ICON IN THE MAKING

28 OPINION MONDAY 14 SEPTEMBER 2015
FORUM
Don’t close the borders: Why
Germany needs the refugees
“Give me your tired, your poor, your
huddled masses yearning to breathe free”
– Inscription on the Statue of Liberty
HAVING so recently played
the part of the hardhearted,
skinflint uncle to a
tee in the Greek crisis, it has
been a profoundly pleasant
surprise to see Germany behave in
such a generous manner over the massive
influx of refugees that has descended
on it. Let’s be clear from the
outset: the refugees are perfectly rational
to want to get as far away from
the hell that is Syria as possible, fleeing
in a desperate bid to escape the diabolical
clutches of three separate
groups of mass murderers in the
country (al-Qaeda, Isis, and the Assad
regime). Ordinary Germans, moved as
we all have been by the harrowing pictures
of the desperate plight of these
people, have responded in a manner
that is a credit to both them and the
rebuilt miracle that is the modern
German Republic. Some 450,000 migrants
have arrived in the country
since the beginning of the year.
But we have now seen the perhaps
inevitable backlash. While the German
public has thus far been solidly
behind keeping the country’s doors
open and extending their welcome to
the refugees, given the mammoth undertaking
of re-settling a projected
800,000-plus people this year alone,
Germany’s decision to reintroduce
controls on its border with Austria yesterday
may not be too much of a surprise.
This is not only a great shame in
humanitarian terms, however, but
could prove to be a catastrophe for
Germany economically in the long
run if the restrictions do not turn out
John
Hulsman
Within the next ten
years, Germany will
become the world’s
oldest major
industrialised nation
tion, anti-Islamic, older citizen supporting
the Pegida populist movement
next utters the usual bile in
Dresden, I’d like to ask them one simple
question: would you rather be bigoted
or would you rather retire? For
given German demographic and economic
realities, that is precisely what
it comes down to.
The German people have not acted
in their notably generous way toward
the refugees because of their keen un-
to be temporary.
For on the question of whether Germany
can and should keep its doors
open to the refugees, one basic, overriding
fact must be stressed time and
again; it is entirely in Germany’s own
self-interest to keep doing good. In
fact, without this demographic jolt to
the system, Germany’s enviable way of
life (a major reason the refugees wish
to go there in the first place) is
doomed to come to a jarring halt.
Within the next ten years, Germany
will become the world’s oldest major
industrialised nation, displacing even
Japan. I often muse about this as I sit
on endless German trains (as I am
doing now); quite regularly I am the
only one of working age in the firstclass
compartment, a fact which tends
to make me panicky, as I simply cannot
shoulder the crushing burdens of
paying for the other five happily retired
people sitting around me. In future,
who is going to backstop those
endless holidays, lavish benefits, and
(belying the stereotype) rather easygoing
way of life? With a replacement
birth rate well below the necessary 2.1,
no one it seems.
If the iron laws of demography hold
true, there are only three remedies to
such a perilous situation: significantly
reducing German benefits, significantly
raising the retirement age, or
taking in significant numbers of immigrants
to make up the difference.
Until recently, all three possibilities
looked to be massive electoral losers.
However, suddenly, Germany’s magnificent
reaction to the refugee crisis
showed that a way out of this confounding,
long-term economic problem
could be found.
So when some ageing, anti-immigraderstanding
of their deep-seated economic
requirements; and that is a
credit to them. But this is a case where
doing good leads directly to doing
well. Angela Merkel, usually so cautious,
has in recent months come out
strongly in favour of supporting the
refugees, and opening Germany’s
doors in the face of Hungary’s odious
Prime Minister Viktor Orban. Just last
week, her vice chancellor said the
country could take in 500,000 people
annually for several years.
Let us hope, therefore, that Merkel’s
government’s apparent volte-face in
its approach to this crisis, the reintroduction
of passport controls, is merely
a temporary measure to allow Germany
to deal with the movement of
truly enormous numbers of people.
For it is crucial that, as the crisis sees
even tougher days, it is the fundamental
economic argument for refugee inclusion
that must be put forward
politically, to decisively sway ordinary
Germans to stay the generation-long
course of assimilation. For the
refugees are the last, best, chance
Berlin has to perpetuate the German
way of life well into the future. The
refugees are not a feel-good luxury for
Germany; they amount to an economic
necessity.
