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POLITICAL ECONOMY OF THE REFUGEE CRISIS

POLITICAL ECONOMY OF THE REFUGEE CRISIS

Amidst the growing populations and fewer resources to feed them, the increasing conflict in the world has given rise to the phenomenon of migration that has become the most contentious political issue of our times. Advanced economies, like Europe and the United States, are coming under mounting pressure of the influx of the refugees from war-torn regions of South Asia, Africa and the Middle East. This has created a sort of polarity in these societies as, on the one hand, calls for providing the refugees with assistance with an inherent emphasis on human rights of displaced people are growing, the conservatives, on the other, advocate limits and enforcement. Owing to the availability of only scarce resources, governmental responses to this burgeoning crisis range from launching information campaigns and providing financial assistance to countries with conditions on tougher policies to blocking migrants and to relocation of and amnesty programmes for refugees.

For the first time since the large refugee movements of the 1990s, which followed the breakup of the bipolar order that had dominated Europe since the 1950s, a refugee crisis tops European policy debate. Currently, the governments appear overwhelmed by the mounting challenges of unwanted migration that has emerged as the most important political and public policy challenge facing Europe. Despite the warnings, the EU was ill-prepared for the magnitude of the problem, and member states lacked the capacity to take decisive action. But, the countries that have borne the brunt of the humanitarian pressure are calling for a rapid and coordinated response to distribute the burden more equally, while many of the rest — the Central and Eastern European countries among them — are wary of the proposed joint solutions.

Embracing Refugees

It seems difficult to find a middle way between the extremes of cosmopolitan idealists, who wish to give all the dispossessed safe haven, and conservatives, who wish to maintain the integrity of historically-bounded communities. More worrying, the migrant crisis is feeding political populism and xenophobia. The divisive forces of right-wing nationalism have already taken hold in parts of Eastern Europe. If they spread westward into Germany, France and Italy, then the EU could tear itself apart.

But one fact that has been largely ignored in this debate is that these migrants can help boost European economy. If well integrated, refugees can contribute to greater flexibility in the labour market, help address demographic challenges, and improve fiscal sustainability. The EU’s problems of declining population and ageing labour force may well be solved by accommodating the refugees into the economic orbit of the EU.

Although the impact will differ not only across countries but also across regions as it depends on the extent to which the skills of migrants substitute or complement the native workforce, yet what is clear from previous research and literature is that the earlier and better the integration, the more likely it is that legally-residing refugees will make a positive contribution to growth and public finances in the medium term. In particular, lowering barriers to facilitate the ’employability’ of migrants is essential for their ability to get a regular job and to have a positive impact on growth and public finances.

Mass Migration & Fear of Burden

The recent sectarian hype in the Middle East between the Sunnis and the Shias along with the lust for resources from the countries from global north have been causing many crises in the region. The ongoing armed conflicts and wars throughout the region are the most catastrophic problems the region has been facing for a while now. Most of the parties to the conflicts are not considering the suffering that their conflicts bring about. The humiliation of the minority communities in Iraq has become a regular issue in the country. The barrel bombs are the new normal in Syria. Incidents of heavy fighting among the Saudi-backed Government, militant groups and Iran-backed Houthis are taking place in Yemen at intervals. Clash among different armed groups loyal to different political bodies have been taking place in Libya.

Such a dire scenario across the Middle East has been pushing the inhabitants of the conflict-plagued region to flee their war-torn native land and seek refuge in other regions of the world. Understandably, most of the people, who have been fleeing the conflict, are choosing the European countries within the EU for a secured future.

Some of the EU member states, including the UK, have been again and again emphasizing the fear that the influx of refugees into the EU would bring about fresh burden on them. The increasing entrance of the refugees into the EU would put the member states into hazardous condition, as claimed by many intellectual corners within the EU. There is a widespread belief that EU’s economy would struggle to accommodate such large inflow of refugees. Such fear is coupled with concerns that the ‘demands’ for food security, social security, racial security, etc., would increase drastically with the increase of the number of inhabitants within the EU. Moreover, the inhabitants, both nationals and refugees, would have to ‘struggle’ to find employment in the present circumstances where the number of inhabitants is increasing by every passing day with the increase in number of refugees in the region. Such urge for employment is very likely to cause chaos within the societies in the EU as there would be a largely increased demand for employment compared to the existing scope for employment itself. Many corners within the greater EU society have been campaigning their concern that employment to refugees takes jobs away from residents and drive wages down, while the inflow of thousands of children places pressure on a country’s education system.

Human Resource Development

With the rise in a country’s standard of living, the cost of labour increases as well. However, with the increase of a country’s standard of living, if the population increases too, the cost of labour would not increase. Rather, in such scenario, the cost of labour would start to fall despite increase in standard of living, because increase in population would also help increase competition in the labour market. More specifically saying, when the number of labourers is proportionate or greater than the number of employment available, the labourers would surely be inclined to sell their labour in cheaper price in order to sustain their livelihood in the competitive market.

Moreover, large population means large domestic market. Any commercial product made within a country, which has a large population, would be consumed faster than those countries where the sizes of population are comparatively smaller. Countries like China and India have become attractive markets for other economies across the world because of their large populations. Businesses outside China and India understand very well that entrance of their commercial products in the markets of China and India assures them of huge consumers and, thus, a faster consumption of their products.

At present, Europe has an impending problem on its hands that could have disastrous repercussions—an ageing labour force along with a declining birth rate resulting in declining population, and thus a declining labour force and a declining number of consumers within the EU market. In order to maintain Europe’s economic growth and industrial output, an inflow of young workers is desperately needed. Such an inflow is also necessary to fund the pensions of Europe’s expanding elderly population. An influx of people is what the region needs right now—and that is exactly what is currently being offered through crisis across the Middle East, i.e. influx of ‘refugees’ into the region.

Conclusion

Although there are various worrisome concerns regarding the influx of refugees into the EU, the impacts of this influx  have been wrongly interpreted by some European intellectual corners. In reality, the above discussion reflects that the refugees will unlikely be burden to the economy of the member states within the EU and to the EU itself. Instead, extending a hand of ‘refuge’ to the ‘refugees’ would not just be morally correct, but would be economically beneficial as well.

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