Europe’s Migrant Crisis: Balancing the Risks with Long-term Gains

migrants

Europe knew for years that the current influx of migrants was imminent, but was clearly unprepared for the unfolding humanitarian, logistical and economic consequences. The United Nations High Commission for Refugees estimates that 366,402 refugees and migrants crossed the Mediterranean to Europe this year, of which 2,800 died or disappeared during the journey. Germany, Austria, the U.K. and France have agreed to take in refugees from Syria, Iraq and other conflict-ridden regions, while Australia said it would take in 12,000 migrants.

With no end of the influx in sight, calls are for a globally shared responsibility to accept and resettle the migrants. To be sure, other challenges abound. One is the staggering scale of the humanitarian aspect of the crisis — with migrants dying in transit or living in unsanitary camps — which demands immediate attention. Resistance from local populations to migrants is another. Fears are rising over the Islamic State and terrorism expanding undercover. Border countries receiving the migrants are unprepared to sift genuine refugees from opportunistic jobseekers. But there is also the hope that immigrants could bring long-term positives for economies, such as entrepreneurship and job creation, according to experts at Wharton and Penn.

“Once you recognize that these are protracted situations that require resettlement options, you cannot expect the first countries in which the migrants arrive to resettle all of them,” said Sarah Paoletti, professor of law at University of Pennsylvania Law School. She is also director of Penn’s Transnational Law Clinic, the law school’s international human rights and immigration clinic. “It does require long-term solutions and global cooperation beyond just the European region Twitter .”

Economic Gains from Migration

The positive aspect in the migrant crisis could be long-term economic gains for countries resettling refugees in terms of entrepreneurial activity and job creation, according to Wharton marketing professor Robert Meyer, who is also co-director of the school’s Risk Management and Decisions Processes Center. “Countries like Germany are looking at it as a very large short-term pain for hopefully a long-term positive gain. A lot of evidence shows that refugee types of immigration often are long-run positives for economies.”

“Evidence shows that refugee types of immigration often are long-run positives for economies.”–Robert Meyer

Paoletti and Meyer discussed the challenges the migrant crisis poses for receiving countries and how they could address them on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.)

According to Meyer, “a great example” of the positive effects of refugee immigration is the influx from Cuba into the U.S. in the 1960s. “In most populations, education tends to follow a bell-shaped curve whereas with immigrants it takes a U-shaped curve,” he said. Migrant flows bring in two types of people — the highly skilled who could start businesses and those at the lower end who are willing to take on jobs that the existing population does not want, he added. “When you put that melting pot together, in the long run, it is a very good source for a lot of growth.”

Resettlement Challenges

Before countries can begin to reap those gains, they must deal with the immediate challenges of resettling refugees, said Paoletti. “From a legal perspective, it is incredibly challenging … to determine whether they are refugees, what their rights are under international law, and what long term resettlement prospects are for them,” she added. That process calls for individualized assessment for each migrant, which becomes “a daunting task,” she said.

Meyer wondered about the risks of terrorism associated with the migrant crisis. “When you have hundreds of thousands of people coming across … how deep can the initial screening process go?” he asked.

Understanding the mindset of the refugees is important in dealing with the crisis, said Meyer. He noted that the natural human tendency [is] to look at the upside … of a much better life in, say Germany, than they ever possibly could back home.” Some may also plan to return to their home countries after the conflicts cease and those economies stabilize, he added.

“In most populations, education tends to follow a bell-shaped curve whereas with immigrants it takes a U-shaped curve.”–Robert Meyer

Sharing the Load

Most of the migrants are fleeing from Afghanistan, Syria, Iraq and Eritrea, are currently in Turkey, Lebanon, Jordan, Libya and Hungary and hoping to get into Germany, Austria, the U.K., France, Italy, Greece and Sweden, as a chart by CNN.com shows. Calls are for the European Commission to propose distributing 120,000 refugees over the next two years. Already, France and Germany have agreed to take an additional 55,000 refugees over the next two years.

