Migration crisis proves boon for some businesses
28 September 2015, 20:06
Berlin — People crammed into boats and trekking across borders have become the dominant images of Europe's migrant crisis. In the shadows, however, there are those who are profiting, for whom every migrant is a business opportunity.
The business of migration extends far beyond the human traffickers, who often grab migrants' money and send them on life-threatening journeys on rubber boats or in cramped trucks. It include bus companies and shelter operators that provide essential logistical help to authorities overwhelmed by the sheer number of people in need of housing and transportation. Telecoms companies that sell SIM cards with special contracts for cross-border calls. And petty food-and-drink vendors at train stations are even known to be price-gouging, charging migrants double or triple the amount they'd be charged in stores around the corner.
There are no overall estimates for how much the business of migration rakes in — but there's no doubting it's a multi-million dollar industry. Authorities in Germany estimate the cost of housing and feeding migrants alone at about 12,000 euros ($13,400) per person, per year.
Entrepreneur Bert Karlsson is among those profiting from the wave of migrants coming to Europe. The record company boss and founder of a now-defunct anti-immigrant party in Sweden raised eyebrows recently when Swedish media reported that his company, Jokarjo, had billed the government 132 million Swedish kronor ($16 million) to house asylum seekers.
Sara Sundelius, a spokeswoman for the Swedish migration service, said the government would normally house asylum seekers in regular apartments. But due to the sharp rise in numbers, some 21,000 asylum seekers are being put up in cabins, small hotels and hostels at a cost of between 250-300 Swedish Kronor per day, per person.
Sweden is one of the main destinations for many of the Syrians, Iraqis, Afghans and others hoping to start a new life in Europe. Another is Germany, where the government has forecast between 800,000 and 1 million arrivals this year.
German local authorities have long outsourced the management of refugee shelters to non-governmental organizations, particularly charitable groups such as Diakonie, AWO and the German Red Cross. But faced with an unprecedented influx of migrants, private companies have been able to offer cash-strapped mayors better deals.
"We're doing something some people consider dirty: we make money," said Klaus Kocks, a spokesman for European Homecare, a housing company.
The firm first began providing accommodation for migrants 25 years ago, when tens of thousands of ethnic Germans left the Soviet Union and Poland for Germany, following the collapse of communism. It expanded as a result of the Balkan wars, which again brought a wave of refugees to Germany.
The latest surge has seen the number of shelters run by European Homecare double to 100 in the past year. The company's 1,000 staff now care for 15,000 refugees in cities across the country.
Refugee rights campaigners have criticized the company, claiming it cuts corners in order to be able to keep costs down and win contracts. Kocks denies this, saying European Homecare is simply better placed to keep costs low. The company buys in bulk to be able to provide full-board lodgings, with social and medical care, for as little as 11 euros per person, per night.
"Where there's price competition those who have lean overheads win," Kocks told The Associated Press.
European Homecare is currently in negotiations to buy modular containers left over from the Winter Olympics in Sochi, Russia, to house new arrivals. The company also provides counseling to those asylum seekers facing deportation after their applications were rejected.
Smaller companies, too, have been doing handsome business off migration. Far-flung hotels teetering on the brink of insolvency have received government contracts to provide all their rooms for refugees; one German firm has specialized in selling starter kits for refugees containing a bed, chair, table and kitchen utensils; security companies, meanwhile, are doing brisk business providing guards to keep the peace inside packed asylum centers and ensure they aren't attacked by far-right extremists.
The sums involved have attracted criminal enterprises too.
In Rome, dozens of local politicians, businessmen and mobsters have been arrested or put under formal investigation in a huge corruption probe centered on allegedly tainted contracts to house and feed refugees.
In one intercepted phone call, police overheard a suspect gleefully comparing the money to be made off services for asylum seekers to drug trafficking profits — without the risks.
The greatest risks, but also biggest profits, are arguably taken by people traffickers who help migrants cross borders illegally. Many of those arriving in Germany say they paid traffickers to take them at least part-way into Europe.
The cost of a short boat ride from Turkey to Greece, for example, can run to 2,000 euros per person. On both sides of the journey support industries have sprung up, with shops on the Turkish coast selling life-jackets and plastic pouches to keep cellphones dry, and those on the Greek side doing a brisk trade in tents and backpacks for the onward journey.
Further north, in Hungary, smugglers were asking up to 250 euros a head to bring people from the border to Budapest a few weeks ago. In order to get to Munich, migrants had to pay another 600-650 euros.
Security officials warn that the traffickers who are caught are inevitably small-time crooks, while the kingpins remain safely in the background.
"Criminals who prey on the desperation of those fleeing conflict or poverty are making millions in profits, which can then be used to fuel corruption and fund other forms of serious transnational crime," Juergen Stock, the head of Interpol, said recently.
But word about the profits to be made off migration has also reached the upper echelons of the world's financial industry.
When European Homecare relinquished a contract to run the Traiskirchen refugee shelter in Austria three years ago, it was succeeded by ORS, a Swiss company. Its turnover in Switzerland, Austria and Germany amounted to almost $100 million last year, before the latest increase in migrants.
ORS is part-owned by Equistone Partners Europe, a London-based fund manager. Equistone, in turn, counts among its investors Barclays Bank, as well as sovereign wealth funds, pension funds and insurance companies mainly based in Europe, North America, the Gulf and Asia.
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