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. 

Poland's Extraordinary Transformation

WASHINGTON:  Twenty-five years ago this autumn two remarkable events took place in Washington.

On September 27^th, 1989 in the musty embassy ballroom of the Polish People’s Republic on upper 16^th Street, Leszek Balcerowicz, finance minister in the new non-communist government, outlined a plan to transform Poland’s economy from communism to capitalism. Shock therapy would be launched in three months.

Balcerowicz’s message was breathtaking.  Prices would be decontrolled, individuals allowed to start businesses, the survival of state enterprises determined by the market. There was more-- the printing press would be shut down—halting hyperinflation, the worthless Polish currency redeemed.

Financial journalists in Washington for the annual meeting of the International Monetary Fund were astonished.  Some sprang from their seats to file stories after the modest man in the ill-fitting East European suit stopped talking. For those of us remaining the room was electric. One reporter said, “there are lots of books about transforming capitalism to communism, none for going the opposite direction.”

This was six weeks before the Berlin Wall came down.

On October 19th, 34-year-old Jeffrey Sachs, the Harvard economist advising the Polish government, made an emotional plea to Washington insiders. At a Willard Hotel dinner arranged by the Institute for International Economics, Sachs said Poland required a cash injection to “leap across the chasm” from disintegrating communism to capitalism. “The next six months,” he said, “are critical in determining whether Eastern Europe’s first non-communist government since World War II succeeds.”

Sachs had made his name by helping to end hyperinflation in Bolivia. He essentially shamed his Washington audience into action, excoriating the US government, the IMF and World Bank for dragging their feet.  It was imperative, he said, that the Polish experiment succeed.

The debate over big bang and shock therapy essentially began that night.

Sachs had offered his services to Poland only weeks earlier and was just off the plane from Warsaw where there was chaos and anger over shortages of basic commodities, including food. Few outsiders thought the planned reforms-- that in the short-term would further depress living standards—had any chance of working. Sachs said later, "It was a terrifying and unpredictable period."

The rest, of course, is history. Not only did the Balcerowicz reforms stabilize and activate the economy, they won critical public and government backing. They became a model for similar plans in Czechoslovakia and the Baltics (where they worked) and in Russia (where they failed).

What could not be foreseen in the autumn of 1989 was that Poland would become the star performer of all the economies that emerged from the wreckage of the Soviet empire. Poland’s return to growth and fiscal discipline were powerful factors in the European Union agreeing to admit eight former communist countries in 2004.

Balcerowicz, now 67, served as finance minister and then central bank chief until 2007. Currently he teaches at the economics university and runs his own research institute.

While Poland has not yet joined the euro currency zone, Balcerowicz subscribes to the fiscal austerity doctrines championed by Germany. He faults Greece and other southern periphery countries for not moving fast enough or hard enough to restructure their uncompetitive economies.

The Polish miracle continues.  Alone among European Union economies it did not experience a downturn following the 2008 financial crisis. In most recent years Poland has been the fastest growing economy in the EU. Its gross domestic product has doubled since 1989 and is today Europe’s sixth largest economy.

More significantly, per capita g.d.p. has more than doubled since 1989.  This in a country of nearly 40 million, by far the largest in Eastern Europe.

Poland and Germany—with a long history of conflict—have become partners, demonstrated most recently by Chancellor Angela Merkel championing the selection of conservative Polish  Prime Minister Donald Tusk as the new president of the EU council. 

Reflecting on the 25^th anniversary of his reforms, Balcerowicz credits Sachs with playing a vital role in persuading the Solidarity-led government that shock therapy was the best way forward. For his part, Sachs says he is "thrilled that the Poles acquitted themselves so beautifully in the pages of history."