By David Dayen, a lapsed blogger. Follow him on Twitter @ddayen
The big thing I’ve learned since I hung up my keyboard as a generalist blogger is to, as much as possible, stay in my lane. I share everyone’s horror at the Paris attacks, and like everyone else have my own thoughts, however unformed, on the best way forward. But I make no pretensions to deep insight on international terrorism and a Middle East that has confounded just about every so-called expert for as long as I’ve been alive. So I’d rather just try to keep up with developments (and you’ll see more of that in the Links).
But there is something, first brought to my attention by Chris Hayes, on which I may be able to comment intelligently. Details are a little murky, but it appears France is seeking some wiggle room on the Schengen agreement:
France is asking its partners in the Schengen border union to agree to systematic controls at frontiers within the group to tighten security following terrorist attacks in Paris.
“Coordinated and systemic controls” are needed within the 26 countries of the group, Interior Minister Bernard Cazeneuve said at a press conference Sunday in Paris. We need to “fully use the available European systems” to tighten security, he added, citing the information system, a governmental database used for security and law enforcement.
We don’t know whether this is temporary or permanent, and what France will ask for. A rumor that the suspension has already occurred was dismissed by an embassy official. But the political pressures all militate toward breaking up Schengen, or at least defining it down. Crispin Blunt, conservative head of the Foreign Affairs committee in the British parliament, says we’re nearing the end of borderless Europe.
To back up, anyone who’s traveled through Europe knows that they can freely cross along a highway from one country into the next, like passing from Pennsylvania into Ohio. This is not just an expression of goodwill among allies but an economic engine. You have areas like Copenhagen, Denmark and Malmo, Sweden where many routinely cross national borders for work. The open borders allow workers to freely move to where jobs are available. It allows goods to move in a relatively frictionless manner over land or sea.
But this openness has been backsliding amid the great migration from Syria and elsewhere. Four countries – Slovenia, Austria, Germany, and Sweden – have imposed temporary border controls of various degrees in violation of Schengen, which has held more or less since 1995. And the attacks, which were reportedly plotted in Belgium, will only accelerate calls to increase security in France, from the likes of Marine Le Pen and Nicolas Sarkozy. With multiple incidents this year and a climate of fear, it’s not hard to see France withdrawing, at which point the raison d’être of the agreement starts to break down.
This is a disaster for perhaps the most critical building block of the European project, something that, regardless of whatever other effects, has reversed a cycle of endless wars for several decades. But what is the near-term economic impact of closing or restricting the borders, to a Eurozone that isn’t exactly a picture of health?
If you look at the direct effects, there’s no question that exports will drop and tourist activity will fall from restrictions on the freedom of movement. More difficulty importing cheap labor might make a difference in some wealthier northern European countries, particularly in those nations with demographic problems. Eventually everything would get over the borders, but with added costs, and for some countries those costs could be significant, or at least unneeded in a time of continued stress (although a little inflation might not necessarily be a bad thing for some). The forces currently pushing forward minimal growth in the Eurozone are expected to fade next year, and such forecasts have typically tended to overstate the growth case.
But play this out a bit more. Could the dissolution of Schengen be a pathway to the breakup of the Eurozone itself? After all, it’s hard to continue to argue for more fiscal integration while assembling border crossings. The accompaniment to such border closures would likely be a rise in right-wing, Euroskeptic nationalism across the continent, and subsequent tensions could spark exits.
This is not the preferred option for how to manage the separation into national independence of monetary policy. Governments fueled by extremism on migrants may not be best positioned for that delicate task. But if you believe the Eurozone is a doomed project, an unnecessary straitjacket tying poorer members to a kind of indentured servitude, then despite the significant price to pay for the disintegration, you would at least look upon it with a more nuanced view and an open mind.
I’m not suggesting it would be worthwhile. Moreover, there’s no definite point A to point B here, either. The troika leadership would go to the barricades to maintain order. But there are definitely powerful forces roiling Europe at this point, and you can envision the best wishes of elites being overtaken by events. The question then becomes how to prepare for that possibility and ensure a post-Eurozone world with some concern for the economic rights of all citizens. For the most part, people have played pundit about Grexit or Brexit, noting the significant barriers to implementation and the consequences of rolling back the clock. But punditry may not be what’s necessary. We might have to start thinking more along the lines of contingency plans.