Economic Impact of Syrian Refugees & Oil Policies
Economic Impact of the Syrian Refugee Crisis on Host Countries
Refugees’ Movement. Since the eruption of the Syrian conflict in March 2011, the world has faced the largest wave of forced migration in recent history. What began as a small-scale internal displacement problem quickly escalated into a large-scale crisis, spilling across borders into neighboring countries. As of October 2015, Turkey, Lebanon, Jordan, Iraq, and Egypt host more than four million Syrian refugees. This essay examines the economic impacts of the Syrian refugee crisis and forced migration on host countries’ economies. A number of socio-economic indicators already provide a picture of this impact.
- To start, infrastructure investments are mainly related to the provision of municipal services, such as access to running water, connections to the power grid, and road maintenance and construction. For example, the funding needed in response to the influx of refugees as a percentage of Jordan’s budget reached around 35 percent in 2015. Such swift budgetary shocks highlight the need for international solidarity to meet the incremental funding requirements of middle-income countries hosting large numbers of refugees.
- Another issue of concern to policymakers in host countries is the impact of the refugee influx on the local labor market. For example, the unemployment rate in Jordan has been relatively stable over the past few years, running from 11.4 percent in the first quarter of 2012 to 12.9 percent in the first quarter of 2015. Despite the neutral or even positive impact on labor markets and growth, Jordan’s case indicates that a trade-off between these impacts and the added strain on public finances will arise in the short run.
- Finally, investments in social infrastructure to meet the urgent humanitarian needs of refugees result in immediate costs and benefits, where the net benefits are often negative and create a degree of resentment on the part of hosting populations. However, investment in physical infrastructure, despite having an immediate cost, results in long-term benefits that typically exceed their cost. These public investments, coupled with smart policies that target labor market integration, may improve the long-run growth prospects of host countries, thus turning a crisis into an opportunity for development.
Oil: An Economic and Political Tool
Today, oil has proven to be a powerful economic tool; it has also proven to be a capable political weapon. In other words, oil contributes directly and indirectly to the production of all goods and services. For example, in 2003, oil as a source of energy accounted for about 37% of total energy sources. There is a compelling body of evidence that oil production is determined by the interplay of institutional and economic forces. The issue is the policies that the key players implement, from the U.S. to the EU and OPEC itself.
Reforming the Oil and Energy Sector
Regarding the reform of the oil or energy sector, in order to meet the requirements concerning the opening up of the market, an appropriate legislative and regulatory framework is necessary, particularly regarding regulation and implementation of energy policy. Apart from the formulation and implementation of an energy policy, work should be concentrated on two aspects: opening up production, distribution, and pricing, and restructuring economic development plans by adopting efficient policies and procedures.
Policy Measures and Recommendations for OPEC Countries
There are several policy measures and recommendations that might minimize any possible losses to OPEC countries:
- Assistance from developing countries to exporting economies to diversify sources of income, as models’ results show that economies with a diverse pattern of production and exports will be least affected by the Kyoto Protocol.
- OPEC’s share of the oil market and cartel power would increase if there are measures to discourage the production of fossil fuels within developed countries.
- Measures to abandon nuclear power generation would also favor oil exporters, as more primary energy needs would presumably be met by oil.
- Creating a situation whereby countries wouldn’t be able to peg their currencies with another and jump off once the market changes, but rather look to creating fiscal policy.
- Finally, the issue of selling essential and vulnerable commodities in a more stable currency like the Euro, as the U.S. Dollar is unpredictable, to say the least.
However, this does not mean that all policies are going to be successful; they need to be well-managed within a sustainable balance of power from global institutions.