Barry Andrews: Migration will not damage the European economy

The biggest challenges therefore are social and political and not economic

The spice market in Istanbul. Why hasn’t the Turkish economy collapsed with an additional approximately 3.5m Syrians within its borders over the last few years? Photo by Chris McGrath/Getty Images
The spice market in Istanbul. Why hasn’t the Turkish economy collapsed with an additional approximately 3.5m Syrians within its borders over the last few years? Photo by Chris McGrath/Getty Images

Clashes between police and migrants at the Greece-Macedonia border in recent days is proof, if further proof was required, that the EU’s response to the refugee crisis, and the Syrian conflict that caused it, is failing miserably.

The recent deal struck between the EU and Turkey is not just highly questionable both legally and morally, it is almost impossible to see how the plan will work. It has already faced severe setbacks and mounting criticism since it came into operation on April 4.

The apparent willingness of EU member states to outsource their obligations under the Geneva Convention is based on a number of assumptions. In the immediate aftermath of the last month's bombings in Brussels, there was a lot of focus on the security implications of large scale migration, for instance.

Another of the assumptions that needs to be tackled is the view that large numbers of migrants will damage their economies - a hypothesis which simply does not stand up to scrutiny.

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What is beginning to dawn on far-sighted CEO’s of Fortune 500 companies is that the risk that is associated with “large scale involuntary migration” is something that is not just a political risk but also an economic risk. The World Economic Forum’s Global Risk Report for 2016 identified this as the No. 1 likely risk to business this year.

Not only that, but it is connected to other major risks including failure to mitigate climate change, increased inter-state conflict and water crises.

They are connected and mutually reinforcing, increasing the likelihood that one or more might come to pass and the impact such an outcome would have.

We saw a similar perfect storm in the Irish economy in 2008. Risks included a precipitous drop in property prices, a drop in the availability of credit, a currency crisis and a trade recession. Few saw all of these risks coming to pass at the same time and lending energy to each other.

If the inter-connected Global risks identified for 2016 are to come about at the same time, the consequences for business, politics and society are enormous.

But we are wired for “fight or flight” not for slow-onset crises. The urgent often crowds out the important. We react when we see a particularly moving photograph or a shocking story. This creates outrage and the electoral equation for politicians changes from a situation where the cost of doing nothing is suddenly greater than the cost of doing something.

This of course is an unsustainable way of preparing for these dangerous outcomes.

The good news is that we are beginning to see practical manifestations of the best way to mitigate these risks in the long run and we are seeing business beginning to take a more integrated approach to these issues.

Some business people talk about addressing societal problems in terms of “giving something back”. The problem here is that it implies that all along, throughout their business career, their relationship with society has been purely extractive. It is not a huge jump to think about this issue in a different way.

Here is an interesting example of how the private sector is playing a more creative role in the refugee crisis.

Hamdi Ulukaya founded Chobani in 2005. He had emigrated from Turkey to the US a few years previously and took over a disused yoghurt factory in upstate NY. By 2011, it had sales of over $1b. EY named him world entrepreneur of the year in 2013.

He set up TENT Foundation with partners LinkedIn, MasterCard, Western Union, IKEA, Johnson and Johnson and Airbnb. He wanted these companies to go beyond what NGOs were doing and challenged them to find entrepreneurial solutions to aid refugees around the world.

The participants have signed pledges that they will employ refugees; that they will shape their supply chains to ensure that they are purchasing from companies that employ and support refugees; and they have already provided expertise to existing humanitarian organisations, like GOAL.

Even some politicians are seeing the refugee crisis from the viewpoint of enlightened self-interest.

The Portuguese PM, Antonio Costa, has taken a pro-active role in seeking out migrants from Greece to boost Portugal's population given that Portugal's birth rate is the weakest in Europe.

Some politicians are also beginning to look more closely at the economics of Syrian refugees.

Why hasn’t the Turkish economy collapsed with an additional approximately 3.5m Syrians within its borders over the last few years? In fact, according to the OECD, the Turkish economy will expand by 4% this year and by more than 5% in 2017.

There is a cost to hosting so many people but the Turkish economy is worth $800b while they are spending about $1.5b per year on refugees - about 0.2% of GDP.

In addition, the informal economy is naturally boosted not only by the availability of labour but also by the new consumers that have come into the economy. They take jobs that local people don’t want, they set up businesses and boost domestic demand.

It is also relevant to point out that substantial businesses that were based in places like Homs and Aleppo in Syria have been relocated to southern Turkey and to Beirut.

The biggest challenges therefore are social and political and not economic.

In Turkey, on a recent visit to our programmes there, I was able to have a look at the Paediatric and maternity hospital in Gaziantep which served a population of two million before the war. The population now is 3m - all of the new influx being Syrian.

The openness with which Turks have welcomed their neighbours among them is truly inspiring. There are shortcomings in overall Turkish policy but there is no country related to the crisis which is utterly blameless.

So even if the moral imperative to help your neighbour or the legal imperative to comply with the Geneva convention is not compelling enough, it turns out that welcoming and supporting refugees makes economic sense too.