Friday, September 18, 2015

EU Migrant Crisis Pushes It On Brink Of Institutional & Economic Meltdown.

The current migrant inflow into Europe is starting to severely affect its institutions that are core to EU economic activity such as the Schengen agreement on free movement across borders.
Data from the past few months from the border of Hungary suggests that the migrant inflow continues to grow exponentially. It was 10,000/month at beginning of year, while 100,000/month now.
The only proposed solution, on which EU members haggled for months and continue to do so is un-viable and counterproductive. The time already lost makes odds of crisis resolution unlikely.
One of the most important pillars of the current global world order is the European Union. It is the purpose for the very existence of the NATO alliance. It is occasionally the world's largest economy, depending on the Euro/Dollar exchange rate. EU member states also collectively make up the largest exporter/importer of goods in the world. It is an important pillar in the global advancement of science, technological innovation, and very importantly, human rights standards.
Europe has also become the most unstable pillar of the current world order. It has been plagued by slow economic growth for some time now. In fact, since 2008 the EU economy has registered average yearly economic growth near zero percent. This has resulted in a great deal of disillusionment with the EU experiment among wide segments of its citizenry, which is being manifested in a great wave of increasing support for radical political movements on the left and right side of the spectrum. In some cases, formerly mainstream political parties had to resort to borrowing the radical positions of the rising fringe parties in order to remain in power. If we can draw a parallel to the historical past, I'd have to say that we are looking at a similar trend as we saw in the aftermath of the 1929 economic crash, where in Germany for instance, the centrist political forces were abandoned in favor of the National Socialists and the Communists.
In addition to the economic crisis that the old continent is facing, a series of unexplainable and seemingly illogical policy decisions have further dampened Europe's chances of recovering. The 2014 economical and political confrontation with Russia comes to mind as a very obvious example. There were plenty of opportunities to prevent the conflict, including the day after Ukraine's president Yanukovic was deposed. On that day, the new Ukrainian government decided to do away with the country's minority rights, which inflamed the spirits among the Russian minority, and in my view did more than anything to spark the civil war. The EU should have acted swiftly to condemn that act as soon as it learned of it. It could have prevented the civil war and might have even denied Putin the opportunity to annex Crimea. But as things stand right now, the EU probably lost hundreds of thousands of jobs as a result of the economic confrontation with Russia and shaved a few tenths of a percent from its economic growth potential. It was the last thing the EU needed after almost a decade of economic stagnation.
Now we are looking at a new crisis that threatens the stability of the old continent. This time, it is causing not only economic distress, but is also leading to an ideological and regional polarization that threatens the stability of the EU. At the root of this problem is yet another mistake made by some EU member states in regards to the handling of the refugee crisis. Countries like Sweden and Germany increasingly signaled a willingness to offer asylum to anyone who shows up and makes a convincing claim to be from a conflict zone. Last year, there were hundreds of thousands who risked the Mediterranean voyage on flimsy, overcrowded boats run by people smugglers in order to take advantage of the opportunity. This year, we are looking at perhaps a million and a half people doing this. Let us not forget that this number does not represent the actual number of people who will receive asylum. On one hand, there will be some rejections, but on the other hand there will be family unification for those who are accepted. Taking this into consideration, the actual number of asylum seekers being accepted ends up being much higher.
A million and a half people and then relatives who will follow may be overwhelming for the EU right now, but the trends we are seeing at the Hungarian border for instance are worrying to say the least. At the beginning of the year, there were about 10,000 asylum seekers entering Hungary each month. By last month however, that figure increased to 50,000 and this month it seems that there are about 3-4,000 new arrivals each day on average, which means that there will be over 100,000 new asylum seekers crossing into Hungary this month. It remains to be seen whether more stringent measures will help stem the flow into Hungary, but even if it will, fact is that the route will simply move to another country such as Croatia. After Hungary closed the border and hunkered down behind its newly-built fence, Croatia saw a massive one-day influx of over 5,000 asylum seekers enter in just one day.
Given the German and Swedish policy of considering anyone who shows up from a conflict zone or from a country where they can show that they are facing political repression for asylum and permanent residence, there is literally no practical limit to the potential supply of asylum seekers seeking to move to Europe. Conflict zones in the Middle East alone, such as Iraq, Syria, Yemen, Libya and Afghanistan collectively comprise a population of over 100 million people. Add to that the many conflict areas in Africa as well as repressive regimes around the world and we have hundreds of millions of people on this planet who are eligible for asylum in Europe, by only showing up. I by no means mean to suggest that hundreds of millions of people will show up, but a growing number are making the journey.
Add to that a growing trend of people assuming a false identity in order to be able to claim asylum under the pretext of being from a conflict zone and there really is no limit to the potential flow of refugees. There have been reports that there is a flourishing trade in Turkey in fake Syrian passports. The Syrian government is also getting in on this by issuing Syrian passportsat various embassies for about $400, with no need to show proof of identity. It has been reported that 10,000 such passports were issued at their Jordanian embassy alone, with similar situations reported elsewhere, such as in Lebanon. There are even those who show up with no identification papers at all. There are many reports of people being caught at the Hungarian border with Serbia, which claim to be from a conflict country, while in fact they came from countries neighboring the conflict zone, such as Pakistani citizens posing as Afghans. Many are not caught however and there is no way to catch them, unless they give themselves away by mistake.
