A To-Do List For Greece

The EU Commission published this press release on the EU-Turkey Agreement. It is a very interesting document because it clarifies several of the questions which many people undoubtedly have. Such as: What will happen to the refugees already in Greece? Answer: They will be relocated to other countries, at least 20.000 by mid-May.

Where the Agreement becomes overwhelming is where it stipulates what Greece needs to accomplish. Below is an extract:

The Commission estimates that Greece will need:

Around 4,000 staff from Greece, Member States, the European Asylum Support Office (EASO) and FRONTEX:

• For the asylum process: 200 Greek asylum service case workers, 400 asylum experts from other Member States deployed by EASO and 400 interpreters
• For the appeals process: 10 Appeals Committees made up of 30 members from Greece as well as 30 judges with expertise in asylum law from other Member States and 30 interpreters
• For the return process: 25 Greek readmission officers, 250 Greek police officers as well as 50 return experts deployed by Frontex. 1,500 police officers seconded on the basis of bilateral police cooperation arrangements (costs covered by FRONTEX)
• Security: 1,000 security staff/army

Material assistance:

• Transport: return from the islands: 8 FRONTEX vessels with a capacity of 300-400 passengers per vessel) and 28 buses
• Accommodation: 20,000 short-term capacity on the Greek islands (of which 6,000 already exist)
• Administration: 190 containers, including 130 for EASO case workers 

Well, that's a bit more than a piece of cake. I suppose that the EU thought that any country which can pull off one of the greatest Olympics ever could easily handle such a to-do list. 

Let's hope they are right!

On The Biased Idomeni Perception!

The past 24 hours have made a major impact on my personal assessment of the refugee situation. The way I understood the situation before yesterday was/is: over 10.000 refugees were trapped in miserable camp conditions at Idomeni near the border. The Greek government had arranged for sufficient temporary quarters for refugees in other parts of the country. Most of the refugees refused to accept that offer from the Greek government.

Journalists seem to be all over the Idomeni area. They report on the miserable conditions; on the failed attempt to break a new trail towards Germany; on the sad drowning of two refugees; etc. They do not report on the buses on the Greek side, waiting to take refugees to other, satisfactory temporary quarters.

Yes, I am aware of how desperate - certainly with justification! - these refugees must be. That they are prepared to do just about everything to get to the Promised Land, Germany. But these refugees are not ignorant nor illiterate people. They know how to use iPad's and iPhone's. And because of that, they must be aware of the drama they are causing all over the EU these days.

To remain in contempt of the Greek government's request to move into satisfactory temporary quarters; to provoke a forbidden border crossing which entailed at least 3 deaths; to blast their self-imposed misery into every journalist's microphone --- well, that's not how Hungarian refugees behaved back in 1956.

Perhaps the difference is that Hungarian refugees in 1956 were escaping from Communist bullets behind them whereas today's refugees escape from miserable conditions in Turkey. But still: the behavior of today's refugees now has a smell to it.

Perhaps it is worth noting that the Geneva Refugee Convention of 1951 defined a refugee as someone who has reason to fear persecution because of "race, religion, nationality, membership in a certain social group or because of political conviction". War and/or civil war DO NOT qualify for refugee status under the Geneva Convention.

The EU developed its own "Refugee Policy Directive" which addresses those who are not eligible refugees under the Geneva Convention. They are called "subsidiary protection refugees". According to the EU policy, "subsidiary protection refugees" are not entitled to stay in the country. Instead, they are only entitled to temporary residence: one year at first, with another couple of years to be added.

Perhaps someone ought to explain to today's refugees that only a fraction of them qualify for refugee status under the Geneva Convention.

Refugees & Growth

There is no doubt in my mind that, in the shorter term and strictly from an economic standpoint, the current refugee crisis will cause a small economic stimulus for the Greek economy. This, of course, presumes that the EU will keep its word and provide up to 700 MEUR to Greece over the next 3 years, 300 MEUR of which immediately. Those will be non-interest bearing, non-repayable funds. Subsidies, in short. And the second assumption is that the money which the EU provides will be sufficient, i. e. that Greece will not have to use its own resources for the purpose of handling the refugee problem.

The money which the EU transfers to Greece will, presumably, be spent primarily domestically. Temporary homes will have to be built, infrastructure for those homes, medical services, general shopping, etc.

Sweden and Germany are already showing that the 'refugee business' is quite an interesting new industry where many private players find profitable business opportunities.

As I have pointed out before, the trick will be that the money will be spent properly and wisely. Examples of unwise spending would undue profits of intermediaries or remittances by refugees of money they receive to their relatives in other countries. They wisest spending is when the money is spent on domestic Greek products and services.

As I said in the beginning, this is a short-term, economic view. The longer-term implications of having a huge inflow from the Middle East and Africa can be quite different.

