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. 

Berkshire 2015: Notes from the Warren and Charlie Show

OMAHA: As usual the Warren Buffett and Charlie Munger show played to thousands of the faithful at Omaha’s main sports arena.  The day-long Saturday session was chock full of jokes and wisdom for investors.

This 50^th annual meeting (my fifth) was noteworthy for the principals pronouncements on the euro currency and China.

 The Young and Not So Young in Omaha

There have always been questions about the euro but this time both Charlie and Warren were more skeptical, arguing that changes are required for the system to be viable. Munger said the € has done well, but the flaws must be addressed.  “They created something that is unwise,” he said,  “they’ve got countries in there that shouldn’t be there.” Obviously referring to Greece, he said in his inimitable way,“you can’t do business with your drunken brother.”

He complained that Greece had submitted false statements (assisted by a US investment bank) to get into the system.  The Europeans, said Munger, have to face up to the system’s flaws. Surprisingly, Buffett chimed in saying, “in its present form it’s not going to work.”  Combined, this is a stronger critique than had been voiced at earlier meetings.

Munger was ecstatic about what China has achieved in boosting living standards. it’s “totally miraculous” what the country has done so far. “I would have not believed a country of that size could move so far, so fast.”

The 91-year-old Munger believes President Xi Jinping is consciously modeling the successes of Lee Kuan Yew’s Singapore, rooting out corruption, even putting some of his friends in jail. Munger sounded almost like a member of China’s politburo, saying “they’ve found a way to unlock the potential of their people.”

Buffett agreed, saying it is amazing what China has done. “It blows me away,” he said. “As Charlie says, China and the US are going to be the superpowers for as far as the eye can see.” He said despite inevitable conflicts China and the US have to find a way to work together.

There was, of course, the usual wit. They said,”we think that any company that employs an economist has one employee too many.”

Munger had this observation about Germany: “Germans work fewer hours than a lot of people and produce a lot more.”

Buffett corrected a questioner who asked about his giving away 90% of his enormous wealth. Actually, said Warren, “I’m giving away 99%.”  Most of those billions go to the Bill and Melinda Gates Foundation. Buffett quipped, “there’s no Forbes 400 in the graveyard.”

The weather was super, springtime in Omaha.  And the show goes on as neither Warren nor Charlie gave any hint of stepping down.