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ESC
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Original: English
NATO Parliamentary Assembly
Economics and security
committee
The Economic and Security Consequences
ofthe Migration Crisis
Report
Ossur SKARPHEDINSSON(Iceland)
Rapporteur
Sub-Committee on Transatlantic Economic Relations
November 2016
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TABLE OF CONTENTS
I.Introduction
II.MASS MIGRATION IN PERSPECTIVE
III.THE ECONOMICS OF Mass Migration
IV.LaboUr Market Implications of Mass Migration: The Recent Experience in the United States
V.Mass Migration and Economic Conditions in Europe
VI.Sharing the Burden
VII.Economic Implications for the Front Line States
VIII.The Security Dimensions of the migration crisis
IX.Conclusions: Responses and WAYS OUT
BIBLIOGRAPHY
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I.INTRODUCTION
1.Mass migration, including the movement of refugees across borders, is a phenomenon abounding with economic, humanitarian, political, social, psychological and security implications. The mass exodus of Syrians from their homes since the outbreak of civil war in that country has once again moved this issue on to the diplomatic front burner, particularly after these refugees began to flood into Turkey, the Western Balkans and EU Member States at an unprecedented pace. The phenomenon has assumed a compelling security dimension insofar as this massive flow of refugees threatens to destabilise several neighbouring countries and, as the Brexit debate in the United Kingdom revealed, appears to have the capacity to undermine fundamental assumptions about politics and policy choices in the West. Indeed, the influx of refugees into Europe ranks among the most salient and divisive political issue on the continent today. It is undermining European unity while roiling domestic politics in a number of European countries. The treatment of refugees and migration in general has also become a central issue in US presidential elections.
2.The security dimensions of mass migration are highly complex. Fear of immigrants is hardly a new phenomenon and has been in evidence not only in countries unaccustomed to large waves of immigrants, but also in those societies that have long defined themselves as immigrant nations. Countries which have not traditionally defined themselves in this manneroften confront particularlytryingchallenges in terms of integrating newly arrived immigrants and refugees. Economic, cultural, political, psychological and historic factors are all at play here.
3.Not surprisingly, the matter of accepting large numbers of refugees from the crisis-riddenMiddle East has created new fissures in Europe. Terrorist attacks in Brussels, Paris, Turkey and elsewhere have cemented the view of some that Europe and North America assume enormous risks by admitting more refugees and migrants from war-torn Syria. It is a facile argument for somepoliticians to exploit and it paints all refugees with the same broad brush. Unfortunately, this kind of politics can pay off in unsettled societies and has even provided fodder and political leverage to demagogic movements in what we generally understand to be highly stabledemocracies. This is not to say that there are not security concerns linked to mass migration. There are, but not in the manner and degree which is often portrayed.
4.Although there have been isolated cases of refugees participating in terrorist acts, these have been exceedingly rare. Most terrorist attacks in Europe and the United States have involved domestic citizens or perpetrators who are not refugees. Of course, security controls and clearance systems are essential. The United States, for example, demands that refugees undergo a series of controls before they are granted admission to the country. They are vetted at US Embassies, are subject to investigations, biometric checks, interviews by Department of Homeland Security, medical screenings and counter-terrorism investigations. This can take up to three years and is clearly a very thorough process. Asylum seekers must undergo equally rigorous scrutiny. It is worth mentioning that of the 750,000 refugees resettled in the United Statessince September 2001, only two have ever been arrested on terrorist charges and these were for providing material support to Al-Qaeda in Iraq. It should also be noted that in recent terrorist attacks in Europe many of the known assailants have been returning foreign fighters with Europeancitizenship as well as those who never fought in the Middle East but were radicalised in the West.This is a very serious problem but one that ought to be treated apart from the refugee crisis as such.
5.One of the risks linkedto the current refugee crisis is not posed by the refugees at all, but by political actors who might be tempted to exploit their presence and their plight to advance highly divisive and even authoritarian ambitionsin the West or undermine the solidarity that has been the lynchpin of European peace and security since the end of the Second World War.The refugee crisis has, at least in the minds of some, become the face of globalisation and the populist reaction in Europe and North America now poses a serious political challenge to those who recognise that nationalism, isolationism and authoritarianism are far more threatening to peace and security than well-managed, prosperity generating, liberal internationalism.
6.Europe and North America accordingly need to develop a far greater capacity to manage this crisis both within and beyond their borders alongsidetheir international partners.The West is well positioned to assist some of those fleeing violence and it cannot be stressed enough that doing so makes security as well as humanitarian sense.Again, governments require proper screening and vetting systems to prevent infiltration by extremists and to reassure their own publics that security matters. Small and more fragile countries bordering Syria - particularly Jordan and Lebanon - each of which has taken in millions of refugees also need significantly more assistance. In those two cases, the situation is far direr, and the problem has effectively become an existential one. Such countries cannot shoulder this burden alone.