By why should Greece not take advantage of the short-term benefits to the fullest extent possible?

Should Greece Give Up Sovereignty Regarding Border Controls?

Observing how Greece gets overwhelmed by the refugees, I asked two of my English-speaking friends in Greece for their opinion why Greece wouldn't say something like the following to the EU:

„Friends, we have reached the end of the line as far as the refugee problem is concerned. We no longer have answers and we certainly no longer have the capability to do what everyone says we ought to be doing. As you may recall, we have been bankrupt for a number of years, and still are. Since you have all the answers and all the resources, we pass the buck on to you. You are herewith authorized to do everything on Greek territory which you think must be done. Protect the borders better than we have done? Fine. Build more refugee homes than we have built? Fine. Make better registrations than we have made? Fine. If you want to have your ships in our waters to defend the border, fine. If you want to have tanks on our territory to shoot the refugees, fine. There is only one request (‚condition‘ is such a harsh word) we attach to our offer: please get rid of all refugees on our territory. We have never invited them nor do any of them want to be in our country. In fact, they see us as part of the problem and not the solution. And we certainly can’t afford to house and feed them.“

Below are their reactions. As one may note, they seem to be saying the same thing but their conclusions are diametrically opposite.

Friend #1, a Brit living in Greece

„You mean that Greece should trade what little remains of its independence in order to survive? No, the Soviet Union of Europe would not agree to that. Far more likely is that it will unhinge Greece totally from the EU. After all, just look at a map - Greece is already totally detached geographically from the Eurozone, and Schengen. Even its only land border with the EU is Bulgaria, and they are not exactly totally enamoured with Greece at this point. Greece is not only currently being attacked by refugees emanating from Afghanistan, Iraq and Syria, it will shortly be attacked by an even greater volume from Africa. In my view, this will be the next calamity as Africans run increasingly from hunger, disease and political/religious turmoil. Where will they run to? Wealthy Europe, of course. Ok, many will aim directly for Italy or Spain but have you looked at a map of the Eastern Mediterranean to see how close Libya is to the southern coast of Crete? Why do you think that the water between the two shores is called The Libyan Sea?!? Look at Africa! Even Egypt is a domino ready to fall when the next revolution arrives. With a population of 80 million+, and growing by 2 million a year, and all packed like sardines in the Nile Valley. I remember that even when I worked in Cairo (2005-7), there were many sub-Saharan Africans there. Egyptian friends of mine merely said that they were Nubians from Northern Sudan, but I think that many were from further south. No, Klaus, the EU SSR will not entertain such a request from Greece nor will Greece openly kowtow to them. Greeks, I believe, will always want to retain some sense of independence, although this will be at a tremendous economic - and political - cost.“

 Friend #2, a Greek
"Couldn't agree more with Klaus' proposition and what David describes as the near- and midterm future to come is all the more reason to see Klaus' thinking as very logical!"

Refugee Subsidies Must Be Controlled!

As Greece can look forward to (well-deserved!) financial support from the EU to handle the refugee crisis, an entirely new perspective opens up: whenever money flows in large amounts to provide help, the question is whether all that money ends up in the places where it is supposed to end up. It is no secret that a good portion of EU subsidies for Greece, particularly agricultural subsidies, ended up in the wrong pockets for the wrong purposes. The Greek government is now challenged to do everything possible to assure proper usage of the refugee subsidies.

If Sweden serves as an example, there are probably already many entrepreneurial Greeks who ponder how to get a portion of the cake. The immediate financial help is said to be 300 MEUR. Those 300 MEUR which the EU will transfer will transform into income on somebody's part. One would think that it cannot be too difficult to trace and control the money which will be disbursed for proper application.

If Sweden serves as an example, one ought to be worried. As this article suggests, an entire private refugee support industry has developed in Sweden. In 2015, 150 MEUR were disbursed to private operators of refugee housing centers. The housing centers are of greatly varying quality. The major operators allegedly have a profit margin of 50% and more!

But it's not only housing where intermediaries will be able to make money. In fact, money is to be made wherever the above 300 MEUR flow. Assuming a multiplier effect of 7, that original 300 MEUR will eventually add up to over 2 BEUR in cash flow. If properly used, that cash flow will be in exchange for products and services delivered to refugees. The key question is how much of that cash flow will end up as profits on the part of intermediaries, in exchange for no value received. 

This Time It's Different!

In their famous book "This time it's different!", the authors Reinhart/Rogoff analyzed 'eight centuries of financial folly' and observed that every new folly was preceded by the conviction that this time it would be different.

Since 2010, there have been several occasions where Greece was seen 'on the brink'; 'headed for total collapse'; essentially 'headed for exstinction'. During such phases, I reminded myself what I had read about the history of Modern Greece. That there had been many phases where Greece seemed 'on the brink'; 'headed for total collapse'; or even 'headed for exstinction', only to re-emerge from all such phases in a stronger position than before. So I felt sure that this time it would not be different. Greece would not move towards exstinction, so to speak. Somehow, Greece would come out of all of this in a stronger position than before.

