This book examines the current dilemmas of liberal anti-racist policies in European societies, linking two discourses that are normally quite separate in social science: immigration and ethnic relations research on the one hand, and the political economy of the welfare state on the other. Gunnar Myrdal’s questions in An American Dilemma are rephrased with reference to Europe’s current dual crisis — that of the established welfare state facing a declining capacity to maintain equity, and that of the nation state unable to accommodate incremental ethnic diversity. The book compares developments across the European Union with the contemporary US experience of poverty, race, and class, highlighting the major moral-political dilemma emerging across the EU out of the discord between declared ideals of citizenship and actual exclusion from civil, political, and social rights. Drawing on case-study analysis of migration, the changing welfare state, and labour markets in the UK, Germany, Italy, and Sweden, the book charts the immense variety of Europe’s social and political landscape.