7.United Nations High Commissioner for Refugees (UNHCR) reported that as of 4 July 2016, that there were 4,839,350registered Syrian refugees living beyond the borders of that country, while millions more are internally displaced. This figure includes 2.1 million Syrians registered by UNHCR in Egypt, Iraq, Jordan and Lebanon, 2.7 million Syrians registered by the Government of Turkey, and more than 29,000 Syrian refugees registered in North Africa (Syria Regional Refugee Response). Ninety percent of Syria’s refugees have remained in the region in countries such as Turkey, Jordan, Lebanon, Iraq and Egypt, while slightly more than 10% of the total have moved on to Europe (UNHCR, 15 February 2016).Between April 2011 and April 2016 there were a total of 1,037,760 Syrian asylum applications filed in Europe.It should also be noted that more than twice as many asylum seekers sought to enter the EU in the first ten months of 2015 as in the same period of 2014. Ten times as many migrants sought to cross the sea into Europe in the first sixweeks of 2016 than in the same period the year before, and in that period, 409 people died making the journey (MacAskill and Graham-Harrison). Those numbers could well increase if the situation in Syria worsens, and it is no coincidence that the NATO Council recently decided to deploy ships into the Aegean Sea as part of a counter human trafficking effort but also to provide a degree of reassurance in the face of this unprecedented surge of refugees into Europe.
8.The explosive growth of migration into Europe, not surprisingly, has bolstered the immigrant share of the total population in many European countries with the particularly notable exceptions of the United Kingdom and France. The largest share increases were in Sweden, Hungary, Austria and Norway,the foreign population of which underwent an increase of at least 1% between July2015 and May 2016.Those four countries now have foreign born populations respectively of 18.3%, 5.8%, 18.5% and 15.3%. By comparison, the share of immigrants in the United States took ten years to rise 1% between 2005 and 2015. This suggests that some European countries have faced significant and sudden demographic changes as a result of migration.The United Kingdomand France already have significant immigrant populations so the numberof migrants relative to the existing migrant population was significantly smaller than in these countries. Although Germany received the largest absolute number of asylum seekers in Europe, it has a relatively large population, thus a capacity to absorb a large number of migrants.Lithuania, Spain, Slovenia,Estonia and Latvia underwent a decline in their immigrant share of the total population. It is worth noting that in both Canada and Australia nearly one in four residents were foreign born in 2015 (Connor).The number of refugees in Europe per 1,000 ranges from 0.01 in Latvia, Luxembourg and Slovenia to 14.8 in Sweden. By comparison the highest proportions worldwide are Lebanon and Jordan with 232 and 87 registered refugees per 1,000 inhabitants respectively (IMF). The refugees that began arriving en masse in Europe last year are much younger on average than the population in host countries.
9.Although Syrians are the largest single group in the current refugee surge, many migrants and refugees are also coming from Iraq, Afghanistan as well as from Pakistan, Africa (Eritreans, Nigeria,Somalia, Gambia, and Sudan among others) and even the Western Balkans. Many of those reaching Europe are doing so through illegal border crossings across the Eastern Mediterranean from Turkey into Greece and through the Western Balkans, across the central Mediterranean from Libya to Italy, across the Western Mediterranean into Spain and a very small number from Russia into northern Norway.
II.MASS MIGRATION IN PERSPECTIVE
10.Migrationon such a mass scale was last registered in Europe in the early 1990’s during the Balkan crisis (BBC News). In 2015 alone, EU member states processed 1,321,560 asylum claims.The passage that these migrants undertake can be extraordinarily dangerous, and many of these refugees are desperately assuming grave risks to achieve a modicum of security. The International Organization for Migration (IOM) has reported that an estimated 214,861 migrants and refugees had entered Europe by sea in 2016 through 22 June, arriving most frequently through in Italy, Greece, Cyprus and Spain. The number of deaths in this period stood at 2,861 compared with 1,838 through the first six months of 2015. In other words, fatalities on the MediterraneanSea in 2016 were 1,000 higher than last year’s mid-year total (Missing Migrants Project).
11.Refugee movements are, however, only part of a broader picture of mass migration, which has had a profound effect on economic, social and political life in much of the world. In global terms, there were 244 million international migrants in 2015, up from 222 million in 2010 and 173million in 2000. Roughly two thirds of all international migrants live in Europe (76 million) and Asia (75 million) while North America hosts 54 million.The United Statesis the country that hosts the largest number of international migrants (47 million).Refugeesare a subset of this very large migrant group(UN International Migration Report, 2015). By the end of 2015, there were 65.3million displaced people worldwide, the highest figure ever recorded. This included 40.8million people forced to flee their homes but residing within the confines of their own countries, 21.3million refugees and 3.2 million people in industrialised countries who at the end of 2015 were awaiting decisions on asylum(Edwards).