The refugee crisis has changed all of that, I am afraid, because the refugees won't disappear. And the fact will remain that Greece is geographically the closest and most easily accessible country to where the refugees come from. It remains to be seen whether any European country can effectively close its borders against a mass migration but it seems certain that Greece, because of its sea border, cannot. So whether or not Greece remains in Schengen, in the Eurozone or in the EU, for that matter, Greece will continue to be the first country (or one of the first countries) where refugees enter the European continent.

This is an awful perspective, reminiscent of a person standing on a beach, watching the huge tsunami approaching and knowing that there was no chance of escaping it. The only way out would seem that other European countries relieve Greece of all the refugees who land there but that scenario appears highly unlikely. It's one thing to send money to Greece knowing that it will most probably never return. It's quite another thing to take refugees from Greece knowing that they will never leave.

In fact, I can only think of one scenario where Greece could be spared the tragedy. If the Greek economic situation became really terrible (much, much more terrible than it already is), refugees might think twice before they risk their lives to enter a country where they would starve. But from the Greek point of view, that would only be substituting one tragedy with another one.

Regrettably, this looks like a no-win situation for Greece.

A Travel Agency Named Greece?

"I no longer understand the policies of the Greeks. It is unacceptable that Greece acts like a travel agency and simply sends all refugees onwards to the North!" - Werner Faymann, Federal Chancellor of the Federal Republic of Austria, a member of the EU. The comments are about a fellow member of the EU.

Is Werner Faymann an enemy of Greece?

Flashback to June 2015. The Greek debt crisis had reached boiling stage. In the Eurogroup, the ratio was 17 against 1. Greece had become a pariah. And in the midst of all of that, Faymann decided to visit Greece to express solidarity to Alexis Tsipras and the Greek people. Not all his European colleagues thought that this was a good idea. In fact, several of them criticized Faymann for sending out the wrong signal. And yet, Faymann warned that Greece must not be humiliated; that further linear budget cuts made no sense and would only hurt the poor; and that an honest compromise was necessary. From then on, Alexis Tsipras used the phrase "my friend Werner".

Flashback to October 2015. The refugee crisis had become a true "Völkerwanderung". Faymann decided to visit "his friend Alexis" to lend support. Together, they visited the island of Lesbos. "When masses of people are heading North towards the border, they cannot be stopped very easily", Faymann was quoted as saying after visiting a Hotspot under construction.

Around the same time, Faymann started a feud with his Hungarian counterpart Victor Orban. Orban's erecting a border fence was a slap in the face of humanitarian values, Faymann argued. His bussing of refugees from the Croatian to the Austrian border reminded Faymann of the transportation methods of the Nazis.

Four months after that, Austria hosted a Balkan Conference in Vienna. Having just set upper limits for refugees, Austria negotiated an agreement where the flow of refugees would be more of less stopped; at least reduced to very low levels. All countries would help to fortify the Greek/FYROM border so that refugees could no longer cross in an uncontrolled way. Even though it was not the intent of the Balkan Conference, the result clearly is that Greece will turn into a "warehouse for all refugees", to use Alexis Tsipras' words.

Greece was not invited to the Balkan Conference, which certainly is an injury to its interests. When asked why Greece had not been invited, the Austrian Foreign Minister Alexander Kurz said that "Greece has not demonstrated any interest to be constructive in the refugee crisis. There have been innumerable meetings and conferences with Greece. Except: Greece was never prepared to even discuss a reduction of the refugee flow. Greece only wanted to discuss how to send refugees as quickly as possible on to the North". That undiplomatic frankness added insult to injury.

One is inclined to think that Austria had a change of government. The previous government had clear humanitarian priorities and defended European values. The new government, installed in the beginning of 2016, made Victor Orban of Hungary look pale. Not only did it announce an upper limit for refugees but, literally overnight, it recreated the spectre of the Habsburg Empire where sly Vienna often was in defiance of arrogant Berlin. Diplomatic niceties were of no importance to the new government. Instead, the Interior Minister opened the Balkan Conference with the words: "Our intent is to provoke. Our intent is to initiate a domino effect. We want to cause a chain reaction of reasonableness".

Except, there was no new government in the beginning of 2016. It was the same government and the same ministers as the year before.

My intent is not to justify the conduct of Austria's government. Instead, my intent is to explain why the government has undergone such a radical change of conduct in the hope that this will be of service to my Greek readers.

I think it is important to differentiate between the flow and the stock of refugees. The flow are the hundreds of thousands of refugees who have crossed European borders in recent years. The stock are those refugees which decide to stay within the borders of one country. The flow incurs one-time costs (temporary infrastructure, transportation, logistics, etc.). The stock incurs permanent costs for generations to come.

