The Costs of Refugees

The weekly quiz is provided by the Globalist, a daily online feature service that covers issues and trends in globalization. The nonpartisan organization provides commercial services and nonprofit educational features.

QUESTION

The number of refugees is on the rise globally. There are worries in Western countries about the future cost of hosting and resettling these people. We wonder: What proportion of its gross domestic product does the United States spend on refugees annually?

ANSWER

A. 1 percent B. 0.35 percent C. 0.03 percent D. 0.003 percent

A. 1 percent is not correct.

Sweden, not the United States, is expected to spend 1 percent of its GDP on refugees this year up from 0.5 percent in 2015 — according to International Monetary Fund estimates for a broad number of European countries. Sweden volunteered to resettle a large number of Syrians earlier during the civil war, which has now raged since early 2011. On a worldwide basis, more than 1 in 5 externally displaced persons are from Syria alone, as of 2015. 21.3 million people have been displaced across an international border from their homes (as of the end of 2015) and are officially registered as refugees with the United Nations. Sweden’s rationale to resettle refugees was to gain some skilled labor. However, only 1 in 3 recent refugees making a new home in Sweden is a college graduate. In earlier resettlements, there was a similar mismatch of incoming new residents and available jobs. Only a quarter of working-age Somali refugees in Sweden had found work in 2010, compared to 57 percent of Somali refugees in the United States at the time.

B. 0.35 percent is not correct.

Germany’s federal and state governments are expected to spend 0.35 percent of its GDP — on refugees this year — a considerable increase over 2015. That year also saw a major increase over 2014 figures. The IMF report only assessed the budgetary expenses in each country, but did not account for nongovernmental funding sources such as charity organizations. Germany’s spending level is also nearly double the average across the European Union, which was 0.19 percent. Germany’s government said resettlement spending by federal and state authorities amounted to 16.1 billion euros in 2015. As a share of the national economy, Germany’s spending on refugees is similar to neighboring Austria. The latter, a much smaller country than Germany, found itself overwhelmed last year with sudden arrivals on its borders of refugees who had been turned away by other countries.

C. 0.03 percent is not correct.

Spain is expected to spend just 1/3000th of its GDP — or 0.03 percent — on supporting refugees (people temporarily fleeing war) and new asylum-seekers (people requesting permanent resettlement to avoid persecution). During the Brexit debate in the United Kingdom, hard-line Leave advocates claimed that a wave of refugees and asylum-seekers would strain the UK budget. In reality, the U.K. spends about 0.016 percent — or about 1/6000th — of its GDP on these costs. The IMF observed, as well, that — aside from longer-term costs for housing, job training and counseling — cash transfers to refugees and asylum-seekers may have a short-term stimulative effect on the local and national economies of host countries, partially offsetting the proportional cost burden. Emphasizing and expanding educational opportunities for the new residents is also key to smoothly integrating everyone into the social fabric and the economy.

D. 0.003 percent is correct.

The United States spends 0.003 percent — or 1/30,000th — of its $16.77 trillion GDP on its annual budget for refugee resettlement, according to estimates by the Open Political Economy Network. In absolute terms, the U.S. federal government allocates only $582 million on resettlement budgeting annually as of 2014, according to the National Conference of State Legislatures. The country spends very little on this in part because it admits so few refugees each year, after an extensive vetting process. In 2016, just 85,000 refugee resettlement slots were allotted for the fiscal year in a country that is home to more than 320 million people. (Asylum, beyond refugee resettlement, was granted to only about 25,000 people in 2013 — a fairly typical year — as well.) Those 110,000 people equal 0.03 percent of the U.S. population. For comparison, more than 1 million people fleeing various crises entered Europe in 2015, seeking temporary or permanent shelter.