Schengen suspension - latest stage in crisis of European Union

The Schengen agreement, regarded alongside monetary union as one of the twin pillars of the European Union, is on the brink of collapse. Its looming suspension marks the latest stage in the crisis of the European Union.

One million refugees fled to Europe in 2015, ninety percent of which were from Syria, Iraq or Afghanistan. It is the largest movement of displaced people since the Second World War. In response, Hungary has built a wall on its southern border, Denmark is seizing the assets of migrants on arrival, Sweden has plans to deport 80,000 asylum seekers and seven European Union states have re-imposed border controls in recent months.

All this highlights the contradiction between capitalism’s need for wider markets and the existence of the nation state. The process of globalization is unravelling and European integration, once considered by many as irreversible, appears now in retreat.

Europe unravelling

The small village of Schengen in Luxembourg sits on the banks of the river Moselle, bordering France and Germany. It is here that these three countries, along with Belgium and Holland, agreed to abolish internal borders in 1985 and established a common visa policy. It came into force ten years later.

Today Schengen encompasses a population of more than four hundred million. More than 1.25 billion journeys are made annually across its internal borders. Twenty-two EU countries, plus non-EU Norway, Switzerland, Iceland and Liechtenstein, compose its membership. EU rules state that Bulgaria, Romania, Cyprus and Croatia are legally obliged to become "Schengen states" as part of their integration.

However, following eight hours of talks between ministers in Amsterdam on January 25th, Johanna Mikl-Leitner, the Austrian interior minister, emerged to state that “Schengen is on the brink of collapse.”

Schengen rules allow member-states to "exceptionally" reinstate controls on their borders "if there is a serious threat to public policy or internal security", but typically for no more than thirty days. But Article 26 of the Schengen code gives the European Commission the option to recommend sweeping border controls for as long as two years.

Germany introduced controls at its border with Austria last September. Following the Paris attacks in November, France imposed a state of emergency and border controls. On January 20th Macedonia, outside of the EU and Schengen, closed its border with Greece.

Donald Tusk, President of the European Council, has said that Europe has two months to get the migration crisis under control – otherwise Schengen "would collapse". Hungarian Prime Minister Viktor Orban has called for the creation of a fence along Greece’s borders with Macedonia and Bulgaria to curb the influx of refugees. Almost all countries along the so-called “Western Balkan route” – Sweden, Denmark, Germany, Austria and Slovenia – have activated provisions that allow them to temporarily re-impose border checks, making Schengen's suspension a de facto reality. No doubt, with the interests of “democracy” at the forefront of their minds, the European Commission proposed in December to widen the privilege it affords non-EU citizens’ - scrutinizing their personal details against police databases - to all EU citizens.

Greece the scapegoat

Greece is once again being made a scapegoat by the European ruling class. Greece, in turn, accuses Turkey of culpability. The Swedish home affairs minister, Anders Ygeman, said of Greece: “If a country doesn’t live up to its obligations, we will have to restrict its connections to the Schengen area.” Yet Greece has no land border with the rest of the Schengen area.

It does, however, have islands that are within easy reach from the Turkish coast from where thousands of refugees have been trying to get into Greece. And Greece borders with Bulgaria, which is expected to join Schengen, and in turn borders with Romania, also expected to join Schengen, which then connects with Hungary.

For the moment any refugees landing in Greece do not have direct access to other Schengen countries, and very few refugees are likely to fly from Athens to Berlin, Copenhagen or Stockholm. Therefore amendments to Schengen against Greece will have no immediate effect on the movement of refugees. Rather, it is a symbolic gesture of vindictiveness by the EU. It is in the same vein as the Danish politicians' seizure of refugees' assets exceeding €10,000.

The "draft Schengen Evaluation Report on Greece", published on January 27th by the European Commission, is an audit of Greece's compliance with Schengen rules. In a display of faith, the audit was published following surprise visits to the Greek-Turkish land border and the islands of Chios and Samos in November by EU investigators.

According to the report, Athens " is seriously neglecting its obligations and there are serious deficiencies in the carrying out of external border controls that must be overcome and dealt with by the Greek authorities.

"If we want to maintain our internal area of free movement, we must better manage our external borders. This means that we will only save Schengen by applying Schengen."

So said Dimitris Avramopoulos of New Democracy, currently serving as Migration and Home Affairs Commissioner for the EU. This Greek Quisling nevertheless accurately conveys Schengen's true purpose. It does not represent the principle of "free movement" in general, but is rather a mechanism to control the movement of labour.

