bid to become the Republican candidate for the Presidency on exactly this foundation.

Most European politicians are more realistic, but they are clearly worried. The joint appearance of the French President and the German Chancellor before the European Parliament only had one precedent, in 1989. The explicit linking that both leaders made between 1989 and 2015 underlines the nature of the challenge for contemporary Europe: it is actually a challenge where (unlike in the case of the Euro) no European country has a simple opt out option.

2015 is a bizarre replay of 1989. 1989 was a spring time of the peoples, 2015 is the end – the grey autumn – of the illusions of spring. In August 1989, East German refugees streaming across the Hungarian-Austrian frontier set off an apparently unstoppable momentum that led to peaceful revolution in the German Democratic Republic, the end of the Iron Curtain, the end of the GDR, and the end of the Soviet Union. In the fall of 2015, the unstoppable momentum and the painful martyrdom of Syrian – and other – refugees on Europe’s borders, and especially on the Hungarian-Austrian frontier, is undermining the legitimacy of the EU. Chancellor Merkel rightly speaks of the result as the gravest crisis since German reunification. President Hollande spoke of the danger of a ‘total war’ in Syria and its impact on Europe. There is a chance that the migrations of 2015 might destroy the EU in the way that those of 1989 destroyed the Soviet system.

Critics of the EU, of whom there are many in the UK, should not see the possibility of a major European collapse as a cause for celebration. The political, social and economic consequences would all have an immediate, and devastating effect on the UK. The discussion of the EU in the UK should not be so much a question of economic gains and opportunities – though that argument is important too – but about the ability of British people to shape and stabilize a world that is increasingly turbulent and uncertain. That is because there are global issues and global challenges, which Britain is powerless to deal with on its own, and which can no longer adequately be dealt with by a United States which is clearly weary of playing the role of the lonely sheriff in a turbulent world.

There is a challenge from which the UK, even if it wanted to, cannot flinch. One of the most striking features of modern flows of migration is that they cannot really be controlled. The United States has tried to stop the flow from Mexico and Central America by building fences and increased patrols. The gross flow has been reduced, but – as Doug Massey demonstrates – the net flow is actually the same as it was before the construction of the fence, for the simple reason that migrants no longer wish to return home because it is more difficult to come back. Italy has been wrestling with illegal migration for decades, but cannot control it; as Luca Einaudi shows, the only effective Italian policy to deal with the issue has been a periodic amnesty, in which the presence of illegal immigrants is ‘regularized.’

One of the most powerful political lessons that Margaret Thatcher applied was that states look very foolish when they try to do something that they really cannot achieve: they create expectations that are bound to be disappointed. In the case of the 1970s British debate this was an issue of state involvement in setting wages and incomes policies – that might have been (for some people) a desirable objective, others disagreed on basic grounds of principle, but the clincher was that the incomes policies did not work. The current immigration stance in Europe, but also in the UK, is not working, and not primarily because of the existence of the EU and its labour market provisions.

What are British people worried about? It is not primarily the economic consequences of the immigration that has already occurred, or that will occur. There are undeniable economic gains from the migration that has occurred. The authoritative study on the fiscal costs and benefits by the Office of Budget Responsibility clearly lays out the past and future implications for public sector debt and its sustainability. It is not economics that is at the heart of this debate, but the idea of a potential future threat to identity and culture.

Angela Merkel has of all European politicians been the most honest in addressing this issue. She has been most emphatic that politicians must not make empty or unrealistic promises: in particular, it is practically impossible to stop the flow of people by quotas or limits. What a dramatic contrast to successive British governments, which have produced targets for migration that are broken again and again!

There is also in Merkel’s recent statements a strong sense of the ethical dimension of politics. She notes that her party (the Christian Democratic Union) that has Christian in its title must not confine itself to Sunday homilies but must translate the message of the gospel into policy.

On the one hand, realistic politicians will recognize that there is no humane or responsible way of stopping the movement of people who are fleeing for their lives. Europe has a historic responsibility to help these victims of war and violence. On the other hand, it is also clear that there are practical limits to the capacity to absorb large numbers of migrants in a short time period.

The focus of effort thus needs to be directed to addressing the reasons that impel millions of people to move. Those causes are in part political: the devastating and cruel civil wars in Syria and Iraq. The disunited and uncoordinated approach of European states and the United States to the problems of the Middle East bear some responsibility for the outbreak of the conflicts. But the causes are in part also economic: the incapacity of the Middle East to generate jobs, or to produce the economic growth that is lifting Asia, Latin America, but also now large parts of sub-Saharan Africa.

It is also clear that the dismal existence of displaced people in the refugee camps, and outside the camps, in Syria’s neighbors is exacerbating the problem. Young people have their education interrupted. They are bored. The absence of opportunity and even of interest is likely to make them disillusioned and radical. The risk that they will never be able to integrate into a stable society is growing as the length of the displacement increases.

Recent speeches by Chancellor Merkel and President Hollande indicate that they are beginning to see development policy – targeted towards the Middle East – as a key to stabilizing Europe. Refugee centres in Syria’s neighbours need to be turned into magnets of entrepreneurial dynamism, that will provide a template or model for a new post-conflict Syria. The new activity would also provide an incentive to stop the conflict, by demonstrating that it is possible to earn a good living without having to fight.

But at present, the situation in the immediate neighbours is dismal, and that is encouraging the flight to Europe. Legal labour markets are fully or partially closed due to fear of disruption and refugees taking jobs of local inhabitants. The current discussions with Turkey indicate just how difficult the issue has become.

There is a now unique opportunity to show that things can be done differently in the Middle East. The cost of not grasping it will be high. The reward would be a roadmap for political as well as economic stabilization. Last year’s challenge, the Ukraine-Russia conflict, and this year’s humanitarian catastrophe have increased the European stakes. None of these challenges can be resolved by middle-sized European countries on their own.

1989 was an unanticipated shock that could not have been prepared for; in 2015 we know that there will be plenty more shocks. 1989 delivered for some countries in Central Europe the lesson that the nation-state was a sort of psychic insurance mechanism in an era of turbulence; 2015 indicates the need for a much larger sort of insurance system that needs to exist on a European level. Like any insurance, it requires careful designing, and a system of rules to guard against abuse. Without such a mechanism, however, even the psychic assurance of the nation-state – even if it has the long historical traditions of the United Kingdom – will be impossibly strained.


Professor Harold James

Harold James is the Claude and Lore Kelly Professor in European Studies and a Professor of History and International Affairs at Princeton University, specialising in modern German, economic and financial history. He was was appointed an International Monetary Fund Historian in 2016. His publications include Making a Modern Central Bank:The Bank of England 1979-2003 (2020), The Euro and the Battle of Economic Ideas (with Markus K. Brunnermeier and Jean-Pierre Landau, Princeton University Press, 2016) and Making the European Monetary Union (Harvard University Press, 2012), while his Politeia publications include Crisis Managed: Monetary and Fiscal Frameworks for the Future (2011).

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