Let us also remember that aiding in this whole process, we also have the people-smuggling networks, which are becoming a billion dollar industry. There is money to be made in the process of facilitating this mass-movement of people across seas and borders. It has been reported that in Hungary alone over 1,000 suspected people smugglers were detained this year. Bottom line, there is an almost limitless pool of potential asylum seekers and the criminal networks to get them to Europe are also firmly in place and growing. Any further invitation to come will result in the tide of refugees rising even higher. Yet, as I shall explain, an invitation for more to come is exactly the proposed solution, in the form of mandatory migrant quotas.
Needless to say that countries like Germany are now feeling overwhelmed by their commitments to take in all those who come, now that the world has heard their message. The proposed solution has therefore become the EU migrant quota scheme, which does very little to prevent this tide from rising. It is however a wrong-headed approach, which is leading to a lot of bad blood across the EU.
In France, for instance, 55% of people oppose taking in asylum seekers, yet their government has taken a lead role alongside Germany in attempting to push for a compulsory system of asylum seeker accommodation among EU members. Needles to say that this is causing a lot of friction given that we have countries such as the Czech Republic, where 94% of people in a recent poll supported the idea of the EU returning all asylum seekers to where they came from. The overall mood of the EU electorate seems to be decidedly opposed to taking in immigrants from outside the EU as a European Commision survey has found. According to the findings, 57% of Europeans are opposed to taking in migrants from outside the EU, while only 34% are in favor of the idea.
The resulting friction caused by an EU population that is largely opposed to taking in the asylum seekers, not supporting some of the EU elites who want to impose a mandatory, permanent quota, while doing little to address the flow of immigrants is already leading to indecision which is tearing EU institutions apart. The mainly EU-based Schengen zone, which allows people and goods to travel through most of Europe without border controls is crumbling as more and more states are putting up border controls. This cannot happen without serious economic consequences. For instance, the Hungarian border with Austria and Slovakia, both of which are now being reinstated is facilitating about $100 billion in yearly two-way trade between Hungary and the EU. Trade between Romania and Bulgaria on one hand and the rest of the EU on the other is also facilitated mainly through those same borders. All the borders that are currently temporarily re-introduced across Europe facilitate a few trillion Euro's worth of trade between EU nations. 62% of all trade done by EU countries is within the European Union. Most of that trade will still continue at an extra cost, but some of it will cease.
Source: Eurostat.
While the potential loss of the free movement of goods is a current problem with grave consequences for the already fragile EU economy, it pales in comparison to the problems it is causing politically. There is increasing acrimony among member countries over the mandatory quota plan, with threats flying over some former communist countries refusing to accept their share. Austria's Chancellor, as well as Germany's interior minister suggested that former communist countries should be pressured into voting in favor of the permanent quota system by cutting EU funds to these countries. Needless to say that there was a very angry response to such coercive and legally questionable ideas being expressed by the German government and Austria's leader. For now Germany's Chancellor Angela Merkel brushed aside such statements, suggesting that it is not helpful to make threats, but it certainly highlights the level of friction that this is causing.
The UK situation is also being aggravated by the current crisis. It is likely to hold a referendum on EU membership in 2017 and this crisis and its handling is pushing British public opinion towards the "Brexit" camp. This would mean far fewer net resources for the EU, given that Britain is a significant net contributor to the central EU budget. This comes just as the EU is engaging in increased spending on asylum seekers, which means that cuts to popular EU-funded programs, such as infrastructure projects will happen, and will further alienate the EU electorate.
Aside from the British referendum, we also have a number of national elections coming up, where anti-EU governments have a strong chance of coming to power. Most notably, we have the French presidential elections in 2017, where the formerly fringe National Front party has a real chance of capturing the presidency with Marine La Pen polling ahead of her rivals. Even in Sweden, where the overwhelming majority of the population was in favor of offering asylum to all who show up from places like Syria, the formerly fringe, anti-immigration Sweden Democrats are leading in the opinion polls. An increase in violence and crime in Swedish towns like Malmo, where immigrants make up an ever-larger share of the population is causing the electorate to turn away from its traditionally moderate views.
There is also an aspect of this situation which most Western mainstream media outlets as well as European officials have been ignoring. While all attention has been on the refusal of many countries to accept mandatory permanent migrant quotas, there is also the prevailing opinion of the migrants to consider. I have the benefit of being fluent in both Hungarian and Romanian, therefore I can access news from local sources. Hungary's government has been pointing out for months that none of the 200,000 asylum seekers who entered Hungary want to actually stay in Hungary. They want to go to Western Europe, where living standards are higher and social benefits more generous.