12.In historical terms, mass migrationis nothing new.It is worth recalling that the 19th century was also characterised by massive movements of people, for example, from Europe to NorthAmerica. Historians have tended to see 19th century migrations as essentially economic matters driven by the “pull” of the New World’s open spaces and opportunities and the “push” created by the lack of economic prospects in Europe (Taylor and Williamson). That insight is important. Even the current and tragic mass movement of people out of Syria, Iraq, Afghanistan, Somalia, South Sudan and other conflicted countries, has important economic dimensions and consequences.
13.Coping with the sudden influx of people poses particular challenges to host countries. Even in countries as large as the United States, which, from its origins, has defined itself as a country of immigrants, the politics of welcoming migrants has not always been easy. Social and political difficulties were apparent in the United States even whenmigrants brought enormous benefits to the country and represented a critical source of economic dynamism and cultural enrichment.Indeed, as the American frontier diminished,the public view of immigration became more unsettled. By the late 19th century, there was no real American frontier to speak of, and the USgovernment had begun to exercise far greater control over who could and who could not gain access to the country.
14.The economic impact of this mass movement of people, however, was tremendous and was clearly a central element in the rise of the United States as the foremost world economic power. Over fiftymillion people left Europe for the New World between 1813 and 1913. Higher wages in the New World reflected global labour market disequilibria that the mass movement of people over that century partly corrected. It is important to note that much of this period is often described as the golden age of globalisation and was characterised not only by the flow of migrants to the Americas but also by free trade, relatively unhindered capital movement and a British-led gold denominated exchange rate system. All contributed to American dynamism, but migration to American shores was an essential factor.
III.THE ECONOMICS OF MASS MIGRATION
15.The classical economic view of mass migration influencessome of the assumptions policy makers currently make about the phenomenon. Broadly speaking, economists make almost no prima facie distinction between refugees and other migrants. The differences in terms of economic impact lie largely in the policies and laws that shape the lives of refugees and their economic opportunities in host countries. In the frictionless, open-trading international system often used as the default model in economics, the movement of people across borders has important microeconomic consequences, similar to the effects of trade on the price of goods, capital and labour and in terms of potential economic gains stemming from these movements. From a purely economic perspective and, other things being equal, the mass movement of people from a low wage under-developed country to a high wage, developed country would theoretically reduce factor price differentials. In other words, if wages were genuinely flexible in both the labour exporting and labour importing country, then the movement of people from low wage to higher wage countries would theoretically drive down the price of labour in the labour importing country and drive up wages in the labour exporting countries, particularly if the quality of labouron both sides were equivalent. This is often not the case in the real world. Capital productivity in the labour importing country would also benefit from the falling price of labour as the yield per unit of capital would increase as labourcosts fell. The movement of labour couldtheoretically, therefore,also diminish productivity differentials between the labour exporting and labour importing country (IMF).
16.A secondary potential impact would be to increase trade between the two countries as the demand preferences of migrants would likely include a basket of goods from the country from which they had departed. Increased capital flows would likely follow initially in the form of wage remittances to the labour exporting country, but later in more complex flows of investment flows partly driven by increased bilateral trade. In the real world, in fact, substantial shares of migrant earnings are often repatriated to the labour exporting country.These remittances have often been found to be more consequential than development aid in terms of their development impact and can thus be critical agents of positive economic change in poor countries.The labour exporting country also stands to benefit from a long-term access to capital technology and knowledge that might accompany increased commercial and financial exchanges whichmigrants foster. Although the labour exporting country may suffer from a so-called “brain drain”, eventually well-trained emigrants may return home and bring with them the knowledge and contacts they have obtained while living abroad. Finally, wage earning migrants are also consumers and their presence provides a boost to overall demand in labour importing countries, which in turn contributes to Gross National Product (GNP) growth.
17.The above described phenomena, however, are abstract although and, for example, assume that the labour from the country of emigration could be seamlessly integrated into the job market of the labour importing or host country. Of course, there are many legal, cultural, and linguistic barriers to this happening, and there is also the matter of possible deviations between the kind of labour demanded in the host country and the kind of skills the immigrants bring to that country. If, for example, a country requires highly trained service workers and the country of emigration is not training its workers to those standards, there is a clear mismatch, and what initially seemed a potential economic opportunity, in fact, becomes an economic burden, at least in the short term until migrants are retrained.