Europe's Stark Choice on Immigration

You'd never guess it from the rants of America's talk-radio Jeremiahs, but U.S. immigration policy isn't really a disaster. In fact, Europe has recently begun studying it enviously—or was studying it anyway. Then the recession struck. Now it's open season on foreigners across much of the continent. Italy's interior minister, a member of the xenophobic Northern League, has sent armed carabinieri to clear out camps of jobless migrants in Naples and other parts of the south. In Britain, Tory leader David Cameron recently promised that if his party wins upcoming elections he'll slash immigration by 75 percent—and that's on top of the visa quotas imposed last year by the current Labour government. Ahead of key regional elections in France, President Nicolas Sarkozy has launched a noisy debate about "French identity." Switzerland has outlawed minarets, and France, not to be outdone, is considering a ban on burqas.

As bad as the surge of intolerance is for the foreigners who are its targets, it's a disaster for Europe. The continent is heading for serious long-term economic trouble unless it learns to manage immigration intelligently. Deaths are expected to outnumber births this year in 10 of the European Union's 27 member states. As of 2015 the EU as a whole will experience negative natural population growth, demographers say, and the gap will grow to 1 million excess deaths a year by 2035. By 2050 the EU will have 52 million fewer people of working age, the European Commission warns. Businesses across Europe are already facing severe shortages of engineers, technicians, craftspeople, and other skilled professionals, with 4 million unfilled jobs across the continent. "Every one of our clients in Europe has positions they can't fill because of continentwide shortages," says Barbara Beck, European head of the employment service Manpower. And the problem will only worsen as the job market recovers.

The trouble isn't a shortage of immigrants. The European Union has attracted 26 million migrants in the past two decades—a full 30 percent more than America's 20 million over the same span. But most European countries tried to protect homegrown labor by shutting out foreign workers. The efforts mostly backfired, encouraging a massive influx of illegal aliens, who tend to accept rock-bottom wages and benefits because they have no legal recourse. At the same time, Europe's generous social benefits encouraged a massive surge of "welfare tourism." As a result, Europe has ended up with 85 percent of all unskilled migrants to the developed countries but only 5 percent of the highly skilled. Compare that with the United States, which has honed its innovative edge by attracting 55 percent of the world's educated migrants. And because immigration happens largely via networks, with established immigrants paving the way for their peers, such trends tend to endure. "It therefore takes decades to turn immigration policy around," says Thomas Liebig, a migration specialist at the Organization for Economic Cooperation and Development (OECD).

For decades most European countries have consigned immigrants to the margins: in Germany, some professions were restricted to German citizens well into the 1990s, while eligibility for citizenship itself was based on bloodlines until a landmark reform in 2001. Millions of refugees were legally barred from working, which forced them into squalid welfare dependency. Muslims especially remain unintegrated and ghettoized in many European countries, including France, Britain, and the Netherlands. Now many European countries have tabled important policy reforms such as the drafting of a continentwide asylum policy and the formulation of smarter immigration criteria based on education and skills. Others, like Spain and the Czech Re-public, are actually paying migrants to go away. The danger is that Europe's worsening hostility toward foreigners will halt or even reverse efforts to assimilate those who are already there, spawning a fast--growing, permanent underclass. According to the OECD, immigrants have been losing jobs at almost twice the rate of native-born citizens during the current crisis, and in many countries the socioeconomic gap between immigrants and natives has begun to grow again.

All this comes at a critical moment for the global economy. Economists predict that global GDP will double in the next 20 years, and as many as 1 billion new, skilled jobs will be created. To avoid being left behind, Europe will need to upgrade its workforce to compete in knowledge-intensive sectors. It can't afford to neglect the education of its immigrant populations or to give up competing for its share of the global talent pool. If it makes the wrong choice, Europe will become smaller, poorer, and angrier. Instead of attracting newcomers, the continent will watch its own best and brightest decamp for better opportunities in the growing economies of China, India, and Brazil. (The economic booms in Poland and Romania have already been slowed by a severe dearth of skilled workers.)

As Europe fiddles, some countries aren't standing still. At the onset of the global crisis, the Canadian government briefly considered slashing immigration quotas to protect its labor market. It then decided to keep its borders open and even to speed up acceptance procedures for some highly skilled arrivals. While migrants have lost some ground recently, they're still twice as likely as native Canadians to hold doctorates or master's degrees. Even within Europe, there are a few countries doing it right. Sweden wasn't satisfied with merely implementing a new, skills-based immigration policy; it actually upgraded its integration efforts, including language and vocational training for existing immigrants, right in the middle of the crisis. But much more can be done to attract skilled migrants—raising the number of visas available in professions where shortages already exist, for example, or cutting the red tape that can make it all but impossible to get non--European diplomas recognized. Nations and companies could also do a much better job of recruiting more of the -estimated 1.4 million foreign students currently enrolled at European universities.

Europeans' concerns aren't totally misplaced. The rapid pace of immigration over the past decade has strained Britain's infrastructure and social institutions. Germans and the French are particularly worried about the underclass immigrants who have isolated themselves from society at large. But now the continent is facing a pivotal decision. Closing its borders will only divert more migration into illegal and uncontrollable channels. Europe is no defendable, homogenous island; it's surrounded by the wildly growing populations of Africa and the Middle East. Europe's choice is not whether to stop migration, but whether to channel it to its own advantage.