From the 1980s on, a dominant international approach has been taken towards the majority of the world’s refugees. Concentrated in a small number of host countries, close to war zones, displaced people have been settled in what have become known as “humanitarian silos”. Such places are usually remote, arid, dangerous and almost always have strict prohibitions on socio-economic activity. They are designed to deal only with the emergency phase of refugee intake, and yet the model has endured, leaving individuals and families stranded for years at a time.
This strategy undermines autonomy and dignity. It also erodes human potential by focusing almost exclusively on people’s vulnerabilities, rather than on rebuilding their lives. Inevitably, many of those directly affected by it become disillusioned and choose to move on, gravitating towards urban areas in the host nation or risking their lives crossing oceans to other countries.
We need to rethink the humanitarian silo. What are the key rights that refugees are entitled to? The overarching right is to protection for the duration of the risk that they are fleeing. But since refuge typically lasts for years, this cannot be sufficient. Refugees have a right to expect a pathway to autonomy. Another distinctive right of refugees is that of return, or integration elsewhere, depending upon the duration of the conflict. For conflicts that persist, integration into another society is necessary: people cannot be left in permanent limbo.
But integration is not a simple solution. Rich countries are becoming less reliable as places for mass refuge. There has been a polarisation of politics. The right has become more rightwing, the left more leftwing and the centre ground has been decimated. In Europe, the far right is on the rise. Then there is Donald Trump as US president. Across the entire political spectrum, there has been a lurch towards nativism, and populist nationalism has become the common currency of democratic politics. Isolated terrorist attacks have repeatedly been used to repudiate the right to asylum in Europe.
The challenge now is to consider ways to address alienation and fear. Politicians face the dilemma of how to reconcile democracy and refuge in ways that can take majoritarian politics with them. Opinion polls tell us that public concern about asylum is not about numbers; it is about a perceived loss of control.
It makes sense to protect most refugees close to home. After all, nearly 90% of the world’s refugees are in countries that neighbour their homeland – nations such as Lebanon, Jordan, Turkey, Uganda, Kenya, Iran and Pakistan. However, countries that border war zones are often in need themselves, and ill-equipped to bear such responsibilities. A new, much more supportive approach to safe havens is urgently needed in order to address this imbalance.
In principle, when refugees flee a crisis, they receive initial emergency assistance and are then offered a pathway to reintegration into normal life. In practice, however, the default long-term response to refugees has become to create an indefinite dependency on aid. The imagined needs of refugees have been reduced to two basics – food and shelter – and it has become assumed that the most viable way to provide such rights is through camps.
It was not meant to be this way. Refugee-intake strategies were originally intended to promote access to autonomy, with particular focus on the right to work and freedom of movement. These rights are in the 1951 Convention on the Status of Refugees. But since the global shift towards encampment that began in the 1980s, these rights have not been implemented.
With the option to shift long-term responsibility on to the international humanitarian aid system, host states have invariably restricted refugees’ participation in labour markets. The denial of the right to work has had catastrophic consequences for many refugees, leading to a long-term erosion of skills and aspirations, and often exacerbating a sense of alienation and hopelessness. It has left refugees less able to contribute to their host states or to eventually rebuild their own societies, should they eventually return home. In Kenya’s Dadaab camps, for instance, many of the 350,000 Somali refugees have been there since the early 1990s – and none have the right to work.
If our duty is to restore the lives of displaced people to something as close to normality as possible, reestablishing their autonomy should be high on the agenda. One of the most important components of autonomy is the right to earn a living.
Rarely have economists thought about refugees. The dominant assumption has been that they are a humanitarian matter, and so studies have been led by lawyers and anthropologists. However, the truth is that refugees around the world lead complex and diverse economic lives. They are consumers, producers, buyers, sellers, borrowers, lenders and entrepreneurs. Faced with new markets, regulatory contexts and social networks, they are often highly innovative, coming up with creative ways to support themselves. A recent study commissioned by the Refugee Studies Centre in Oxford and conducted in Uganda – one of few nations that allows refugees to work – shows that they can make a contribution. In Kampala, the nation’s capital, 21% of refugees run a business that employs at least one other person; of those they employ, 40% are citizens of the host country.
Refugees bring diverse skills and talents; they usually represent a random sample of their home country’s population. As people, rather than “victims”, refugees are not economically different from anyone else. The only thing that makes the economic lives of refugees distinct from those of citizens or other migrants is the regulation that affects whether or not they can participate fully in the economy.
