Blog: Finding the money: financing Europe’s refugee and migrant crisis

The UN warns the humanitarian aid system is ‘being stretched to breaking point’

This article was originally published by SPERI

The International Organisation for Migration (IOM) reports that over 613,000 people of mainly Middle-Eastern and African origin have crossed into Europe this year so far, fleeing ongoing conflict and poverty in countries such as Syria, Iraq, Afghanistan, Libya and Somalia. The European Union’s response has been chaotic, frenzied and ultimately tragic, and can be described as nothing short of an ‘omnishambles’.

Germany is the destination of choice for many refugees and migrants. It has oscillated between an ‘open door’ policy, with a promise to take up to one million asylum seekers this year alone, to offers of billions in aid to Turkey (currently ‘home’ to over 2.2 million Syrian refugees), plus accelerated EU membership talks, if its government promises to help stem the flow of people to Europe. The Independent newspaper now reports that German Chancellor, Angela Merkel, faces a backlash from her own parliamentarians over her handling of the crisis with threats to table proposals for a ‘Berlin Wall’ style defence on Germany’s borders.

Elsewhere in Europe, Hungary’s response has been to fire tear gas and water cannon on unarmed people and, even more notoriously, to erect razor wire ‘security’ fences along its borders with Croatia and Serbia (dubbed by some media outlets as the ‘Great Wall of Europe’). Greece, which is crippled by its own economic crisis, is also on the frontline; the International Rescue Committee and the IOM estimate that, every day, more than 7,000 people stream onto Greece’s shores to be met by chaos and squalid conditions as under-resourced local authorities collapse under the strain. Most European countries seem happy to ‘pass the buck’ to the next country and even facilitate refugees’ onward travel with special trains, buses and even taxis laid on for the purpose.

As the EU continues to squabble over what to do next and as the civil war in Syria enters its fifth year, there are few signs that the flow of people will diminish any time soon.

All these events, combined with other crises in other locations, have put international humanitarian assistance under the spotlight as never before. An extraordinary combination of emergencies continues to test international and national capacities to prevent, prepare for and respond to crises, whatever their nature or origin.  This year’s Global Humanitarian Assistance Report (GHA) reports that international humanitarian assistance reached record levels at US$24.5 billion in 2014, up by a fifth on the previous year and more than three times the figure of ten years before. This is a number that can also be expected to climb next year.  The UN’s High Commission for Refugees (UNHCR) recently reported that it ‘has never had to address so much human misery in its 64-year history’.

Yet, for all the presence of more money in the ‘humanitarian system’ than ever before, funding is not sufficient to meet needs.  The United Nations reported a US$10.8 billion shortfall for its humanitarian appeals this year (it raised just 45% of the resources it requested from the international community). Humanitarian financing needs appear to be escalating rapidly – not just growing each year in volume, but doing so seemingly with higher growth rates each year.  Much of this is driven by protracted crises in countries with ongoing conflict and insecurity: these problems account for seven to eight of every ten dollars spent and constitute the bulk of the pressure on the humanitarian system, even in years in which significant disasters occur.  Two-thirds of international humanitarian assistance is provided to long-term recipients, such as Syria, Somalia and Pakistan.

The United Nations and bilateral donors now warn that the humanitarian aid system is ‘being stretched to breaking point’ by a range of challenges, such as war, natural and man-made disasters, climate change and extremism. More money, better coordination amongst the various humanitarian actors and more attention paid to the root causes of crises are needed, we are told.

On money, the appeal for more resources from international donors is certainly warranted. A convincing case can also be made that aid should be made available to countries dealing with large refugee influxes, such as Turkey, Lebanon and Jordan, which do not normally receive very much (Lebanon now counts one refugee for every four inhabitants).

But this also raises another set of challenges. Aid for humanitarian interventions is mostly sourced from donors’ development aid budgets.  If donors don’t grow the overall aid ‘pie’ (which by and large they are not at the moment), it can mean that fewer resources are available for spending in other countries and on other issues, such as water and sanitation, education and health-care.

In parallel, there are other pressures being placed on traditional development aid budgets, in particular the need to allocate more resources to climate change adaptation and mitigation in developing countries in line with international commitments. Again, a considerable chunk is sourced from development aid budgets, even though, in principle, these resources are supposed to be additional to aid.  In 2013, climate aid amounted to US$37 billion out of US$134 billion in total aid for that year (OECD donor countries only). As with spending on humanitarian interventions, this amount is likely to increase further in the future.  France’s President, François Hollande, recently announced his country would almost double its spending on curbing climate change (mostly, it should be noted, in the form of loans to other countries).

As several researchers have noted (see here and here), the list of global policy issues that states are asked to fund, collaborate around and follow up on grows longer and longer by the day. It includes hugely diverse issues: such as reducing poverty; advancing international peace and security; fighting international crime and terrorism; combating tax evasion and avoidance; controlling communicable diseases; funding science, research and innovation; averting and mitigating the risks of climate change; fostering international financial stability; protecting human rights; and many more.  Yet public resources don’t increase (or don’t increase enough) in line with this larger set of international demands.  Worse, several donor countries are scaling back spending on international concerns, while others want to widen the criteria for what can be counted as ‘development aid’.

For example, under current aid rules (which donors draw up themselves), costs associated with supporting refugees in the donor country may be counted as overseas aid for up to one year after the refugee’s arrival. As they prepare to take in more Syrian, Iraqi, Afghan and other refugees over the coming period, some donors have asked for this to be increased to three years.  Already in 2013, some US$5 billion in overseas aid was spent on in-donor country refugee costs, a figure which will climb this year.  This represents another major pressure on long-term development aid budgets.

One key challenge is that many electorates are not well-informed about – and thus do not prioritise – spending on these sorts of international concerns. Building the case for such spending is even harder, of course, in an era of austerity.  Yet the reality is that the world’s countries are more closely connected and interdependent than ever before.  This means that getting this spending right has never been more important.