Former German Chancellor Gerhard Schröder, in an interview, suggested his country grant asylum and working permits to the roughly 1.1 million refugees it has already admitted and compel its E.U. neighbors to take the rest.
At a Handelsblatt conference on Asia on Monday in Düsseldorf, Mr. Schröder proposed a “liberating coup” in dealing with the refugee crisis -- to accept, process and train refugees for jobs already in the country.
But the Social Democrat, who ruled Germany in a coalition until being unseated by Angela Merkel's Christian Democrats in 2005, said Germany should impose daily entrance quotas to slow the refugee flow.
Whoever is already here before a certain cut-off date may stay and work. Gerhard Schröder, Former German Chancellor
“Whoever is already here before a certain cut-off date may stay – and work,” Mr. Schröder said. “No matter if their legal case is yet to be resolved.” All other refugees should be distributed across Europe.
“We can deal with the million people who have already arrived. But what we cannot deal with is the speed with which new numbers are dropped onto the local councils,” Mr. Schröder said.
Putting back up internal border controls in the 26-nation European Schengen area would severely harm the economy, Mr. Schröder said.
“We need to preserve Schengen, and the liberty it provides,” he said. Businesses have a vital interest in the free exchange of goods.
“Whoever wants to dispense with Schengen will have to explain how to replace it,” he said. “We do not need a fast solution, but a proper plan.”
With his comments, Mr. Schröder entered the debate raging between the supporters of Chancellor Angela Merkel and her critics, many of whom are within her own conservative political wing.
While the former chancellor said he embraced Ms. Merkel's “big heart,” he accused his successor of sending the “wrong signals” by allowing an emergency to become a new norm.
The party leaders of Ms. Merkel's coalition government cannot afford to ignore the warnings, Mr. Schröder said, and simply proceeding under the current policy is not an option.
Germany's leading political groups are at odds over how to address the refugee crisis.
It is not guaranteed that Ms. Merkel, Sigmar Gabriel, the head of the Social Democrats and Ms. Merkel's would-be political challenger in 2017, and Horst Seehofer, the head of Ms. Merkel's Bavarian political wing, will agree on a solution at their meeting on Thursday.
Mr. Seehofer has called on Ms. Merkel to cap the flow of refugees. Mr. Gabriel has made statements both supporting more refugees and calling for controls. Ms. Merkel so far has refused to set a cap on refugees, but has tacitly supported moves by other countries to close off their route to Germany through the Balkans.
The future of the 30-year-old Schengen agreement remains in doubt.
Sources close to the German government fear the inability to hang onto free travel and trade should the Continent's leaders not reach a European solution to the refugee crisis.
The Netherlands has suggested free travel be restricted to a smaller group of northern European countries in Schengen.
In the past days, E.U. countries like Austria have proposed that Greece, an E.U. and Schengen member, be excluded from the free-travel bloc. Some are also suggesting that Italy and Austria be excluded also.
Daimler Chief Executive Dieter Zetsche is also concerned.
“The car sector is extremely interconnected and relies on open borders within the Schengen zone,'' he said. "Any centrifugal force aiming at destroying a strong and united Europe will harm our industry and its competitiveness.”
A smaller Schengen zone is not something Arndt Kirchhoff, who is chief executive of German auto parts maker Kirchhoff, wants to see.
"It would raise production costs for all relying on trans-border trade and lead to a big disadvantage in international competitiveness,'' Mr. Kirchhoff said. "For the trans-border labor market, it would be catastrophic."
Bruegel, a research centre in Brussels, estimates the costs to GDP if internal border controls are imposed at the double-digit billions of euros.
“Particularly the starting phase would create a lot of issues,” said Guntram Wolff, Bruegel's director.
Depending on how tightly freight traffic was controlled, there would be long waiting times at the borders.
The continent's 1.7 million commuters in cross-border jobs would also face problems.
Elzbieta Bienkowska, a Pole who is the European commissioner for the internal market, has called on political leaders to use “the highest sensitivity possible” in addressing the refugee debate.
"If Schengen fails, the internal market will suffer,” she told Handelsblatt. "Consumers will have less choice and will pay higher prices. Logistics will suffer, too, and the industy will lose competiveness. It will impact on investments and in the end it will threaten jobs.”
"Our wealth depends on a united Europe,” said Volker Bouffier, the state premier of Hesse, where Frankfurt is located.
Nevertheless, Mr. Bouffier said Germany's refugee flow will have to shrink. He said it is crucial that Ms. Merkel's coalition pass a series of asylum reforms now before the legislature.
But German political parties are divided over how to deal with the refugee crisis too.
Last Tuesday, Mr. Seehofer, a vocal critic of the refugee influx and the state premier of Bavaria, threatened to sue Ms. Merkel in German court. His remarks sparked speculation that Mr. Seehofer's Christian Social Union, Ms. Merkel's Bavarian sister party, could leave her coalition.
Reiner Haseloff, the state premier of Sachsen-Anhalt, said Germany will have to act if it does not get help from its European neighbors.
"If there is no common European solution to deal with the refugee crisis, we will have to protect and control our borders efficiently,'' Mr. Haseloff said. "If that does not work within the existing Schengen zone, we have to concentrate on what is feasible."
Mr. Schröder, the former chancellor, said daily quotas for newcomers may be the only practical solution.
“We need to say how many people we can accept realistically,'' Mr. Schröder said. "In my view there is no way around a limit.”
Such a limit is nothing new, he said, noting the United States has been imposing a similar limit on Mexican and other immigrants for a long time.
“We need a liberating coup to end the current situation,'' Mr. Schröder said. "We are forcing a million people into a process designed for asylum seekers. But refugees from war are not necessarily asylum seekers and should be processed in a system of quotas."
"If we do that, we can define how many we can take in,” he added.
Daniel Delhaes is an editor at Handelsblatt in Berlin. Thomas Sigmund is Handelsblatt's Berlin bureau chief. Oliver Stock is a deputy editor in chief of Handelsblatt. To reach the authors: [email protected], [email protected] and [email protected]