In restrictive countries, refugees are often denied the right to own certain types of property, their contracts may not be enforced, and there may be restrictions on mobility and the right to work. These kinds of institutional differences create immense challenges for refugees but they do not extinguish economic life. On the contrary, they explain the emergence of particular forms of informal economic activity.
Refugees and nationals frequently interact in ad hoc markets at the boundaries of camps and settlements. Illicit markets for goods, services, and labour spring up even when suppressed. SIM cards, handsets and World Food Programme food rations are bought and sold. Almost any item or service can still be procured if the price is right. There may be winners from these distortions, notably brokers and intermediaries. Certain forms of economic activity will thrive, including hawking and vending. Some refugees and even more nationals will accumulate capital in these highly regulated refugee situations.
Preventing refugees from participating fully in the economy is inefficient. Even a miniature refugee-only economy, kept separate from the national economy around it, will inflict needless losses on both. This is because the scope for specialisation and exchange is reduced. These economic losses will be exacerbated by the effect heavy regulation has in suppressing normal and productive economic activity. By creating situations in which there are extreme differences in market power between those who control opportunities and desperate individuals who seek them, we are more likely to leave people open to exploitation.
It makes economic sense to begin to break down arbitrary boundaries to refugees’ economic participation. But, as it turns out, many of the barriers to achieving this are political.
We need to change how we think about refugees’ needs. How can we move from a focus on vulnerabilities towards recognising and building their capacities? Rather than seeing refugees as an inevitable burden, how can we find ways in which they can be a benefit? Instead of being viewed as just passive victims of humanitarian disaster, how might they be seen as potential agents of development?
This requires a vision. There have been far too few good examples of refugees being given access to autonomy and jobs. Jordan has pioneered de facto “experiments” in refugee policy that deviate markedly from the dominant norm of long-term humanitarian aid.
Jordan has been profoundly affected by the Syrian refugee crisis. Its initial response to refugees was largely typical of host countries around the world; the government of Jordan faced severe policy constraints. But it is also a country whose refugee policies matter a great deal to the rest of the world: bordered by Syria, Iraq, Saudi Arabia and Israel, Jordan represents a rare island of stability within an insecure region. It has historically shown immense generosity towards refugees, welcoming and integrating Circassians, Armenians, Palestinians and Iraqis over several decades. The UNHCR estimates that Jordan currently hosts more than 600,000 Syrian refugees, although the government contests this figure and suggests it may be more than 1 million – this in a country whose own population is just 6.5 million.
A minority of the refugees are in camps such as Zaatari, Azraq and Zarqa, within which they are effectively “warehoused”, with limited economic autonomy and high levels of dependency on international assistance. By contrast, 83% of Jordan’s refugees are in urban areas, with the highest number in the capital, Amman, and others in Irbid and Mafraq. They have voted with their feet: while urban refugees have access to higher levels of autonomy, they relinquish access to most forms of international assistance. Furthermore, while most subsist via the informal economy, few are able to access formal work permits, either because they are prohibitively expensive or because of the restrictive bureaucratic process.
The international response is premised upon the same default logic that characterises the entire refugee regime. Donors write cheques to support humanitarian relief and host countries of first asylum are expected to provide the territory on which the refugees are hosted. Less than 3% of the total Syrian refugee population has received resettlement to countries outside the region. As with other neighbouring countries, this places a considerable strain on Jordan. When pushed to offer greater economic participation to refugees, Jordan has generally responded with two big concerns, relating to development and security.
One concern relates to competition for economic resources. In particular, Jordanians are worried about competition for jobs, downward pressure on wages, upward pressure on house prices, and the depletion of natural resources such as water. Although recent studies show that Syrian refugees have had a negligible effect on Jordanian labour markets, there is still concern.
The key concern, though, is national security. The large concentration of Syrians in cities creates a variety of anxieties, not least the problems that could arise with large numbers of young men with limited long-term economic opportunity. The perceived risk has increased as Syrian refugees deplete the savings and capital they brought with them. The timing of Jordan’s decision to close its border with Syria in September 2014, for example, coincided directly with a spike in Islamic State-related displacement from July 2014 onwards; ultimately, the fear of radicalisation and terrorist infiltration concerns the Jordanian government more than the labour-market implications do.
The result is a policy characterised by stasis. Most Syrian refugees are in urban areas, but are forced to subsist in the informal economy while their children remain out of school. A minority are in camps and dependent on international aid. Tens of thousands more are trapped on the other side of the Jordan-Syria border in a demilitarised zone known as the “berm”. Meanwhile, the international community is effectively stuck in a holding pattern, delivering aid while hoping the war in Syria will come to an end. It is hardly surprising that many young Syrians in the country see their only remaining routes to change as travelling onward to Europe or returning to Syria to fight.
The policy challenge in Jordan, and around the world, is to address the development and security concerns of the host country while empowering refugees. There are no easy answers. But there may be a solution that can simultaneously benefit Jordan, enable refugees and enhance security in the region. It lies in a particular approach to job creation.
One finds pockets of extraordinary resilience and innovation among the Syrian refugee community in Jordan. In the Zaatari refugee camp, home to around 80,000 Syrians, there is no right to work and all economic activity is supposed to be highly regulated by the government. But creativity abounds. The bustling main market street known as the Shams-Élysées – a play on words that references the Paris shopping district and the historic name for Syria – is lined with shops and small businesses. Despite strict access controls at the entrance to the camp, seemingly every product imaginable – from cosmetics to textiles to pharmaceuticals to pets – can be purchased here.
Innovation is on display in other ways. All refugee households are given a caravan, usually made from an old shipping container, to live in. Yet many of these caravans are reconverted: they might be moved across the camp, become shops along the Shams-Élysées or converted into furniture. A black-market construction trade smuggles bricks and cement into the camp, enabling further upgrades and extensions. Across the camp, one finds endless illustrations of inventiveness and entrepreneurship: urban gardening, striking murals and community-led journalism, to name just a few.
While some of this informal activity is tolerated, most is formally prohibited and selectively dismantled. The Jordanian police make occasional raids to shut down some forms of business, either because they have become too large, or for more vindictive reasons. Meanwhile, irrational contradictions pervade camp life: hundreds of Jordanian teachers are employed at great expense to teach Syrian children according to the Jordanian national curriculum, while hundreds of qualified Syrian teachers are left idle. The suppression and neglect of skills, talents and aspirations benefits nobody. What if instead refugees were allowed to join the labour market?
Just a 15-minute drive from the Zaatari camp in Jordan, there is a Special Economic Zone (SEZ) – an area in which business and trade laws differ from the rest of the country, in order to attract trade, investment and job creation. It is called the King Hussein bin Talal Development Area (KHBTDA). The government has invested £100m into connecting it to the national road network and economic grid. However, despite having a few factories, in 2015 it was operating well below capacity. It lacked two key things: workers and business investment. What might be the potential if refugees were allowed to work alongside Jordanian nationals in the economic zone? This might offer a way to simultaneously benefit refugees, contribute to Jordan’s own national-development strategy, and incubate the post-conflict recovery in Syria.
For a country such as Jordan, refugees arguably represent an opportunity for a transition to manufacturing. They are a potential source of labour. Syrians, for example, are often skilled and well educated, and share a language with Jordanians. Crucially, international recognition of a regional refugee crisis creates a potential opportunity for the government of Jordan to appeal for the relocation of a number of multinational corporations to Jordan, for reasons that partly connect to corporate social responsibility and partly to core business interests. The crisis also offers a basis on which the government could appeal to other governments – in, say, Europe or North America – to provide trade concessions that improve access to their markets.
A range of external actors might support the creation of such economic zones for refugees. For example, EU trade concessions, which are conditional on providing refugees with the right to work, might be available to businesses operating within the designated areas. Syrian businesses no longer able to operate in Syria could be encouraged to relocate to such zones, assuming they were eventually able to return. Among these businesses are multinational corporations such as American Express, Sony Corporation and Caterpillar, as well as many Syrian companies.
SEZs often have a bad reputation, being associated with exploitative, low-wage labour. But there is no reason why the model could not be adapted to ensure respect for human rights and ethical practice. The core of the idea would be to allow economic zoning that creates geographical spaces within which refugees receive access to a set of entitlements and capabilities. Crucially, the model should not function on the basis of any kind of coercion, but offer opportunities sufficiently concrete to attract refugees to work within and live close to these spaces. They should be premised upon possibilities that enhance refugee choice and autonomy.
A key part of this model is that it would contribute to post-conflict reconstruction. Ideally, many of the businesses developed within such spaces would be footloose, enabling them to follow refugees back to Syria when the security situation allows, and thereby play a key role in political and economic transition. The model would not depend upon the end of insecurity within Syria, but could be based on the idea of working towards an eventual post-conflict reconstruction, rather than feeding into a narrative of “local integration”. In that sense, it would be a model that works directly to enhance refugees’ autonomy, to meet Jordan’s concerns about national development and regional security, and to support rebuilding in the new Syria.
These initial ideas have since gained political traction, and have begun to be implemented. The trigger for international interest came during David Cameron’s visit to Jordan and Lebanon in September 2015. His visit immediately followed an outpouring of public support for refugees after the image of a drowned three-year-old boy, Alan Kurdi, went viral after appearing on the front page of newspapers across Europe. It prompted the UK government to initiate a resettlement scheme for Syrian refugees, providing official transport direct from the haven countries so that they need not take their chances with the people-smugglers. While in Amman, Cameron had met King Abdullah, who suggested the idea to him.
In January 2016 at Davos, the forum for global business, Queen Rania of Jordan acclimatised CEOs to the idea that corporate social responsibility to refugees did not mean diverting some profits into sending blankets; rather, it meant putting their core skills to use by integrating them into global supply chains. In the context of emerging business interest in solutions to the refugee crisis, a range of manufacturing company CEOs began to take notice. The formal launch of the pilot project came as part of the London conference on Syrian refugees on 4 February 2016. The basic deal on the table – called the Jordan Compact – was that Jordan would receive around $2bn (£1.6bn) in assistance and investment. In exchange, it would offer up to 200,000 work permits to Syrians. One of the main vehicles for this would be through a series of five new SEZs, in which refugees would be employed alongside Jordanian nationals, partly building upon existing development areas.
Over the next few months, the governments of Jordan and the UK, together with the World Bank, led the negotiation of a partnership to flesh out the details of the Jordan Compact and to carry the pilot forward. The UK has provided convening power and funding. The World Bank has offered concessional loan-based finance. But the most crucial component has been the unprecedented commitment of the European Union to providing trade concessions for particular products exported from the SEZs. In particular, it agreed that concessions would be initially offered in the garment sector, an industry in which many Syrians specialised in places that have come under relentless bombardment, such as Homs.
The deal represents a new kind of partnership: one that involves governments and businesses working together; one that cuts across old silos and situates solutions for refugees at the intersection between development, trade and security. Crucially, it is built upon a recognition that if areas of mutual gain can be identified, hosting refugees can become an opportunity rather than just an inevitable cost. European governments want to address a migration crisis; Jordan wants to make the leap to manufacturing and manage a security nightmare; business is seeking a new investment opportunity, while also trying to restore respect for modern capitalism; refugees want to work; and just about everyone has a stake in the long-term future of Syria. By linking these concerns, the approach offers scope for everyone to benefit, and so provides a more realistic possibility of moving the needle for refugees than the past model of pious exhortation ever did.
Globalisation can be a menacing and disruptive force, but it can also be a powerful one for good. At its best, it brings earning opportunities to people in places where previously they were largely absent. Refugees, separated from their prior livelihoods and often clinging to the lowest rung of the economic ladder in their host societies, need this power of globalisation more than any other group.
But how feasible in practice is it to bring global opportunities to Syrian refugees? In the context of Angela Merkel’s famous “wir schaffen das” speech, Germany received far more Syrian refugees than any other country in Europe. Superficially, the half a million Syrians who have moved to Germany would appear to be in the best position. But to date this has not been so, according to the German Federal Employment Agency, which reports a less than 10% employment rate for the new arrivals. It is hoped that this will change over time, but the employment record for Syrian refugees in Germany so far is undoubtedly unimpressive. This outcome is not surprising, given that Germany’s distinctive place in global production is entirely ill-suited to refugees from a poor country.
Production for global markets in Germany has specialised in highly skilled tasks that require years of training. The German system of training, envied around the world, integrates the last years of schooling with the early years of employment. Refugees cannot readily be parachuted into this system. Further, reflecting the high average level of skill, Germany’s minimum wage is far, far higher than wages in Syria, which reflected average levels of productivity of Syrian workers: per capita incomes in Germany are around 20 times higher than those in pre-conflict Syria. Consequently, inserting Syrian refugees based in Germany into the global economy is going to be difficult. They are more likely to end up in domestic-service positions created for them in the public sector, such as the post office. Even here they face difficulties: a refugee who applied for a job cleaning toilets was ultimately rejected by the local Bureau of Employment on the grounds that “a native-born German could do the same job”. By that criterion, many of the refugees invited to Germany will continue to languish in unemployment.
Connecting the refugees in the regional haven countries is likely to be easier. Paradoxically, German firms may find it easier to generate jobs for refugees in the regional havens than to integrate them into their German-based activity. This is because German firms have pioneered modern globalisation. The world’s top authority on this recent form of globalisation is economist Richard Baldwin. As he explains, since the 1990s globalisation has not been about shifting production to China; it has been about relocating some tasks that are still done within the same firm to cheaper sites. These sites cannot be thousands of miles from the main factory, because production on both sites must be controlled as an integrated process. For example, managers must be able to fly between them in a day. It is not only distance that matters: if the “foetus” factory is to be linked by an umbilical cord to the parent factory, there must be no regulatory impediments.
Trade barriers between the country of the parent and the country of the foetus would be a killer. In the 1990s, the preferred sites for German manufacturing firms were in Poland: very close and much cheaper than Germany, and a member of the EU and so barrier-free. German firms are not alone in this – the same model has been developed by US and Japanese firms – but they are Europe’s leading practitioners. US firms have some tasks undertaken in Mexico, while Japanese firms offshore some work to China.
But, as in China itself, as German production shifted to Poland, wages rose and so firms started to look a little further afield. During the past decade, the preferred location has been Turkey. Turkey is further away than Poland, but still the “near offshore”: if refugees can walk it, German managers can certainly fly it. And although Turkey is not in the EU, it has privileged status for trade purposes. The EU lets goods produced in Turkey enter duty-free. Turkey has indeed been growing explosively as a result of breaking into global markets for manufacturing. To give an example, within the last decade a nowhere town in central Turkey, not even on the coast, has developed into the dominant global centre of production for synthetic carpets.
If German firms can offshore to Turkey, in principle they can do so in all three haven countries. Turkey’s big advantage was its privileged market access to Europe. Both Turkey and Jordan have many industrial zones in which refugees could potentially work alongside nationals. This, of course, requires that the governments of the haven countries permit refugees to work in the zones. The international deal to which the government of Jordan agreed at the London conference in February 2016 included a commitment by the Jordanian government to provide work permits for refugees in return for new jobs being created in the zones: hence the vital role that international business can play in bringing dignity to refugees’ lives. The government of Jordan committed to 50,000 work permits in the following 12 months. It is on track to achieve this target, with more than 30,000 permits so far allocated, but the critical question is whether international business will generate enough jobs.
It might seem as though setting up production in a haven country industrial zone would require years of preparation. But global business does not work to such a glacial timescale. In Mexico, one US firm succeeded in going from zero to production in six weeks. Even the relocation of footwear production from China to Ethiopia took only a few months. A lot can happen in a year if CEOs take the issue seriously.
Nor does the generation of jobs for refugees depend entirely, or even primarily, on manufacturing firms opening new factories in the havens. All the main haven countries for Syrians are already middle-income economies, with many firms, international and domestic, producing goods that can be supplied to global marketing chains. The key companies might not be those engaged in global production, but in global retailing. For example, Asda investigated the scope for routing some of its orders to the zones in the havens, in return for commitments by suppliers to hire refugees. It found that this was feasible: now some of the products that British consumers are buying in their local Asda stores have been made by refugees.
Globalisation can work for Syrian refugees, but can it work at the required scale? The jobs created by foreign firms – both those that establish new production units and those that buy from firms already in the havens – generate other jobs: there is a multiplier. The incomes earned by these new workers get spent on services and food produced domestically.
International business can make a real difference to the life chances of refugees, but governments can make a decisive difference by catalysing the process. Following the London conference, David Cameron brought a whole-government approach to making it happen. He appointed a special envoy, Patricia Morris, to bring in the private sector, and Britain’s business secretary, Sajid Javid, flew with a group of CEOs to Jordan. That is how the Asda commitment came about. Other European leaders were too preoccupied with either trying to offload thousands of invited refugees to their neighbours, or resisting European Commission directives ordering them to do so, to focus on generating jobs for the millions of refugees remaining in the havens.
Every approach should involve promoting empowerment through the right to work, the role of public-private partnership, and the recognition that refugees need to be understood as much in terms of development and trade as humanitarianism, and that deals should be based on the principle of mutual gain.
While the Jordanian SEZ pilot focuses on a middle-income country aspiring to increase its manufacturing base, the basic logic of “development areas” – whether based on integration or incubation – could also be applied to countries that are seeking to build different economic sectors. Depending on whether one is seeking to promote economic participation in manufacturing, agricultural or information economies, the model and partnerships required for success will vary.
Refugee protection is not the same as immigration. Its purpose is to provide people with their full set of rights until they are able to go home or be integrated elsewhere. Nevertheless, with creativity this can be done in ways that promote human flourishing and simultaneously benefit host countries by supporting their development strategies, particularly within underdeveloped border areas. But the potential of this new approach extends beyond refuge. It can be made to serve another purpose, too: helping to restore stability to countries such as Syria once the conflicts are over.
This is an edited extract from Refuge: Transforming a Broken Refugee System by Alexander Betts and Paul Collier, published by Allen Lane.