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Buiter: Migrant Crisis "May Signal The Beginning Of The End" For EU

Earlier this month, in a call that grabbed headlines across the mainstream financial media, Citi chief economist Willem Buiter made “some kind of recession” his team’s base case scenario for the next two years.

The rationale: China mainly, and EM more broadly. The solution: why, “helicopter money” of course. 

Unfortunately for the EU - which Buiter says is laboring under “already excessive public debt and the pro-cyclical nature of the constraints imposed by the Stability and Growth Pact and its myriad offspring” - member countries now face a growing problem that can’t be immediately “fixed” by cranking up the printing presses, namely, an influx of asylum seekers fleeing Syria’s four-year civil war. 

As documented in these pages extensively, Europe’s migrant crisis threatens to undermine the spirit of the Schengen Agreement and the events that unfolded on Hungary’s border with Serbia over the past week presage what may be in store for the region should recalcitrant nations refuse to comply with the quotas Brussels wants to enforce in an effort to settle hundreds of thousands of asylum seekers. 

As Slovakia put it earlier this week, if Germany attempts to use its financial leverage to force other nations to take on migrants, it would “bring the end of the EU.” We’ve also warned that any effort on the part of Berlin to impose its will risks fanning the flames not only of nationalism but of religious intolerance, especially given the likelihood that those opposed to settling the migrants will be predisposed to stirring up fears of ISIS operatives slipping into Europe disguised as refugees.

Willem Buiter apparently agrees with all of the above.

In an interview with RIA Novosti, Buiter expressed concern that the strain imposed by the steady flow of migrants threatens to tear the EU apart at the seams. Here’s more, via Sputnik:

The current refugee crisis is putting the EU’s fundamental principles on the line and may become the beginning of the end of the 28-nation association, Citigroup’s chief economist warned.

 

“The refugee crisis is undermining the EU’s fundamental principle of free cross-border movement within the Union… This is effectively throwing the EU’s very future in question,” Willem Buiter, global chief economist at Citigroup, told RIA Novosti news agency on Wednesday.

 

He said that even though some countries were introducing temporary entry bans in a bid to tackle “a huge humanitarian crisis, they may eventually become permanent not only for the  migrants but for EU residents as well.”

 

“This may signal the beginning of the end, the stakes are extremely high,” he warned.

 

Willem Buiter believes that the current refugee crisis could shift European policy towards “radicalization, xenophobia and nationalism,” which would have an immediate negative effect on their economies.

 

“Western Europe is much better off than the East European countries as it is more experienced in dealing with immigration-related issues which are a real problem for countries like Hungary, Poland, the Czech Republic, Slovakia, Bulgaria and Romania, which  have never had to deal with massive inflows of migrants. This is a big challenge to them,” Buiter said.

We leave you with the following video from the Croatian border with Serbia which has become the choke point for the Balkan route to Germany: