Nearly everyone who recently crossed the Danube by open-air ferry from Ukraine and landed in the frozen Romanian port city of Isaccea had a roller case and a contingency plan. A woman planned to join her husband in Istanbul. Another was on his way to Munich, where her company is headquartered. Others met brothers, cousins, in-laws and friends in Paris or Sofia, Madrid or Amsterdam.
And then they hoped to go back to Ukraine.
“I have to go back,” said Lisa Slavachevskaya, who traveled from Odessa with her 10-year-old son and 5-year-old daughter. “My husband, my mother and my grandmother are here.” She said she planned to go home in a month.
Whether such a rapid turnaround is possible is one of many uncertainties surrounding Europe’s fastest-growing refugee crisis since World War II. However the catastrophe in Ukraine ends, the cost of helping the millions of Ukrainians fleeing Russian bombs will be enormous. Some early estimates put humanity’s housing, transportation, feeding and processing bill at $30 billion in the first year alone.
“This is a humanitarian and medical emergency in the coming weeks,” said Giovanni Peri, director of the Global Migration Center at the University of California, Davis.
What happens in the coming months will determine whether Europe will face the additional costs of a massive resettlement that could reshape the economic landscape.
European economies are still recovering from the pandemic, facing persistent supply chain deficits and high inflation. As costly as it will be in the short term to provide aid to families temporarily displaced by war, in the long run the costs of integrating millions of people would be far greater and put enormous pressure on housing, education and health care. . While a massive influx of workers, especially skilled ones, is likely to increase a country’s output over time, it could intensify competition in the job market. In January, about 13 million people were unemployed in the European Union.
“It is uncertainty that now dominates the economic calculation,” Peri said.
More than three million refugees fled Ukraine in less than three weeks, according to the UN’s International Organization for Migration, with millions more likely to follow as the war continues.
Officials, migration experts and economists say it is too early to say whether most displaced Ukrainians will stay.
This is in stark contrast to 2015, when 1.3 million migrants from the Middle East and North Africa fled to Europe after years of war and terror and sought asylum for fear of persecution. Returning was not an option.
According to officials, relatively few people have so far requested such protection. Of the 431,000 Ukrainians who entered Romania, for example, only 3,800 have applied for asylum. Many indeed shuddered at the label ‘refugee’.
“I don’t consider myself a refugee,” Evgeniy Serheev, a lawyer, said through a translator as he waited to cross to the northeastern Romanian city of Siret. But with his wife, three children and their bags crammed into one of the hundreds of cars crawling to the border, he acknowledged that he looked good.
The urgent humanitarian and moral cause is convincing on the face of it; the economic argument can be harder to make. However, most long-term research shows that working refugees can help economies grow, increase a country’s manufacturing capacity, pay taxes and generate more sales for supermarkets, hair salons, and clothing and electronics stores. That was what happened in Germany after 2015, when it took in more than a million refugees, most of them from Syria.
“Economically, it was net positive,” said Ángel Talavera, head of European economics at Oxford Economics.
But countries face significant upfront costs.
The European Union pledged EUR 500 million or $550 million in humanitarian aid last week, but it will have to pay more. “European governments are going to inflate the budget,” said Claus Vistesen, Eurozone chief economist for Pantheon Macroeconomics. This latest loss comes on top of an extraordinary amount of government spending over the past two years to fight the coronavirus pandemic.
The sudden need for more housing, fuel, food, healthcare and more will further exacerbate supply shortages. “Inflation will rise, rise, rise,” said Mr. Vistesen.
Inflation in the eurozone is rising to 5.8 percent, and Mr Vistesen said he expected it to rise to 7 percent this year given rising energy prices. That is almost a third more than last year. For the European Central Bank, he added, it will make the delicate task of balancing inflation risk against the risk of a recession all the more difficult.
For those living and working in Europe, this means less purchasing power in the short term. If wages don’t rise, they get poorer.
For now, Ukrainians, with strong kinship, cultural and religious ties in other European countries, have mostly been received with care packages and offers of free shelter, transport and food.
At the border in Siret, volunteers ran to Ukrainian families who trudged across the road with offers of cups of hot tea and €5 SIM cards for mobile phones. Organizations, companies and individuals rushed to a spot closest to the checkpoint to be the first to give chicken soup, kebabs, blankets, toothbrushes, stuffed animals and hats.
The government in Bucharest has so far allocated $49 million to cover the costs. The prime minister, Nicolae Ciuca, said he expected the European Union to reimburse much of that.
The EU immediately allowed Ukrainians to stay for up to three years, look for a job and go to school – access migrants from other parts of the world could only dream of. And some countries, including Romania and Poland, have agreed to allow refugees to receive the same social and health services as their own citizens.
The war between Russia and Ukraine and the world economy
But past experience of refugee crises shows that such goodwill often sours when an influx strains public finances and social services such as education and health care.
There has been an outpouring of sympathy and contributions, but the burden of actually hosting the refugees is extremely skewed. About 1.7 million Ukrainians have arrived in Poland alone, and Warsaw’s population has grown by 15 percent.
“We are overwhelmed,” Rafal Trzaskowski, the city’s mayor, said in a news interview. “We can’t improvise anymore.”
Clemence Landers, a policy officer at the Center for Global Development, said a handful of countries were taking on an international responsibility and needed financial assistance to do so.
Global institutions such as the World Bank are an important source of cheap loans, especially for the poorest European countries, where most Ukrainians live, argued Ms Landers, co-author of an analysis of the costs of the refugee crisis.
International financial support can help mitigate the political and social backlash that often follows the refugee crisis, she added.
If many of the Ukrainian refugees stay longer than they expect, there are reasons to believe that they can be integrated into the economy relatively quickly. Many have a network of friends and family. Their level of education is not so different from that in some host countries. (According to the United Nations, the average number of school years in Ukraine in 2017 was 11.3 years.) And they have a track record.
Peri, of the University of California, said Ukrainian immigrants already in Europe worked in hotels and restaurants and as home assistants for seniors and the disabled, jobs that were difficult to fill in some places.
Despite the ever-increasing devastation the Russians wrought on Ukraine, few people interviewed at the border were ready to contemplate a long future far from home.
Iryna Karpenko, who entered Siret with her three children, two sisters-in-law and her father-in-law in a blue Toyota bus, said they were on their way to Bulgaria. They had budgeted about €1,500 ($1,644) per person for a one-month stay. In Ukraine, she said, “we have houses, husbands and jobs there.”
When asked what they planned to do once they crossed the border, Ms. Karpenko was about to answer when her sister-in-law Karina Bohatynska said from the back seat, “Go back home.”