As for the U.S., the current political climate does not lend itself to welcoming migrants, said Meyer, citing Republican presidential frontrunner Donald Trump’s call for “walls” against immigration. However, in Germany, public attitudes toward immigrants have shifted in recent years, he noted. “There is greater willingness among people [in Germany] to accept refugees and see the positives.”

Paoletti hoped for “more action” from the U.S. on the migrant crisis, while acknowledging that it is challenging to deal with immigration issues, especially in the context of ISIS and Syria. “But it’s a real opportunity for the U.S. to take a leadership role in this.” Meyer agreed with Paoletti. He said the recent decline in immigration flows into the U.S. is not an economic positive. “As a country that was born and developed and achieved greatness through immigration, to suddenly turn our backs on that doesn’t bode well for the future.”

Meanwhile, the wealthy Gulf nations of Saudi Arabia, United Arab Emirates, Qatar, Kuwait and Bahrain have refused to accept Syrian refugees. Their mindset must change, according to Paoletti. She noted that those countries routinely accept labor migrants, “which opens the possibility of people getting channeled into labor trafficking or other forms of human trafficking.” Meyer noted that countries like Qatar, which already has non-nationals accounting for 80% of its labor force, feel they have reached the upper limit on this issue.

Resettling migrants is another complex issue. Meyer noted in Germany, refugees have to wait three years before they can join the labor force. “In that three-year limbo period when you have camps and enormous outlay of expenditures to keep these people going, you might find that public appetite turns negative,” he said. Added Paoletti, “The youth and school-age children feel their lives are getting wasted if they don’t have access to education and opportunities.”

Calibrating the Aid Process

A top challenge with the refugee crisis is to plan the transition from immediate humanitarian aid to long-term development aid, said Paoletti. The development tools would include facilitation of integration of refugee communities and their long-term settlement, education, job training and job placement opportunities, she added. “As long as you address this purely as a humanitarian crisis with a short-term vision, you run the risk of exacerbating the costs, challenges and difficulties down the road.”

“It’s a real opportunity for the U.S. to take a leadership role in this [refugee crisis].”–Sarah Paoletti

According to Paoletti, migrants face a “triple trauma paradigm” — the trauma of leaving their country or the trauma that provoked that departure; the trauma in transit; and the trauma of being a refugee in a strange land. With refugee status, migrants have rights and privileges under international law that allows them access to education and other services and benefits, and work authorization. Legal permanent residency and citizenship could take years, especially in the U.S. with its immigration backlog, said Paoletti. “Making sure there are mechanisms in place to do this efficiently and effectively up front is critical.”

Paoletti also called for a review of the U.N. Refugee Convention. “The notion of forced migration is broader than the narrow legal category of a refugee as it currently exists in international law,” she said. Refugees could escape from an environment of fear, compounded by economic or other factors that force them to move, she explained.

Balancing the Risks

According to Meyer, countries receiving migrants also have to decide how open they should get. He noted that the U.K. has warned against the risks of opening the doors too wide. “It is a fine line — you want to be accommodating and support people, but if you make it too easy and too open then it is hard to tell who is a real refugee and who is simply taking advantage of the situation.”

In the countries receiving migrants, Meyer said it is natural to see a pushback from the local population, who fear a threat to their jobs. Economists, however, would highlight the upsides of immigration, he noted. He said that according to data, in more than 40% of the start-ups in Silicon Valley, one of the co-founders is an immigrant. Migrants fleeing Syria with their families to unknown places are “entrepreneurial risk takers almost by definition,” he added. “To have some of that population brought into a country can be good for an economy … [in the] long term.”

Photo credit: “Refugee march Hungary 2015-09-04 02” by photog_at from Österreich – 20150904 174. Licensed under CC BY 2.0 via Wikimedia Commons.

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