The European Migrant Crisis: A Silver-Lining for German Industry and Society?

As migrants flood into Europe from countries like Afghanistan, Iraq, Nigeria, Kosovo, and especially Syria, European leaders and policymakers face a great challenge.  Coming on the heels of the Greek debt crisis, the recent influx of migrants is testing the European Union once again. The responses and policy proposals from EU member states vary greatly, but the majority are focused on securing borders rather than protecting the rights of migrants and refugees.  In the short run, the migrant crisis may be a burden on most of Europe, but in the long run, it could present an economic opportunity.

A Silver-Lining

Europe’s surging migrant population could be a valuable resource for sustained economic growth in those countries that possess the foresight to invest in them now.  Many European economies face demographic challenges as fertility rates fall to 1.3 – below the replacement rate of 2.1 – while the average age increases.  In 2014, 19 of the top 20 countries with percent of population ages 65 and above were European countries.  This dramatic demographic change poses a serious threat to future productivity.  Europe is in need of fresh young workers to counter its feeble birth rate and aging population.

Germanys Response

So far, Germany has led the humanitarian charge, unveiling some of the most generous asylum policies in the EU.  One week ago, Germany’s Chancellor Angela Merkel pledged to spend $6.6 billion to cope with the roughly 800,000 migrants and refugees expected to enter the country this year.  Unfortunately, without similar refugee support from nearby countries—most notably Hungary—Germany was overwhelmed by the flow of asylum seekers and decided to temporarily close its border with Austria.

Refugees arrive at the train station in Saalfeld, Germany (Source: Jens Meyer)
Refugees arrive at the train station in Saalfeld, Germany (Source: Jens Meyer)

In spite of the border closure, the continued acceptance of refugees is economically sensible.  As of 2014, Germany had the world’s third highest percentage of individuals 65 years and older (21%), coupled with the world’s fourth lowest percent of population between the ages of 0 and 14 (13%).  According to the German government’s Federal Institute for Research on Building, Urban Affairs and Spatial Development, if this trend continues, the number of working age people in Germany (about 45 million) will shrink by 8.5 million by 2030 and another 8.7 million by 2050. Put another way, Germany will lose over 37 percent of its working age population in just 35 years.  The largest economy in Europe cannot be sustained without more workers.

Industry as a Catalyst for Integration

As migrants and refugees enter a host country, one of the main issues that they face is integration with and acceptance by the native population.  A successful way to avoid this problem is to provide opportunities for migrants and refugees to quickly contribute to the workforce and the country’s overall welfare.  Private-sector investment is crucial in this process.  Fortunately, several corporations have already started to make an impact on the refugee and migrant populations in Germany.

Ulrich Grillo, Head of the Federation of German Industries (BDI), said last week: “If we can integrate [refugees] quickly into the jobs market, we’ll be helping the refugees, but also helping ourselves.” In addition to speaking about the economic benefits of refugees, BDI has proposed changes to Germany’s labor laws and regulations and even sought assurances that migrants who do find employment will not be deported.

Corporate leaders in the automobile industry, one of the largest sources of employment in the country, have been the most outspoken in their support of migrant and refugee employment programs.  Dieter Zetsche, the CEO of Daimler-Benz and a global leader in corporate philanthropy and human capital investment, said that his company would take steps to recruit new employees from the incoming pool of refugees.  In addition to investing in refugee capital, the famous automobile maker also joined in the relief effort.  A few months ago, Daimler Trucks, in collaboration with the Frankfurt-based aid organization “Wings of Help”, initiated a mobile relief effort in the Turkey-Syria border region. A fleet of eight Actros semitrailer trucks, provided by Daimler-Benz, carried some 120 tons of relief supplies to those in need.

More recently, Matthias Müller, the CEO of Porsche AG, called for industry leaders to “take a clear stand against xenophobia and extremism.” Muller’s statement is especially important in light of the recent attacks on refugee residences. VW’s Porsche luxury-car division will also provide language training and counseling to refugees. The impact of language instruction, in particular, cannot be understated.  The ability to communicate in German is a necessary step towards successful societal and workforce integration.

Europe’s refugee crisis may be viewed as a political problem, but it can be an economic and social opportunity. The actions of corporations like Porsche and Daimler, as well as organizations like BDI, demonstrate that refugees can be invaluable contributors to economic and social development. Moreover, by encouraging private-sector investment in refugees governments can transform the current migrant crisis into an economic and social turning point for both Germany and the European Union.

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April is the Cruelest Month: the Coming Austerity Measures and Elections in Ukraine

Photo Credit: REUTERS/Anatolii Stepanov
Photo Credit: REUTERS/Anatolii Stepanov

The International Monetary Fund has offered Ukraine a two-year bailout package of $18 billion in return for steep economic reforms. The long-term goal of the bailout package is to stabilize a Ukrainian economy that is running up expenses and moving toward a debt default. It is hoped that economic stability in Ukraine will lead to the political stability that can then ease Ukraine’s transition to democracy, and more importantly, away from Russia. By opening up to the IMF deal, Ukraine will signal to nations like the US and Japan that they are committed to restructuring their economy and are open to investment. For example, the United States Congress is working on a bill for $1 billion in aid to Ukraine as well as economic sanctions against Russia. The European Union has put $15 billion on the table. It total, Ukraine is in position to receive around $27 billion in aid.

The downside to these deals is that the enforced austerity measures will likely hurt the average Ukrainian citizen by increasing gas prices by 50% and inflating the currency, the hryvnia, by somewhere between 12% and 14%. Therefore, we may see the cost of living rise while the purchasing power of the hryvnia plummets. Ukraine’s interim Prime Minster Arseniy P. Yatsenyuk explained that there would be a minimum-wage freeze and an increase in taxes for Ukraine’s largest companies. All of this spells out hard times for Ukraine in the coming years. But consider the result if Ukraine were not to accept the austerity measures. As The New York Times reported, Yatsenyuk “told the Parliament on Thursday that the country was ‘on the brink of economic and financial bankruptcy’ and that gross domestic product could drop 10 percent this year unless urgent steps were taken in conjunction with the fund.” With such instability, Ukraine’s interim government would not have the time or the legitimacy to set up the proper institutions before the planned election in May.

Photo Credit: Genya Savilov/AFP/Getty Images
Photo Credit: Genya Savilov/AFP/Getty Images

The top candidates for the election include former Prime Minister Yulia V. Tymoshenko, billionaire businessman Petro Poroshenko, and Parliamentary leader as well as former professional boxer Vitali V. Klitscho. Tymoshenko, who was born in the industrial and Russian-leaning eastern Ukraine, has support from the western and central provinces. However, it is Poroshenko and Klitscho who lead in the polls. No matter the result in May, the next president of Ukraine is set to face a difficult transition in all aspects of society. Somehow, he or she must ease the pains of economic liberalization, consolidate political factions, and reign in nationalist as well as pro-Russian sentiments. International aid may help, but the real battle for Ukrainian independence must be fought from within. It is a fight to defeat the legacy of authoritarianism; a fight that Ukraine desperately needs to win.

Migrants and Porters at the Gate

The word “Morocco” conjures images of deserts, Bedouins, and souks in Marrakech, not the flamenco and Paella of Spain. Yet, there are two enclaves of Spain resting in Morocco, much to the chagrin of the Moroccans. Ceuta and Melilla are Spanish autonomous cities that lie along the Mediterranean Sea, nestled among the hills of Morocco. Both cities have been disputed by Moroccan claims, which are rejected by the Spanish government and local populations. Meanwhile, Ceuta and Melilla have become portals between Europe and Africa, both for people and goods.

A map of Ceuta and Melilla on the Mediterranean

It has been well documented that Africans are willing to endure many hardships to cross into Europe, with news stories popping up constantly about capsizing boats off the coast of Lampadusa, Italy or the coast of Greece. Ceuta and Melilla have also become a popular destination for African migration into Europe. The Spanish authorities contend that there are around 80,000 people waiting to cross into those two Spanish cities. The sheer volume of potential immigrants has led Spain to construct a triple layer of 20 foot high fences with barbed wire around Ceuta and Melilla, manned by border police with rubber bullets. These barriers were constructed at a cost of around 30 million euros, and are referred to by some Europeans as “walls of shame”.

The Valla de Melilla, or triple rows of barbed wire fence standing 20 feet high

These fences have not been a deterrent for desperate migrants looking to cross the border into Europe. There are frequent surges of people trying to cross the fences or swim to shore, hoping that their numbers will overwhelm the border guards. Earlier in February 2014, over 250 Africans  tried to simultaneously climb the fences or swim into the safety of Ceuta, while the Spanish border guards fired rubber bullets in an attempt to deter them. So far, 15 bodies have been found from that altercation. The interpretation of Spanish law is largely to blame for these surges. Would-be immigrants have not officially entered Spain until they have crossed the police line, not the border. The Spanish government is looking at reforming the law to ease the pressure. Currently, the migrants are housed in the Temporary Center for Immigrants and Asylum Seekers (CETI), which is chronically overcrowded. In 2013, the Ceuta CETI housed more than 700 people in a space built for 512. Large numbers of the migrants come from countries with whom Spain does not have treaties, giving the migrants the freedom to stay in Spain once they have their paperwork. On the Moroccan side of the border, the government has been trying to “regularise” undocumented migrants to allow them to work in Morocco, while the number of deportations of migrants to the Algerian border has decreased.

It’s not only people that try to cross the border clandestinely, as many Moroccan women attempt to take advantage of a loophole in Moroccan law through Ceuta and Melilla. Any goods that come into Morocco by foot are exempt from duties, as they are considered personal luggage, not goods for sale. Due to this loophole, many porteadoras, mostly Moroccan women, cross the border between Ceuta and Melilla into Morocco with 60 kg (132 lbs) of goods on their backs for as little as 3 euros a trip. Most of these women make 3 to 4 trips a day carrying more than their body weight in clothes, blankets, and other goods. In 2011, this trade was estimated to be worth 15 billion dirhams, or $1.5 billion, all untaxed. Up to 90 million euros is also paid in bribes every year, mostly to Moroccan border guards, according to Moroccan weekly Al Ayam. While these may seem like difficult and hellish conditions, these jobs support 45,000 people directly and 400,000 indirectly, highlighting the importance of cross-border trade and migration. Still, there is a danger, with porters dying every so often, trampled under the crowds of people loaded with kilograms of goods.

The porteadoras, or mule women, carrying goods across the border into Morocco

While these enclaves may seem small and unimportant, Ceuta and Melilla mean so much more to people who depend on them for their livelihood or their freedom into a new life. As much as they cause headaches for Spain, Morocco, and the European Union, there is no easy answer to resolve the issue. These European oases will continue shining like beacons, attracting the weary and desperate from the African continent.

Teach a Man to Fish, or Track an Illegal Fisherman

Africa is a continent of vast natural resources, and the West African coastline is no exception. Large portions of the West African population rely on the coast for their livelihoods. In the region, 1.6 billion tons of fish, estimated at a value of $3 billion, is caught off the coast of West Africa. This figure directly or indirectly employs over 3 million people, and represents up to 10% of GDP in countries, such as Guinea-Bissau and Sierra Leone. It is also estimated that up to two-thirds of the animal protein consumed in coastal West African states is fish, highlighting its importance as an economic and nutritional resource for West Africans. Unfortunately, Africa is also a continent used to exploitation from people outside of their borders. In West Africa, this has manifested itself in the form of massive trawlers, particularly from Europe and Asia, appearing along its coasts.

Traditional West African pirogue in front of a Spanish trawler

These trawlers are largely involved in what is known as IUU fishing, or Illegal, Unreported, and Unregulated fishing. This is a more comprehensive way of thinking about fishing, as it involves not only the act of fishing, but also the illegal trade of the fish and the demand by consumers for those products. The trawlers usually fish in areas near the shore and then either mix them with legal catches in the Canary Islands or in refrigerated vessels known as “reefers”. The effect of IUU fishing in most of these countries are unsustainable practices of overfishing. It also takes away the livelihoods of some of the poorest people on earth. Illegal trawling has been estimated at $1 billion, while the Ivory Coast reported in 2010 that their catch was down by 30%. The end destination tends to be vessels from China, South Korea, Belize, and the EU, with 25% of European fish coming from West Africa.

Haidar el Ali, the Senegales Fisheries Minister

It has been difficult for the West African governments and their populations to cope with the international trawlers. Corruption is a big issue with the granting of licenses for some of these vessels. Even when caught, most of the captains or crew members offer policemen and fisheries officers a bribe to look the other way, typically in the thousands of dollars according to a source in the Guinean military. These West African states also tend to be weak in the international arena. The largest fine ever levied against one of these trawler operators was $1 million by Liberia in 2013. However, according to the Senegalese Fisheries Minister, Haidar el Ali, these vessels can haul in 3,000 tons of fish with an estimated value of $100,000 in one trawl, highlighting how weak a deterrent some of these fines can be.

Map of West Africa

Even against these long odds, governments and civil society organizations are starting to turn the tide. Greenpeace has been active in mobilizing Senegalese fishermen against the Common Fisheries Practice of the EU, which defines how EU fishing vessels are allowed to operate worldwide, particularly by pushing the cancellation of subsidies for fishing fleets far from EU shores. Furthermore, 29 fishing licenses were cancelled in 2012 in Senegal after 52,000 small-scale fishermen threatened action against both the illegal fishing fleet and the government over alleged impropriety of the granting of licenses. The aforementioned Mr. el Ali has also been more active in his pursuit of justice, seizing vessels and establishing fines for repeat offenders. Internationally, there has been a call by the former UK foreign secretary and current president of the International Rescue Committee, David Milliband, to an international ocean-police force to stop the estimated illegal fishing of $10-24 billion worth of fish worldwide. At a more practical level, the Environmental Justice Foundation has raised money to equip local fishermen in Sierra Leone to track illegal trawlers and identify them so that they can be passed on to EU and African authorities, while pushing South Korea and Panama to act on vessels under their flags. The actions of illegal trawlers have been extremely problematic for the West African population, but continued action and coordination of governments, along with continued success by civil society organizations there may be hope for West Africans along the coast.

Phoenix Rising in the Euromaidan?

360 degrees of a protest at the Euromaidan.

From various recent photos, it could be presumed that Ukraine is consuming itself into a fiery maelstrom. However, the seeds for these protests lie in the recent past, starting with the Orange Revolution. In 2004, Viktor Yanukovich (show in red for clarity) was running against Viktor Yushchenko (shown in orange) for the presidency of Ukraine. Bizarrely, even before polls had started, Yushchenko had been poisoned with dioxin, leaving him pockmarked and scarred. This was very suspect considering that Yanukovich had a history of criminal activity through assault, battery, and robbery. The exit polls gave Yushchenko a margin of victory of 11% while the official results declared Yanukovich the victor by 3%, sparking massive protests in the street. After many months, threats of secession from the pro-Russia East of the country, and a re-run of the polls, Yushchenko won by 8 points and finally took office as the president of Ukraine. The political intrigue did not end with the Orange Revolution. Viktor Yanukovich was elected president in 2010, beating the populist opposition figure Yulia Tymoshenko, one of the leaders of the Orange Revolution, which the international community observed as free and fair. Shortly thereafter, Tymoshenko was arrested and convicted to seven years in prison and fined $190 million for supposedly signing a disadvantageous contract with Russia for natural gas when she was prime minister. There were more protests, though smaller in nature and mostly only Tymoshenko supporters.

The effects of the dioxin poisoning on Viktor Yushchenko.

Within this politically charged atmosphere, there was always a geopolitical divide between pro-Europe factions and pro-Russia factions. With the return of Vladimir Putin to the presidency in Russia, there has been a revival in the idea of a Eurasian Union. Having already lowered tariffs and customs duties, Russia, Kazakhstan, and Belarus aim to create an economic union similar to the European Union. Key to this Eurasian Union is Ukraine, as it is one of the biggest markets from the former Soviet Union. Russia is the destination for a quarter of Ukrainian exports. One of the main worries for Ukrainians is that a Eurasian Union will lead to a political union dominated by the Russia, as Putin has been seeking closer ties with the former states of the Soviet Union.

