January 20th, 2016

Cameron’s ‘blackmail’ offers a way out of migrant welfare bind

by Enrico Colombatto Immigration is one of the many pressing issues […]

Immigration is one of the many pressing issues that European policymakers failed to resolve in 2015. Not only were they unable to arrive at a common view; they could not even agree to a consistent road map. Prime Minister David Cameron’s demands to limit welfare benefits and the threat of Brexit may be giving Brussels an unexpected chance to put things right.

Under normal circumstances, flexible labor markets would ensure that immigrants do not remain unemployed for long. Adjustment would be eased by efforts to enhance their education and technical skills, as well as to reduce the language barriers that prevent the newly arrived from feeling at home in their new environment.

Regrettably, the authorities in the European Union think otherwise. They ignore that highly regulated labor markets transform an opportunity – the acquisition of more human capital by the EU economies – into a problem. The obstacles that prevent foreigners from getting a job increase the chances that they end up on the dole, in the underground economy, or sometimes even engaging in crime. Regulations seem designed to discourage newcomers from upgrading their skills and encourage them to take advantage of the welfare state.

Europe’s burden

Not surprisingly, political parties throughout the EU are trying to exploit the immigration issue to their own advantage. Although their ideologies vary, most parties share the common belief that immigrants constitute a burden for their host countries. They also agree that Europe’s ability to shoulder this burden is limited, especially in periods of stagnation. In particular, it is argued that since local taxpayers fund government spending, the benefits should go to the locals and foreigners should be excluded.

British Prime Minister David Cameron took this view to its logical conclusion in November, when he demanded that all immigrants, regardless of whether they are EU or non-EU citizens, be given only limited access to the British welfare system until they have worked in the country for four years.

Not surprisingly, this project raised eyebrows in Brussels, since by treaty no member country is allowed to discriminate among EU citizens. This raises the question of Mr. Cameron’s motives and purpose for making the proposal, along with its implications for the cohesion of Europe.

Cameron’s ploy

Until a few weeks ago, it was believed that the United Kingdom’s referendum on retaining its EU membership (the so-called Brexit vote) would occur sometime in 2017. However, the British prime minister has stepped up the pressure since November, suggesting the referendum could be moved up and that he would be inclined to anticipate a negative verdict at the polls if a deal is not reached. Before the EU’s fruitless December summit in Brussels, Mr. Cameron is reported to have warned that unless he receives a quick, satisfactory answer from the other EU members, he would be willing to join the ‘no’ campaign – thus increasing the probability that the UK would actually leave the EU.

The prime minister’s preferred scenario heading into February’s extraordinary EU summit in Brussels is easily described. Provided the EU accepts most of his demands, Mr. Cameron is counting on a resounding ‘yes’ vote in the referendum – essentially, a victory lap after his diplomatic triumph in Brussels. For the prime minister, this outcome has the further advantage of neutralizing the threat that Scotland would seek to keep its EU membership by holding another referendum on independence, which is probably what would happen if the UK decided to go ahead with Brexit.

Most observers are skeptical that the EU will give way to the British, who clearly oppose Brussels’ efforts to give substance to the notion of EU citizenship and – more generally – to legitimize its preference for centralized policymaking. If the EU member countries agree to revise the treaties to please the British, the basic principle of a single labor market, shared regulations and common trade and agricultural policies would also be undermined.

Legal straitjacket

Yet, one cannot entirely rule out compromise. The EU is still burdened by its own legitimacy crisis, for which poor leadership and lack of common vision are largely to blame. Brussels needs to show that it can offer constructive opportunities for cooperation, rather than fostering yet more friction and dissent between member countries. It also needs strong national leaders as credible partners.

Although Mr. Cameron’s proposals have been put forward in a clumsy way – some commentators have used the term “blackmail” – they offer a chance to loosen the legal straitjacket of the EU treaties and rethink the bloc’s priorities. After all, it would not be the first time that treaties have been circumvented. The difficulty here is that the UK is asking for a structural opt-out – not a temporary derogation – on non-discrimination, one of the EU’s core principles. Still, there are possible workarounds.

For example, the EU might introduce a distinction between basic needs and secondary needs for citizens. In this context, EU member states might guarantee all individuals, regardless of nationality, sufficient support to meet the basic requirements of existence, while preserving their autonomy on deciding whether to fulfill secondary needs. Introducing this principle requires that any distinction between EU and non-EU citizens be erased. Solidarity on basic needs cannot be rooted in race, nationality or religion. While this distinction is unlikely to vanish anytime soon, the seeds have been sown.

Serious gamble

The alternative to the compromise scenario looks like a gamble. The EU might rebuff Cameron’s requests with regard to the welfare state regime, but seek to defuse tensions and defeat Brexit by accepting his view that non-eurozone members need to be consulted on monetary policy. This would presumably involve some kind of official cooperation between the Bank of England and the European Central Bank. However, one must make the somewhat dubious assumption that the Tory leadership will be happy with this minor success, and – more importantly – that British public opinion will appreciate it.

A third possibility is that the British requests will be flatly denied. Instead, Brussels will simply bet that pro-EU sentiment prevails in the referendum while discounting the possibility that the UK (or part of it) will actually leave. This is the scenario that most observers currently predict; however, the next few weeks might present a more nuanced picture.

German Chancellor Angela Merkel has already declared that she is prepared to consider the British viewpoint seriously. One can perhaps imagine that she will take advantage of this opportunity to develop new, comprehensive proposals on immigration together with the UK and a few other EU members. Under pressure from critics of her migrant policies at home, Ms. Merkel needs to take the initiative – even if it runs counter to positions held by France and the authorities in Brussels.

The price David Cameron is asking for an explicit and positive commitment to fight against Brexit does indeed sound like blackmail. This ultimatum could turn out to be a serious gamble, both for the Tory government in London and for Brussels. Yet it should not be forgotten that the history of the EU abounds with such instances of brinksmanship, twisted rules and neglected treaties. In key moments, the national leaders have usually prevailed over the bureaucrats in Brussels. A decision that defines – or fails to define – the principle of EU citizenship and the rights it bestows might well be one of these key moments, perhaps as early as the February summit.

Closer to acceptance

While Prime Minister Cameron’s initiative is unlikely to trigger a major revision of the European welfare systems, his proposals will not be totally ignored. Quite possibly its immediate consequences will be to serve as political window dressing for the benefit of British voters, rather than to provide any substance.

Yet reimagining a welfare state where access is selective, rather than universal, might also allay the widespread fear that immigrants are flocking to Europe in order to enjoy unlimited free lunches at the expense of the local taxpayers. Mr. Cameron’s vision of a more selective welfare state, rather than expressing xenophobia, could actually bring public opinion closer to the idea of immigration as an opportunity rather than a scourge, and to acceptance that labor market regulations should be relaxed, at least for newcomers.

If that happens, the prime minister’s blunt attempt to claim special treatment for Britain could be a blessing for Europe, benefiting millions of people across the continent and beyond.

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