£ Dr John C Hulsman is senior columnist
at City A.M. He is a life member of the
Council on Foreign Relations, and author
most recently of Lawrence of Arabia, To
Begin the World Over Again. He is
president and co-founder of John C
Hulsman Enterprises (www.johnhulsman.com),
a global political risk
consultancy, and available for corporate
speaking and private briefings at
www.chartwellspeakers.com
From migration to capital movements –
the City thrives on openness to the world
DEBATE
CITYAM.COM
Q: As Goldman
Sachs warns that
the price of oil
could fall to $20 a
barrel, is the US
shale revolution
over?
Peter
Kiernan
YES
US shale oil growth between 2011 and
2014 was spectacular, causing total US
crude oil output to grow by an annual
average of 1m barrels a day during those
years. But this was when prices were
high. Production growth has slowed this
year, with US government data showing
consecutive monthly falls in output
since May. Sustained lower oil prices
were bound to have an impact on shale
drillers eventually, even allowing for
cost-cutting, more efficient drilling and
price hedging. Furthermore, the readily
available capital that has fuelled the
shale boom will not be so accessible if
prices stay at current levels or fall
further. Shale will be down – although
not out – and the boom time will be hard
to repeat, unless prices sharply rebound
over the longer term. This is unlikely as
the Saudis are pumping at high levels,
Iraqi output is creeping up, and Iranian
barrels will probably return to market
next year.
£ Peter Kiernan is lead analyst for energy
at The Economist Intelligence Unit.
Ole
Hansen
NO
A2,000 mile round trip to
Lithuania, quickly followed
by another round
trip of 7,000 miles to
Washington, means that
I will be spending a large part of
this coming week travelling. But
this time spent up in the air gives
me a good opportunity to reflect
on the challenges and opportunities
that the City is facing at the
moment. It also gives me a good
grounding as to where the UK is
sitting in the global pecking
order, and how we are faring in
the modern, competitive world
economy.
My meetings in the Lithuanian
capital Vilnius with the country’s
Prime Minister and finance
minister will focus on our
improving bilateral relations and
the economic situation in the UK
and Lithuania. The Capital
Markets Union will also be high
on the agenda as a way of
removing barriers and creating a
more efficient system of marketbased
financing, ironing out
national differences. With the UK
yet again registering a pretty
dismal trade deficit last week,
widening access to finance for our
businesses should be a high
priority for our government and
those across Europe if we are to
boost the economic performance
of all member states.
In America this week, the UK
and EU political situation will be
high on the agenda in my
meetings with senators, regulators
and financial institutions,
alongside transatlantic regulatory
issues and an update on the
Transatlantic Trade and
Investment Partnership
discussions.
What really interested me over
the summer, though, was how
David Cameron confounded
expectations with the destination
Mark
Boleat
of his first trade visit of his new
government. China and India
would have been the obvious
destinations, but the large,
untapped potential of South East
Asia proved too alluring. The very
fact that the region will be the
fourth largest single market in
the world by 2030 probably proved
decisive here. During the visit he
said that the UK needed to go “to
the ends of the earth” to sell its
wares and that, while Europe has
to date been a prosperous trade
partner, new markets cannot be
ignored, and if they are, we will
be the losers in the long run. We
need to be open to be successful –
we need to be open to our existing
trade partners like Europe and the
US, and be open to those that we
don’t trade enough with.
On the topic of openness, it
would be remiss of me to not
mention the ongoing migration
crisis. The City’s view on the
general topic of immigration is
that part of our success over the
years has been built on welcoming
highly-skilled migrants. Clearly
this is a wider-European political
issue. But as Harriet Harman said
last week, if we are closedminded,
“who will be the future
consultants at our hospital
bedsides, the entrepreneurs who
will build our economy and the
professors in our universities?” I
couldn’t agree more.
£ Mark Boleat is policy chairman at
the City of London Corporation.
US shale producers are struggling,
following the renewed price weakness of
the past quarter. A price collapse to $20 a
barrel would cause a major consolidation
in the US oil industry with many weaker
producers falling by the wayside. But
while it will change the landscape as we
know it today, it will by no means remove
US producers permanently. What
characterises shale oil production is its
ability to remove and add production
capacity, as the price changes, in a costeffective
manner. The shale industry is
like a very agile sprinter, while major oil
companies are more like the proverbial
tanker: they are heavily invested for the
long haul and have difficulty responding
quickly and adroitly to price changes. As
we approach the end of this decade, the
lack of investment elsewhere will mean
that only US shale producers and Opec
can prevent a new oil shock. Shale is
down, but by no means out.
£ Ole Hansen is head of commodity
strategy at Saxo Bank.