Refugees: Germany Land of Hope

GOTHA, GERMANY:  In welcoming thousands of refugees shunned by others Germany occupies moral high ground. Stories and images of desperate migrants fill television news. Nightly there are informed debates about the challenge of integrating Syrian and other Muslim asylum seekers into German society. 

The impulse to help is visceral, shared by the public and elected leaders.  Chancellor Angela Merkel probably speaks for millions when she declares, “I am happy that Germany has become a country that many people outside of Germany now associate with hope.”

Germany’s biggest political parties, Merkel’s Christian Democrats and the Social Democrats, are at one on immigration, agreeing that Germany can absorb 500,000 refugees this year.  Only Bavaria’s Christian Social Union is skeptical.

The welcome signal from the top resonates.  This week I watched youthful volunteers at the Frankfurt train station wearing “refugees welcome” shirts in English and Arabic handing out fruit and soft drinks to new arrivals. 

Germany’s affirmative stance has struck a chord elsewhere, including the Pope’s call for Catholic families to take in refugees, and Britain and France increasing the number they’re willing to accept.

But there is a limit to German generosity and of course the burden of accepting refugees must be shared.  The ongoing flood of refugees underscores a complete absence of EU consensus on immigration.  Much of the disagreement is historical and cultural.

Greece, the first EU country where Iraqi and Syrian migrants arrive after transiting Turkey, is weak politically and prostrate economically.  Greek authorities on islands adjacent to Turkey were overwhelmed. EU migration guidelines were ignored. Greece merely transported refugees to Athens and put them on trains headed north.

A single rail line links Greece with Belgrade through Macedonia. Departing from a EU country the refugees walk the final mile to the border where the Macedonians have been ill prepared to receive them. Once aboard trains—as I observed last weekend in Skopje—the refugees arrive in another non EU country Serbia, which has done well in moving them through to the Hungarian border.

It is in EU member country Hungary where the problem is most severe.  Hungary, led by a rightist nationalist party, has greeted the refugees with contempt and the ugly scenes at the Budapest station and the Serbian border have spread worldwide.

But it’s not just Hungary. Other EU countries-- formerly communist Czech Republic, Slovakia, Poland and the three Baltic States—oppose quotas on accepting refugees. Romania and Bulgaria, the poorest EU members, say they won’t take any. And Bulgaria—where 500 years of Turkish oppression is still talked about—is viewed as the EU country least welcoming to Muslims.

Critics of Germany’s stance say the country is naïve and foolish, that the floodgates having been opened, ISIS and other terrorist groups will have placed their people among the refugees. Germans are aware of that danger but count on strict accountability as migrants are required to study German and regularly update their status.  Unlike illegal immigrants into United States those coming to Germany seldom vanish into a marginalized shadow economy.

Much is at risk in this refugee crisis. Unless resolved soon the free movement of people within the EU’s single market—the Schengen agreement—could be modified. Germany’s asylum policies are in flux and already migrants from countries no longer labled conflict zones—Albania, Kosovo and Montenegro—are being sent back.

Germany is no stranger to mass migrations and is acutely aware of its horrific failure to protect Jews during the Nazi period. After the war Germany resettled over five million Germans expelled from lost territories. There was a wave of migration out of East Germany prior to unification. The current flood of people, however, is the greatest since the war and shows no sign of abating.

As with the euro currency crisis, Chancellor Merkel says the future of the European Union is at stake. “If Europe fails the refugee question,” she says, “then a founding impulse for a united Europe will be lost.”

For now at least Germany holds high the banner of human rights. 

Thessaloniki: Heart of Macedonia

Thessaloniki, Greece.  The Galerius Arch has been the eastern gateway into this pulsating port city since it was built in 299 A.D. commemorating the Roman emperor’s victory over the Persians.

The thoroughfare passing beneath the arch—the Via Egnatia—is even older. It dates from 146 B.C. and extends 400 kilometers from the Adriatic town of Durres across the mountains of Macedonia and then south to this magnificent city at the top of the Aegean Sea. The Via Egnatia was the second most important highway in the Roman Empire and the first to span the Balkan peninsula. It remains Thessaloniki’s principal thoroughfare.

It is tragic that a geo-political argument prevents Thessaloniki from being fully integrated with its traditional hinterland.  The problem is the rancorous, silly dispute between the Macedonian region of former Yugoslavia and Greece that has dragged on, impeding regional progress for two decades.  Athens argues that the Republic of Macedonia that emerged from Yugoslavia in 1990 is not entitled to be called Macedonia because the real Macedonia is in Greece.

So adamant is Greece that in 2008 it vetoed its vulnerable northern neighbor’s bid  to join NATO and continues to block Macedonia’s path to the European Union.

