European financing for the European refugee crisis

Guntram B. Wolff

As countries are struggling to implement the EU-Turkey deal on refugees, the debate on how to finance EU migration policy is heating up. Italy has proposed issuing ’EU Migration Bonds’ to fund migration in EU countries, while Germany’s finance minister Wolfgang Schäuble has proposed that expenses related to migration, including enhanced European border controls, be financed with a commonly agreed tax on fuels.

Pooling resources to fund migration and border controls makes sense in an EU that has largely removed internal border checks. Protecting external borders is a shared task, which can be most effectively carried out if paid for with common funding. EU countries should also work with neighbouring countries to influence their policies, and cooperate on dealing with migrants.

This is what the EU has been doing in the deal with Turkey and is also discussing as regards Libya. Again, EU actions will be much more effective if different policies are closely coordinated between countries. Once the political and administrative capacity is in place, the EU’s external policies will also need their own source of funding.

The IMF has estimated the short-term fiscal costs of asylum seekers to be at an average of around 0.1% of GDP. However, some countries are spending significantly more. Added to the asylum costs are the costs of other policies, such as more effective policies outside the EU and funding Frontex, the EU’s external border control agency. Handling the refugee crisis and funding the response to it cannot be left to Greece, Italy and the other peripheral countries alone nor can Germany and Sweden accept and fund almost all refugees arriving. It must be a joint endeavour.

Common border controls and migration policy represent a permanent cost – as the Italian paper argues, migration flows towards the EU will likely continue. Permanent costs require permanent resources and cannot be funded by deficits. The idea to create a common tax to fund such costs is therefore welcome. Wolfgang Schäuble’s idea to use a petrol tax points in a sensible direction.

The article's full-text is available here.

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