The consensus developing now among some European leaders is that Greece should be suspended from the Schengen system and transformed into a "buffer zone" to shield the rest of Europe from the refugee crisis. European Commission President, Jean-Claude Juncker, has welcomed a suggestion made by Slovenia to reinforce the Greek-Macedonian border to stem the flow of migrants.

In a fitting illustration of the contradictions Europe finds itself in, these plans would see Europe reinforcing a non-EU border in order to forcibly retain people within an EU member-state, against the wishes of that state. This risks reviving tensions between Macedonia and Greece and in reality would push Greece towards a de facto suspension from Schengen.

Many walls going up

Just two years ago German Chancellor Angela Merkel used the 25th anniversary of the fall of the Berlin Wall to laud German re-unification. The capitalists re-tell the tale of the Wall as the triumph of freedom over oppression; of democracy over dictatorship; of capitalism over communism. However, no sooner had the Chancellor brought down the curtains on the celebrations, than new walls were being erected.

After promising to open Germany's doors to the Syrian refugees, Time magazine's "Person of the year" and "Chancellor of the free world" is coming under pressure. Forty percent of Germans now believe Merkel should resign over the refugee crisis. In November, Wolfgang Schäuble compared the chancellor to a clumsy skier who triggers an avalanche on a steep slope.

In January forty-four right-wing members of the Reichstag signed a letter demanding effective border controls. Julia Klöckner, a leading CDU figure, has called for the setting up of border registration camps. The leader of the CDU's Bavarian sister-party and partner in government, Horst Seehofer, chairman of the CSU and Minister-President of Bavaria, has also come out against the Chancellor. The right-wing populist Alternative für Deutschland has now reached double-figures in opinion polls.

Merkel is travelling to Turkey again in an attempt to revive negotiations aimed at convincing Erdogan to stop refugees crossing into Europe. How dramatic the situation is can be seen by the tens of thousands of more Syrian refugees massing on the Turkish border in the last few days. In November the EU came up with a €3bn incentive for Ankara, as well as the promise of political concessions such as a visa-free travel agreement. But Turkey, which has spent $8bn on housing, education and health care, will require additional motivation.

Decline and fall

In Europe capitalism formed, then outgrew, the nation-state. It then went on to colonize the world in the quest for cheap raw materials and new markets. In spite of that, the world market was incapable of absorbing the combined productive capacity of the major powers. The result was two world wars fought to decide who would dominate in Europe and globally. In the end those wars saw the European powers unseated from their dominant global position.

It was out of the ashes of the Second World War that the European Coal and Steel community arose, the embryo of what was to become the European Economic Community (EEC) and later the EU. It was born out of the need for the European bourgeoisie to overcome the fetters of the nation-state and its limited national market.

The European countries were compelled to combine together, or be by-passed by the rapid development of world trade and the growth of economic giants such as the USA and Japan. In this respect the European Union is a joint imperialist venture. It contributed to world trade by establishing a gigantic free trade area able to accommodate its banks and monopolies. It exported capital whilst at the same time protecting its native industries and farming from cheap imports.

The growth in world trade following 1945 stimulated investment and world GDP growth. The establishment of a European free trade area contributed to that. Today the crisis of capitalism can be seen clearly in the fact that the process of integration is going into reverse on a global scale. In the first half of 2015 world trade suffered its sharpest fall since the collapse following the financial crisis of 2008. Imports and exports declined month-on-month in China in 2015. In December, the US imposed a 256% tariff on Chinese steel imports. Overproduction plagues Europe, as the $1.1trn cash piles at non-financial European companies testify. From a capitalist point of view, why invest in more production, when you cannot sell the goods already produced?

"World trade growth actually declined for most of last year. On 23 December the US imposed punitive sanctions on Chinese steel imports. Hence as renminbi devaluation accelerates, and a new more deadly phase of the global currency war unfolds, we are set to slide into another global recession. And can investors really be sure that policymakers won’t repeat the mistakes of the 1930s, and avoid an outright deflationary bust accompanied by a trade war?" (Albert Edwards, head of global strategy at Société Générale)

Introducing internal borders on the 1.7 million European workers who use Schengen every day would cost €3bn a year in lost business, according to Jean-Claude Juncker. German business leaders have warned that re-introducing borders will cost the country’s economy up to €10bn a year. The French government’s economic planning agency, France Stratégie, estimated in a recent report that it would cost the EU €110bn, and make its economy 0.8 percent smaller within a decade. It also said that France would suffer losses between €1bn and €2bn annually in the short term if Europe returns to controlled borders. Tourism would shrink by between €500m and €1 billion a year, while the negative impact on trade would amount to between €60m and €120m annually. Such a development would exacerbate the downward trajectory of the world economy.