Austria, too, has bussed hundreds of thousands of refugees from its Southern borders to the border with Germany and it has earned much anger from Germany for doing that. However, Austria has also built up a stock of 95.000 refugees in the year 2015 alone. Under current laws, these refugees will be entitled to bring along their families and the general expectation is that this will trigger a multiple of 3-4. In other words, 2015's stock of 95.000 will automatically become a stock of 300-400.000 within a few years.

The stock remains in the country and it triggers enormous ongoing costs: building homes; expanding social services like schooling, training, health care; and integration measures in general. Put differently, there will be 300-400.000 new residents who are entitled to essentially the same social benefits as Austrians, and the social benefits in Austria are generous: roughly 850 EUR per month for the first adult, half of that for the second adult and about 200 EUR per child. A family of four will quickly collect 1.500-2.000 EUR per month. A politician recently published a calculation where, in Vienna, a family of four can make up to 36.000 per year if all special benefits are taken advantage of.

Mind you, these are not income figures for working. They are income figures if not working. And there are many Austrians who do not achieve these income figures despite working which makes for fertile ground for anti-refugee sentiment.

Given Austria's demographic challenge over the next decades, refugees could become a blessing and the answer to that challenge. Provided, of course, that refugees finds jobs, earn income for work and make contributions to the social systems. Regrettably, the statistics are not very promising. In Switzerland, for example, statistics show that up to 80% of refugees are still recipients of social benefits after 5 years in the country. Time will tell how Austria will fare in that regard. Early analyses suggest that, at the most, 25-30% of the arrivals have skills which are in demand. At the same time, Austria presently has the highest unemployment since the end of WW2.

For quite a few months, Chancellor Fayman was 100% loyal to Chancellor Angela Merkel. They both agreed that this was a European problem which could not be solved by any one country alone and that, in consequence, national measures were detrimental to the overall project. Merkel/Faymann preached without end that the stock would have to be Europeanized (a fair distribution throughout Europe) and that the flow would have to be reduced. And they were essentially told by others to go fly a kite, particularly by the East Europeans.

That was when Faymann showed nerves for the first time. Upset by the lack of solidarity from the East, he suggested that those who failed to show solidarity by accepting their fair share of refugees should see a reduction in subsidies they receive from the EU. After all, subsidies are a form of showing solidarity, too. As sensible as this suggestion sounded, Faymann was literally clobbered for making it. Blackmailing one another was not a European value, Faymann was educated. That was a formative experience for Faymann.

Then, major atmospheric changes took place in Germany, Austria and Scandinavia. Sweden, the former showcase for humanitarian policies, reached the end of the line and said they couldn't handle any more refugees. In Germany and Austria, the former 'welcome culture' mutated into a 'farewell culture'. Angela Merkel dared to tell Syrian refugees that when the war was over, they would have to return to Syria. But still, both Germany and Austria were still nobly accepting stock in their countries. And then Faymann blew a fuse.

After Austria broke a taboo by announcing its new policy of limiting the stock for 2016 to 37.500 (after 95.000 in 2015), literally all hell broke loose. Faymann was told by his European colleagues that this was anti-European, anti-humanitarian, anti-everything. Austria should be ashamed of itself. And then Faymann cried out: "Austria, with a population of 8 million, has accepted a stock of 95.000 in 2015. The Austrian ratio of acceptances/total population is arguably higher than that of Germany. Before anyone criticizes us, they should show the same humanitarian effort as Austria has shown so far!"

With that, the genie of diplomatic restraint was out of the bottle and it will be hard to get it back into the bottle. The Austrian government (as represented by a now upset and feeling-offended Chancellor, by a hard-nosed Interior Minister and by a slick young Foreign Minister) is now in defiance, a defiance which is based on demonstrated positive actions and not on beautifully articulated beliefs. The message to others clearly is: "First do as much as we have done and then we can talk!" The message to Greece is: "Don't make so much noise when you have taken in a stock of only 11.000 in 2015 with a total population 3 million greater than ours!"

It's a bit reminiscent of Clint Eastwood's "Go ahead, make my day!", except that Eastwood only had a revolver to impress his opponents whereas Austria has the track record of an accepted stock of well over 100.000 refugees by now. And all of these refugees are extremely well taken care of by Austria.

As unlikely as it appears today, it still cannot be ruled out that the EU, threatened by its demise, will eventually get its act together. Any European solution would undoubtedly have to involve some form of fair burden sharing among all members as regards the stock and some effective policies to control the flow. Who knows? If that miracle were to happen, and it would have to happen within weeks, then perhaps people will look back and conclude that the turning point was when Austria declared its intent 'to provoke a chain reaction of reasonableness'.