Business, Politics

How War in Western Asia Creates Opportunities in Destabilized European Economies

 

Years of conflict in Syria, Iraq, Afghanistan, and other Western Asian nations have left local economies in tatters and resulted in mass outfluxes of citizens. In 2015, the number of refugees and migrants reaching Europe totaled 1.83 million. According to the United Nations High Commissioner on Refugees, almost 60 million people were forcibly displaced worldwide (11). These varied from war refugees fleeing parts of Central Asia and the Middle East, to conflict-torn or hunger-based migration in Sub-Saharan Africa, and economic wanderers heading through Central America to reach the United States.

The current crisis in Syria has taken its toll on countries affected by the resulting migration patterns, warranting in some cases public crises that leave the political economies of countries, or even economic powerhouses like the EU, unstable.

Since its foundation, the cohesive network of European countries has been successful in its original goal, namely to harbor peace and economic prosperity between member nations. One of its fundamental ideals was the prospect of an open trade zone with free movement between states: the Schengen Area. As the refugee influx increased in 2015, European states took different measures concerning domestic interests. In Denmark, Austria, Sweden, and Germany, temporary borders were erected to mitigate the flow of migrants (3). Borders led to reduced trade, as extended travel times created losses for businesses (10). For instance, after temporary closure of the Calais tunnel between the UK and France, 36 miles of congested highways costed the haulage industry alone ₤750,000 [$1,056,416] (1). If tensions were to increase, a Europe with open borders could cease to exist. Taking into account that around 75% of EU trade consists of road transport, the consequences for transnational businesses would be severe (8).

“Without Schengen and the free movement [of citizens], the euro makes no sense,” warned EU commission president Jean-Claude Juncker (9). German Chancellor Angela Merkel also cautioned that Schengen and the Eurozone are directly linked (12). The Netherlands, an export-heavy country with over 50% of exports heading to the Eurozone, would experience an unemployment rate of over 30% if the Eurozone were to crash (2). Yearly cost projections currently stand between 5 and 18 billion euros (6). However, not only EU commerce would decline; trade to the US and China would suffer between 91 and 280 billion euros over the next ten years (4).

As the United States’ largest trading partner, the stability of the EU is in the best interests of American multinational enterprises. The United States’ and the European Union’s economies account for half of the world’s GDP and one-third of the world’s trade flows (7). A necessity has risen here for businesses to aid in stabilizing political environments in which to better conduct business. One of the most efficient ways to handle the destabilizing migrant situation in Europe is to create vocational training programs for inducting refugees into a company. Many benefits, short-term (stabilization) and long-term (growth), can arise when business leaders adapt to these resulting changes and determine a strategy for business development, with the ultimate goal being the eventual expansion into additional foreign markets.

As a short-term benefit, migrants form a separate middle-class consumer base from the general populace, opening opportunities for entrepreneurial pursuits. The diversity of new people with different needs is a base economic factor for growth. Of all Fortune 500 companies, over 40% were founded by migrants or their children, indicating a strong entrepreneurial spirit (5). Middle class migrants bring self-brought innovation, and if inducted into a company properly, can help expand ideas and directions in which a company can expand. Furthermore, employing refugees allows them to become integrated into society, and weakens the effects of European nationalistic-populist movements, like Front National in France and the Jobbik movement in Hungary.

The long-term goal for multinational enterprises in hiring refugees is ultimately to expand abroad more effectively. If an American business in Europe trains refugees from Syria, for example, adapting them to the niche of the company, that business will reduce future expenses for hiring and talent search when expanding into Syria, once the political climate stabilizes. It’s important to understand the market one is trying to enter and adapt the business plan accordingly. For example, in Germany, McDonald’s sells beer in addition to its regular menu, as an attempt to market itself to the local culture. Not all companies attempt this; Walmart tried to apply the US model to establish itself in Germany and faced large obstacles in turning profits before eventually suspending operation. It’s critical that business in Europe not only market to the local culture, but actively work to improve the political situations they find themselves in. With the previous example of hiring Syrian workers, if the outlook in Syria improved drastically and became a lucrative market, those businesses that had preemptively trained refugees would have a noticeable edge in the Syrian market. Understanding the consumer base and having knowledge of how laws and customs play out in business dealings are essential. Businesses that adapt and plan accordingly have advantages due to skilled workers knowing how trade in that country is achieved, resulting in better marketing, advertising, and cultural transactions.

As the world grapples with an incredibly large number of migrants and refugees, we head into political uncertainty, which generates stress in the business world. European countries that have accepted masses of refugees, like Germany, Sweden, Italy, Greece, and Turkey, all currently find themselves in political crises. These conflicts within stable countries’ political systems are weakening economic outlooks and worrying the populace. This is never good for a financial climate, as unrest has correlated to a continuing depreciation of the euro. Aiding and training refugees where businesses perform transactions creates a more stable and stronger environment to do business in. Businesses have to adopt to meet the needs of changing demographics. Companies and firms have an opportunity to provide programs and training to migrants and refugees to quell unrest in their respective countries, foster positive relations abroad, and open their markets to future opportunities.
Sources: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12

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