The Slavic Macedonians share the blame.  They have only a connection of geography to the ancient Macedonians, whose most famous son, Alexander the Great, died hundreds of years before Slavs even arrived in the Balkans.  It’s an insult that the Republic of Macedonia names the airport of its capital city Alexander the Great. Pursuing a fraudulent identity, Skopje has built statues to a Hellenic-speaking tribe with which it has no lineage.

Despite economic crisis, Greece allows the dispute to fester. This month brought more angry exchanges. The Greek prime minister accused Skopje of intransigence.  Macedonia’s prime minister countered, asking Greeks how they would feel if their country was called “the former Ottoman province of Greece,” a pointed reminder that Greece endured 400 years of Turkish rule.  Foolishly, Greece insists that in international organizations its neighbor is identified as FYROM, the Former Yugoslav Republic of Macedonia. 

A sensible solution is for Skopje to have the name Northern Macedonia. This would suggest that the Macedonian heartland is to the south in Greece and that only an accident of history resulted in the southern part of Yugoslavia having the same name.

Of course, strife and bloodshed are all too common in the Balkans and Thessaloniki has been a particular victim. Traditionally a melting pot of cultures and ethnicities, Thessaloniki endured the Romans and then the Turks who were finally beaten and driven out in 1912.  The victorious Greeks sought to obliterate all evidence of Ottoman rule, destroying all but one of the city’s minarets.  

Further outrage came under the Germans when the Nazis deported and killed Thessaloniki’s 50,000 strong Jewish community, which had flourished since receiving sanctuary from the Turkish sultan after being expelled from Spain in 1492.

Thessaloniki somehow manages despite the political standoff and rail and road delays at the Macedonian border.  But it would be so much more vibrant if it could resume its rightful place as the commercial center of an integrated, peaceful Balkan region, the beating heart of the Via Egnatia. #

A Stunning Lack of US Support for the IMF

Thessaloniki, Greece.  Some years back, I wrote that the annual meeting of the International Monetary Fund in Washington was Davos on the Potomac. It is, but it is much more.  Held two out of every three years in the IMF headquarters city, it is a much larger and more important gathering than the World Economic Forum.  

Marco Annunziata of GE, formerly the chief economist at Italy's biggest bank, calls the IMF meeting "an extraordinary concentration of policy makers and market participants...an opportunity to take the pulse of the global economy."

Created in 1944 by the British/American partnership that led the western war effort, the IMF is in Washington because then President Roosevelt and his Treasury Department wanted to keep an eye on it. (They weren't sure the wily Brits who wanted US money could be trusted)  

As the Fund gathered strength in the 1960s making emergency loans to countries in distress, US dominance in the financial agency that has always been headed by a European became paramount.

It still is. Washington alone has a veto over all major decisions as votes are weighted in accordance with economic strength and the US accounts for over 16% of the total.

And so it was that this year's meeting took place while the US government was shut and its treasury secretary distracted by calamity.  Put in simplist terms, with finance ministers and central from virtually all the world's major economies in town, the US government presented itself as unable to produce a budget, a task the IMF identifies as basic. 

Embarrassment to describe the political gridlock is too mild. Shock was a more typical assessment from the high-powered visitors. Frustration with US dithering on global and domestic policy prompted editorialists at Xinhua in China to write that it is time for the global economy to be "de-Americanized." 

They also had in mind the disgusting refusal of the congress to even consider a replenishing of IMF resources that the Obama administration and over 180 IMF member countries agreed to  in 2010.  The lack of both congressional action and administration prodding is galling since it is essentially cost free to the US taxpayer. 

Myopic politicians in both parties fail to comprehend the extent to which the IMF promotes US goals of free markets, financial rectitude, and a rules-based open world economy. That China and former "third world" countries are demanding more say in the IMF should be seen as a triumph of US policy.

Indeed, some US officials privately support increased votes for emerging market countries, something the Europeans--overweighted in the IMF-- do not. Former Treasury official Tim Adams, who heads the Institute of International Finance, says "the old concept of the first world leading in the IMF is outdated." A determination to get more say in the IMF is one reason that seemingly disparate Brazil, Russia, India, China and South Africa have banded together as BRICS, creating their own credit lines with plans to create a development bank. 

The US remains the dominant world economy with its dollar the world's reserve currency. That privileged status shouldn't be taken for granted. With chronic trade and budget deficits, if the US were not respected, Washington could be like Greece coming cap in hand to the IMF for help. Far-fetched as that seems, it could someday happen.  Aware that the US is still recovering from its deepest recession since the 1930s, most policy makers abroad want the US to succeed. They recognize that robust growth and prosperity in the US is in their own interest.

But they also want an end to gridlock and a plan to bring our financial accounts into balance. Without this, US leadership in the global economy will continue to erode. #