Through this whole background, Ukraine was slowly inching towards European integration. Under Yulia Tymoshenko, a EU-Ukraine Association Agenda was agreed upon in 2009. Yanukovich continued closer ties with the EU through negotiations to lift visa requirements and establish a free trade agreement with the EU. However, November 2013, the Ukrainian government decided to suspend agreement talks, sparking the largest protests in Kiev since the Orange Revolution. Shortly thereafter, Ukraine and Russia signed a treaty where Russia would buy $15 billion in Ukrainian bonds and supply natural gas at a reduced rate. This is widely considered to not only keep Ukraine in the Russian sphere of influence, but also to keep alive the dreams of the Eurasian Union. Russia has even tried to influence the Ukrainian economy by banning the import of Ukrainian chocolate.

Protesters in Kiev battle with police on the streets.

This has not set well with the Ukrainian people, especially those around Kiev. They have set up protests in Independence Square, now known as the Euromaidan, camping out there since November 2013. Protesters have barricaded themselves in government buildings, including the ministry of justice and Kiev city hall. The Ukrainian government passed a series of harsher restrictions on protests, known by protesters as the “dictatorship laws”, by a show of hands. These laws include such flagrant violations of civil rights and protests, such as trial in absentia and a blanket amnesty against those who commit crimes against the protesters, like the security and law enforcement officers. The law with the most far-reaching consequences is the law requiring non-governmental organizations accepting foreign funding to register as “foreign agents”, modeled on a similar law passed in Russia.

The Ukrainian parliament votes for restrictions on protest with a show of hands.

In Russia, the “foreign agents law” has been used to crack down on civil society organizations. The Golos Foundation, a civil society organization that helps monitor elections, has been fined $10,000, even after they stopped receiving funding from foreign sources. Amnesty International, Transparency international, charities, non-orthodox churches, and even a french language school have been raided by the Russian security forces trying to weed out “foreign agents”. The nature of the law has been to “stigmatize and discredit NGOs engaged in human rights, election monitoring, and other critical work”. In essence, the law has been used to stymie dissent from organizations promoting community-wide discourse. There is the fear that Yanukovich, with his his criminal history and suspected involvement with vote-rigging, could clamp down on civil society and harass organizations in a similar manner as they have in Russia. Luckily, the Ukrainian parliament repealed the anti-protest laws with near unanimity. However, as it’s shown in the past, the Russian bear is always waiting in the wings.

Stateless in the EU: Why the Roma Can’t Get a Break

There are always barriers that get in the way and make the development process take considerably more time and resources. In fact, the majority of the job is trying to figure out how to break through these barriers. Roma development is a particularly difficult conundrum. The term “Roma” refers to a large minority (of an estimated 10 to 12 million) spread primarily in Central and Eastern Europe, though they are more commonly known as “gypsies.” Roma people have been historically discriminated and are typically isolated and/or forcibly moved from their homes when deemed a drain on society. Continue reading

Methods of Development | The European Union: The Ideal Economic Model?

In recent years, and especially with the recession in the U.S., the European Union’s success seems like the ideal model for economic unity and financial security. So ideal that South America and Africa are considering similar models. However, with European banks struggling to repay sovereign debt, the unified euro zone model has come under scrutiny.

Last week, The Heritage Foundation hosted a talk titled “The Euro on the Brink: What’s Happening in Europe and Why It Matters for America.” Moderator Theodore Bromund and speakers Ambassador Terry Miller, Dr. J.D. Foster, and Dr. Desmond Lachman discussed how lack of financial foresight led to the decline of the euro and the current banking crisis, most acutely felt by Greece, Ireland, Portugal, Italy, and Spain. While they pointed to issues of budget deficits (as a result of not following criteria in the Maastricht Treaty), bailout fatigue, price and wage inflation, solvency and liquidity crises, the speakers suggested ways in which European governments could adjust policies in order to curb the effects of the crisis. The most common response to debt crises lies in austerity programs and budget cuts, which for the hard hit countries in the EU, could take years to reach their previous levels of economic activity.  Continue reading