The European Union is a combination of ex-colonial powers who suffer from an unappeased yearning to return to their youth. Having lost their empires, they also declined as industrial nations relative to rising powers such as the US and Japan, and in order to survive in the world market they were forced to huddle together. And within this process, although at the height of the post-war boom all member-states benefited to one degree or another from the Union, a differentiation took place with Germany in particular rising to the disadvantage of the others, increasing the internal contradictions rather than reducing them.

The working class's natural aspiration to move freely, seemingly championed by Schengen, is now colliding with the inherent contradictions of capitalism, which can no longer allow freely moving labour-power. As the EU goes further into decline, the internal social situation is worsening with growing levels of unemployment, especially high among the youth. In these conditions pressures have built up within many of the EU countries to curb the influx of workers from other countries, whipped by reactionary right-wing parties.

Imperialism and Citizenship - Parallels with Roman Republic

There are some parallels here with the end of the Roman Republic. Rome also had its developing contradictions between the mode of production based on the slavery and the development of the productive forces. Slavery was no longer as productive as it had been and the conditions were maturing for its downfall and replacement with another, more productive system. This crisis included the question of who had a right to citizenship.

The slave mode of production gave an impulse to Roman expansion, putting it in a state of almost permanent wars of expansion in order to quench its thirst for slaves. The use of slave labour on a vast scale eventually dispossessed many of the small peasant farmers. Throughout Italy the slave owners and patricians greedily swallowed up the common lands and the small peasantry. Ruined, the peasants flocked to Rome to swell the ranks of the lumpen-proletariat, a parasitic class maintained by the state.

The lumpen mob became a decisive factor in Roman politics. Local ward leaders, often former soldiers, were bought or bound to noble patrician families and senators. They mobilized the vote for their masters, organized riots and carried out political assassinations. Like many downtrodden layers in history, the Roman citizens were set against other layers, such as the slaves, all the better to keep them in their place. They jealously guarded their citizenship status, which entitled them to the vote and to state hand-outs of bread. They had a contempt for labour, associating it with the slaves, which they aspired to own, rather than become.

As more and more non-Roman Italians were ruined by the huge growth of the slave latifundia, so tensions grew up between the Roman citizens and the foreigners who poured into Rome. Politicians based themselves on these tensions, championing the side of the Roman or foreign mob for political gain.

Roman capitalism was confined to the margins of society. Capitalist enterprises could rarely compete with cheap slave labour. Where the labour of a slave would not do, such as in skilled crafts, foreigners were employed as workers. However, it was the dream of every foreign worker to acquire Roman citizenship, at which point they would graduate from the workshop to join the lumpen citizens in the baths, circuses and gambling dens.

Overproduction of labour power

There are clear parallels between Ancient Rome and today's society, although with obvious differences, not least the different dynamic of slave society, and the differing economic and social position of the working class. Yet a common trait is that a section of the ruling class always rests on narrow nationalist demagoguery, especially in times of crisis and decline. Under capitalism this narrow national outlook tends to be the preserve of the small and medium sized bourgeois, especially those whose market outlets are limited to the home front. They chafe at EU restrictions and foreign competition. That this is now increasingly becoming an approach that is gripping sections of the mainstream bourgeois is proof of the decline of the European ruling class.

"The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls" , said Marx. In the recent period the rise of China has seen American and European walls raised against Chinese goods. Now they raise walls against the refugees.

Why would the big bourgeois oppose the import of cheap labour? Surely, in the words of the head of the IMF, Christine Lagarde, “...the current surge in refugees is a challenge with an upside potential. With appropriate policies, this rich source of human capital can be harnessed with benefits for everyone”?

They have always closed their hearts to the refugees. But the depth of the capitalist crisis means that now even their wallets do not flutter. The bourgeois have brought too many workers into existence. There is an overproduction of labour-power. Two hundred million are unemployed globally, according to the ILO. Official figures show unemployment to be eighteen million in the Eurozone area, although that figure is likely to be an underestimate. They are completely unable to "harness this rich source of human capital", in the cold language of Madame Lagarde. Under the present conditions of crisis what  immigration means for the ruling class are increased costs in the social wage - the welfare bill - adding further to the state debt. This outweighs any benefit accrued by lowering the nominal cost of labour through competition.

