Refugee Policy Coordinated at the European Level Has Economic Advantages

In the ongoing political debate surrounding Germany’s policy regarding refugees and asylum, the current focus is on whether Germany can achieve its goals in this area without the support of other nations. Professor Friedrich Heinemann, head of the Research Department "Corporate Taxation and Public Finance" at the Centre for European Economic Research (ZEW), offers his view on the matter.

“The creation of a functional refugee policy in Europe is currently under serious threat from the free rider problem. By closing their borders, the EU Member States are trying to shift the costs of refugee policy onto their neighbours. This has triggered a chain reaction of defensive measures that will ultimately lead to the effective end to the acceptance of refugees in any considerable numbers. The European public good of receiving refugees would therefore no longer be provided. Such a result would go against Europe’s own interests.

Apart from the costs associated with controlling the borders within the EU Single Market, an effective system for receiving refugees in Europe would also help to stabilise countries such as Lebanon and Jordan, which are currently overwhelmed by refugees. Stabilising these countries is very much in Europe’s economic interest. In addition, an EU-wide approach can offer Member States insurance protection against the costs of a future refugee crisis that might hit them in an asymmetric way. Last but not least, saving the lives of refugees brings a moral benefit in accordance with the values inscribed in the Treaty of the European Union.

An EU-coordinated approach to refugee policy is the only way to overcome the destructive free rider problem and avoid a policy failure. In addition, a ZEW study has shown that an EU-wide refugee policy would lead to a considerable reduction in costs as a result of a more specialised asylum procedure. The recommendation for the current refugee debate is clear: it is worth investing more time in finding comprehensive European-level approaches to refugee policy. The potential economic benefits of a functioning refugee policy coordinated at the EU-level are considerable, while the costs of continuing negotiations are low due to the currently low numbers of new refugees. Choosing to go it alone in terms of refugee policy at this current time would therefore clearly not be in Germany’s best interest.”

For further information please contact:

Prof. Dr. Friedrich Heinemann, Phone +49 (0)621/1235-149, E-mail friedrich.heinemann@zew.de