The media and EU officials seem to have dismissed these reports coming out of Hungary, preferring to accuse that country of not providing the asylum seekers with adequate shelter and other help, rather than admit to the fact that their entire argument that these are not refugees but mainly economic migrants is flawed to say the least. The fact that asylum seekers in Hungary refused attempts to house them in camps and be registered in accordance with laws governing members of the EU and Schengen area, was simply dismissed as a refusal by refugees to collaborate with authorities that were accused of not treating the asylum seekers well enough (which is partly true). At the same time however, only after two days of Hungary closing its borders, diverting the flow of migrants towards Croatia, we are already seeing violent and chaotic situations emerge in that country as well. I think, it puts into perspective the lack of objectivity that the Western media as well as EU officials used in their attacks on the Hungarian authorities in the past few months.
In Romania however, where thus far there has been no influx of refugees, the true picture of the situation was uncovered by the Romanian media. As the debate over migrant quotas was raging in the EU, it was revealed that roughly 6-7,000 migrants may be sent to Romania as part of the first quota allocation. Some Romanian journalists from Adevarul (Article is in Romanian) got the bright idea to go to Hungary and talk to some of the asylum seekers in places like Budapest and asked them what they thought of the prospect of being sent to Romania. All the respondents refused the concept outright, all of them citing the fact that they heard Romania is a "poor" country, therefore they are not interested. So, clearly, the overwhelming majority of the asylum seekers are motivated by economic considerations when showing up in the EU, therefore the whole quota system is flawed and likely to create more problems.
I cannot think of a more explosive situation than forcing potentially hundreds of thousands of migrants to locate to countries in the former communist block, where they do not want to be, surrounded by locals who overwhelmingly do not want them there either. In Hungary, they went as far as breaching the camps in order to avoid being subjected to the quota. They all declared themselves for Germany or other Western countries. They resisted any attempts by Hungarian authorities to enforce the laws that bind it as a member of the EU, thus not respecting the laws of the EU, where they wish to claim refugee status. I do not see any positive prospects for hundreds of thousands of these migrants, which will be allocated to the former communist block in the next year or so if the quota system is approved, to simply accept their fate peacefully. They would if they were simply refugees trying to find shelter from violence as most of the Western elite tried to portray them. While many of the asylum seekers are indeed from conflict zones, they are clearly dual-purpose migrants and by the time they reach Europe, they are no longer fleeing war. Ignoring this very important fact cost the EU months of haggling over the quota system, which does not resolve the problem, only intensifies it in the longer term.
The quota system will intensify the problem by sending out the message to potential asylum seekers that Europe has found a mechanism to deal with ever-increasing volumes of migrants, which means that they are less likely to be rejected when showing up. In effect, it will not only be Germany and Sweden inviting them, but the entire EU. The already exponentially-growing flow of refugees will intensify further, overwhelming Europe's ability to cope. That is exactly why Britain's Prime Minister announced that his country will take in 20,000 Syrian refugees, but not from among the asylum seekers who showed up in Europe, but from camps in the Middle East. It is a measure that is not only logical but also humane, given that the ones taking refuge in places like Lebanon are the ones in most need, given that they cannot afford to pay the people smugglers to get them to Europe. A few EU leaders recognize the danger of continuing to offer asylum to all who show up with a valid claim, but unfortunately the EU leadership as well as leaders of many EU countries are choosing to take an ideological rather than a logical position.
Given the political deadlock, as well as the fact that the only proposed solution on the table is deeply flawed for the many reasons I pointed out, this crisis will not only continue, but intensify. EU elites have been very slow to realize that the overland migration route through the Balkans, which started to grow in prominence late last year and is now eclipsing the previously popular Mediterranean route. It already has the potential to bring to the borders of the EU hundreds of thousands of asylum seekers each month. The EU is not prepared to deal with it politically or institutionally. European public opinion puts it at odds with the EU elite, while opposition from some EU countries to taking in refugees through a permanent mandatory quota is causing friction among member states. Now we have border controls re-introduced among member states, being announced on a daily basis. The economic impact that it will have depends on the severity of the border controls, but as of this week, we are now looking at a resulting economic impact, which is set to grow exponentially together with the crisis.
If nothing is done to stop the crisis and the resulting acrimony, as well as the resulting disruptions to the institutions that the EU economy depends on, we could start to see the return of recession in the EU next year, or even sooner. If the quota system will be adopted, it might lead to a return to a semblance of normal life in the EU for a few months, but I expect that it will ultimately lead to an even more severe social, political and economic crisis breaking out within a few months, or within a year at the most, depending on how fast the flow of refugees will continue to intensify. At that point, we will likely become spectators to an EU crisis that will make the Greek "tragedy" look very tame in comparison.


  1. Well said Zoltan, too bad so many people are brainwashed by mainstream media to realise the true.

    1. Thanks for your comment. It seems fewer and fewer people still believe the official mainstream media line. It is just that most people are not sure what to do about it.

  2. A very good and reasonable summary of the situation, thank you.

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