In truth, all laws presented as being to curb the number of immigrants are not in reality to reduce the influx of very cheap labour. On the contrary, cheap labour is welcome to the capitalists. But for political purposes, bourgeois politicians want to be seen to be doing something to curb the number of migrants coming in. This is first and foremost due to the lack of clear explanation of what is really at stake here on the part of the labour and trade union  leaders. With growing unemployment, it is not difficult for right-wing demagogues and the gutter press to whip up the idea that “there are no jobs because the immigrants are taking them.” This propaganda is being used by parties such as UKIP in Britain, the National Front in France or the Northern League in Italy, and it is forcing governments everywhere to the right.

How to make cheap labour even cheaper

In practice, however, all the anti-immigration legislation achieves is to place immigrant workers in an even more precarious condition. It makes more of them “illegal”, which means they cannot join a trade union, cannot go on strike for higher wages, cannot claim benefits, and therefore have to accept any level of wages in any condition simply to survive. The bourgeois know what they are doing here, killing two birds with one stone: strengthen right-wing parties with racist propaganda, dividing the working class, while at the same time rendering immigrant labour even cheaper than it already was.

The whole phenomenon, however, is contributing to further destabilising the situation socially and politically, with growing internal tensions within all the member states. At the same time, it is increasing the tensions between member states, as they all try to unload the burden of meeting this crisis onto each other's’ shoulders.

Hans-Helmut Kotz, a visiting professor of economics at Harvard University, writing for the World Economic Forum, raises  the possibility that “... not only Germany, but also Sweden, the Netherlands, Austria, and others, are running up against what is deemed to be politically feasible. This implies that no EU-wide response can be expected, and thus that Schengen is probably doomed…” and “...As uninspiring as this might sound, we must now consider the prospect of the end of the European Monetary Union and the EU as we have known it.”

This explains the growing number of politicians in the various national parliaments pushing for protectionist policies. It is partly a demagogic answer to win electoral support, and partially a direct reflection of at least a section of the capitalists who are losing out in the open market across Europe.

In moving in this direction, they pretend to have the interests of working people at heart.  But these people are no champions of the working class. Rather, they base themselves on the lack of any socialist-internationalist programme put forward by the leadership of the working class, of its parties and trade unions. Without such an alternative, a section of the working class, usually the poorest, and especially the lumpen, declassed layers, can be drawn in - at least for a period - by nationalist demagogues.

Protectionism no solution

Protectionism, however, is no solution to the problems of capitalism. It is a short-sighted policy promoted by a more backward section of the ruling class. In the long-run competitive protectionist measures lead to a spiralling downwards of the world market, as in the Great Depression of the 1930s. This means mass unemployment and poverty everywhere for workers of all countries.

The anti-refugees stance of European national governments is part of the racist propaganda, designed to pit worker against worker. They can get away with it for a period and among certain layers because, as we have already stated, the labour movement leaders do not pose an alternative. In fact, they often try to show that they too are keen on anti-immigrant legislation. All this does is to give greater credence to the propaganda of the right wing.

The answer to cheap labour is not to fight the poor immigrants, but to organise them, bring them into the trade unions and unite workers across national, ethnic, colour and religious divides in a struggle against capitalists of all nations. That was one of the tasks the First International dealt with effectively. It is what is required today. If immigrant workers are fully legal with the same rights of the indigenous population, they can fight for better wages and conditions together with all workers. Thus from a perceived threat they would become an ally in the common class struggle.

The fact is that whichever way the capitalists turn, they have no solution to their present predicament. A truly open market would be to the advantage of those capitalists who can produce most productively, i.e. have the cheapest goods, but would mean the collapse of the others. The flipside to this is national protectionism which would dry up the world market for all. In both cases, it would merely exacerbate the already serious crisis. Abolishing Schengen and raising the borders is simply part of the overall process of each national capitalist class trying to hide behind its own national borders. It is a step down the road of the historical decline of the European Union.

This, however, also prepares the other side of this equation. With growing social and economic problems comes class struggle, and we will see this develop on an all-European level in the coming period. One European country after another will enter the arena of mass struggles, protests, strikes and general strikes, together with the polarisation of society to the left and the right as the classes look for a way out. We will see left governments coming to power followed by periods of reaction and new waves of struggles. In this process, over the coming period the working people of Europe will begin to draw very radical conclusions.