The Immigration Crisis

The arrival of asylum seekers will remain problematic for Europe during the quarter, but measures by EU members to enhance land and maritime controls and colder weather will temporarily reduce the influx of migrants into the Continent. During the quarter, Europe will focus its efforts on measures designed to prevent people from entering the Continent, especially by seeking to cooperate with countries in the Middle East and Africa.

However, European efforts to prevent migrants from reaching EU territory will have modest success. The European Union will provide more funds for countries in the Middle East and North Africa. This will only be modestly effective: In countries such as Libya, there is not a central government to negotiate with. The European Union's naval operation in the Mediterranean Sea will start boarding, searching and seizing vessels in international waters. This will increase the chances of violent clashes between EU forces and human traffickers. In addition, money will not be enough to keep migrants in countries like Turkey or Lebanon, where asylum seekers find legal barriers to work.

Under pressure from conservative forces at home, Germany will toughen its position on asylum, trying to become less attractive for asylum seekers. Access to asylum benefits will be made harder while repatriations will be made easier for certain groups (especially migrants from the Western Balkans). Sporadic border controls will remain in place across the Continent aimed at disrupting migration routes.

The Greek Crisis

During the fourth quarter, the Greek government will introduce just enough measures to receive funds from its bailout program, but the entire schedule of reforms and disbursements of money will be delayed. Because of the general elections that were held in September, Athens postponed the approval of many of the reforms included in its bailout package. As a result, the creditors will probably delay their assessment of the bailout and the disbursements of money (both were originally scheduled for mid-October).

The creditors are likely to give Greek politicians some extra time to come up with a government program and a plan for reform. But several governments in Northern Europe, including Germany, the Netherlands and Finland, invested significant political capital in approving the Greek bailout and promised conservative lawmakers at home that they would keep constant pressure on Athens. This means that the lenders will have some patience with Greece, but pressure will return by the end of the year.

The delays in the reviews and disbursement of money will also delay the International Monetary Fund's decision on whether to participate in the program. The Greek government will push for debt relief, but the creditors will not make any concrete moves. Talks on debt relief will start during the quarter but will probably not bear any fruit before the end of the year.

After making substantial debt payments to the European Central Bank in July and August, Greece faces a somewhat calmer calendar of debt maturities for the rest of the year. This means that Athens can probably survive a delay in the disbursement of bailout money. However, Greece is not out of the woods. The longer the implementation of the program is delayed, and the longer the disbursement of money is deferred, the greater the fear of a Grexit and the more political frictions within Germany are bound to escalate.

The Spanish Crisis

In Spain, the political effects of its economic crisis will be fully felt as secessionist sentiments continue to create problems between Madrid and Catalonia and as anti-establishment parties challenge the political establishment in the general elections.

In Catalonia, pro-independence forces will spend the first weeks of the quarter trying to form a government because the Together for Yes party, which won the Sept. 27 election, will need support from the small left-wing CUP party to appoint the next Catalan president.

Friction within the pro-independence parties will delay the secession process somewhat, and the next Catalan government will move cautiously: The Catalan parliament will probably approve a solemn declaration announcing the beginning of the independence process and will also announce plans to draft a constitution. However, political differences within the pro-independence camp will prevent Catalonia from making any drastic moves. The government in Madrid will turn to the Constitutional Court to block whatever measures it believes violate the Spanish Constitution.

At the national level, Spain will get ready for general elections on Dec. 20. After years of crisis, the two largest political parties (the People's Party and the Spanish Socialist Workers' Party) are discredited and will probably not be strong enough to form a government alone. This will lead to acoalition government, potentially including newcomer parties such as Podemos and Ciudadanos. Considering that Spain has little experience with coalition governments, 2016 will be a year of political fragility, as the decision-making process will become considerably more complex.

Date: 2016-04-22; view: 606