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23 June 2011, Gateway House

The Schengen spirit of openness

Despite their economic downturns, domestic tensions keep developed countries from embracing the revitalizing potential of foreign workers. Ambassador Neelam Deo argues that India should continue to leverage its history of diversity and capitalize on a world more open to the free flow of goods and services.

Director, Gateway House

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In the arcane world of the World Trade Organization (WTO), the movement of people is referred to as the Movement of Natural Persons. It is an oddly neutral nomenclature for human beings, presumably adopted to differentiate them from other legal entities such as corporations, money, or commodities – the free movement of which is the goal of the WTO.

Pursuing the free movement of people across national borders is just as important a goal, though, because it can help address one of this century’s most important phenomena: demographic change, with its vast economic and social implications. Unfortunately, despite the support by 40 members of the WTO, including India, to support more open borders, the U.S. has marginalized the issue as something to be discussed bilaterally. This represents a significant opportunity missed by both the stagnant West and the developing BRIC nations.

The populations of Western Europe, Japan and Russia are ageing as birthrates fall, while those of developing countries grow rapidly and their populations become more youthful. In an ideal world, of course, people would move from countries with a skill surplus to those experiencing declining populations, high dependency ratios and shortages of skilled and semi-skilled workers. However, if such movement is inhibited by social factors or political policy, the economies of the potential ‘destination’ countries will suffer. Japan is a glaring example of how not to handle demographic change: it remains trapped in near-zero growth because, among other factors, it is closed to legal immigration and does not welcome highly-skilled foreign workers.

Western Europe’s problem is sustaining its high standards of living and robust welfare systems with economic growth struggling to reach 3% a year. Although each of the BRIC countries are at different stages – China’s population is graying and will soon begin to decline in real terms, for instance – India is in a demographic boom and producing tens of thousands of engineers, doctors, software and banking professionals each year who could be employed in the West. Even amid rapid economic growth at home, many educated Indians would appreciate the opportunity to work overseas, but are being held back by barriers to the free movement of people.

Unfortunately, the cure to economic troubles in the US and Western Europe – a controlled inflow of foreign workers – has been conflated with mass immigration and turned into a hot political issue across the region. Electorates that have been hurt by job losses and the erosion of welfare programmes are shifting rightwards on the political spectrum, backing parties with an anti-immigration stance. Moreover, these countries are limiting the number of visas given to highly-qualified professionals who could contribute generously to their tax revenues and inject dynamism into the region’s mature economies.

Developed countries are also failing to deal well with the diversity they have among their populations. David Cameron, the UK Prime Minister, said in March this year that the country had failed to integrate its immigrant population. While this should have been understood as a call for better policies it was immediately turned into an attack on immigrants. Subsequently, Chancellor Merkel made a similar argument for the failure of immigrants to assimilate in Germany. In recent years, France has legislated against the wearing of the veil in public and Switzerland against the building of minarets, both hot immigrant issues that don’t address the problem of an aging society.

Everyone, even BRIC countries, grapple with diversity issues in different ways. After the collapse of the Soviet Union, Russia has become a less diverse country and seen prolonged unrest in some of its enclaves. Rich in resources, Russia’s highly educated population is shrinking, suggesting that it should change its policies to attract more foreign workers to develop those resources, especially in remote areas such as Siberia. It would also benefit from its business community being able to travel more freely in Europe to build necessary ties.

Brazil recognizes the class and economic dimensions of its racial diversity, and the healthy consensus achieved under former President Luiz Inacio Lula da Silva helped its economy grow rapidly. For its size it has a relatively small population which is absorbed in exploiting its own vast land and natural resources. The large Han majority in China make it almost as ethnically homogenous and intolerant of minorities as some European countries.

India, though, is the most diverse country in the world thanks to its range of religions, languages and ethnicities. It has a history of being invaded, with the diverse streams of people flowing in and the locals influencing each other, both adapting to survive. Of course India has had its share of conflict, but it has usually defused those situations without excessive state violence.

Its turbulent history has made Indians both risk-takers and very adaptable to local sensitivities, demonstrated by the astounding success of the Indian Diaspora in the U.S., UK and Europe.  In the US, Indian-origin immigrants have an average household income of more than $70,000 because three-quarters have graduate degrees and half have Masters’ degrees. There are over a million people of Indian origin in Europe, half of whom are in the UK. Despite the fact that the Indians who originally migrated to the UK were unskilled workers, at present they are the least impoverished of any immigrant community. Indian communities also have no history of involvement in ethnic violence in their host countries.

In a back-to-the-future dynamic, globalization is forcing us to be more flexible about borders and nationality. The European Union, notwithstanding the present difficulties of the Euro, is the best example of defining down the power of the nation state. It has shown how ceding some sovereignty and opening borders can resolve historical hostilities. The number of bilateral and regional Free Trade Agreements concluded and under negotiation makes it clear that countries want to be “in” and not “out.”

This Schengen spirit of openness applies equally to India in its neighbourhood. By making a success of the South Asian Association for Regional Cooperation and opening itself to textile and ready-made garment imports, India will gain a bigger market for its own higher-value manufactured goods. Economic integration can also begin to soften the remaining historical resentments of colonization and the brutal partition of the subcontinent.

Neelam Deo is India’s former ambassador to Denmark and Ivory Coast, and served in Washington and New York. She is the director and co-founder of Gateway House: Indian Council on Global Relations.

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