Europe’s humanitarian crisis has economic consequences

Kimberly Adams Sep 14, 2015
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Europe’s humanitarian crisis has economic consequences

Kimberly Adams Sep 14, 2015
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The migrant and refugee crisis in Europe is first and foremost a humanitarian one. Hundreds of thousands of people are risking — and some losing — their lives for a chance to live in Europe. Now Germany and several other countries are toughening up their border security, saying there needs to be a more orderly system for processing the flood of people.

In most of the 28 countries of the European Union, you can cross borders without showing your passport in what’s called the Schengen Area. But now some countries, including Germany and Hungary, are changing that.

“A couple of member states have felt the need to reintroduce border checks to make sure they have the situation fully under control on a temporary basis,” says David O’Sullivan, the European Union’s Ambassador to the U.S.  He says the border checks are allowed, especially given the scale of the crisis.

But, in some ways, free movement for goods and labor is already being limited in some areas. Wolfgang Danspeckgruber is the director of the Liechtenstein Institute on Self-Determination at Princeton University, and just returned from Europe. He says the masses of people gathered at some train stations are causing problems for Europeans traveling for work.

“Because of all kinds of programs or controls,” he says, “trains would be delayed, and you would have — for European rail connections — unheard of delays.”

The cost of those delays for businesses isn’t yet clear. But Aroop Zutshi,  global president and managing partner at consulting firm Frost & Sullivan, says he expects it to be about $350 million a day. That’s what he’s seeing so far in the United Kingdom, which it isn’t part of the Schengen Agreement.

“So when you have a disruption of this nature, it has a ripple effect across the entire value chain,” he says. But ultimately, Zutshi says Europe’s economy will benefit from the influx of refugees and migrants.

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