BALKAN BLOG: Wooing back Southeast Europe’s diaspora

BALKAN BLOG: Wooing back Southeast Europe’s diaspora
By Clare Nuttall in Bucharest January 31, 2017

Southeast European countries have some of the highest levels of emigration worldwide, and the loss of this human capital has had a damaging effect on growth. Governments and NGOs in the region are now looking at ways to harness the power of the countries’ diasporas to boost growth back home, but face numerous obstacles.

Globally Bosnia & Herzegovina tops the list of emigre nations; 30% of the people born in Bosnia have emigrated, escaping the wars that tore the country apart in the 1990s or later leaving in search of better opportunities abroad. The extremely high level of unemployment in Bosnia - 41% as of October 2016 according to official data - has continued to drive emigration.

Two other countries from the Western Balkans, Albania and Macedonia, are also among the nine countries worldwide to have lost more than 20% of their populations to migration, according to a report by the Pew Research Center. Again, high unemployment, instability and corruption have been driving factors. EU member states in the region, in particular Romania, have also seen a wave of emigration. Romania’s population has fallen by around 4mn since the collapse of communism.

Although many emigrants continue to send back money to their home countries, the loss of large swathes of the population - often including young people with drive, initiative and language skills - has helped to slow growth in the economies they have left behind.

“The biggest part [of migrants] are active people with initiative,” says Violeta Cenusa, project manager at RePatriot, an organisation set up to help the Romania diaspora reconnect economically with their homeland. “Most of these would have been the entrepreneurial class that could ensure sustainable growth for Romania.”

As in other parts of the world, the drivers for emigration go beyond poverty and lack of jobs to “a sense of being stuck … of having no way of going up on the social scale or building a better future for their children”, says Andrei Tarnea, director of the Bucharest branch of international non-profit the Aspen Institute. Following the collapse of communism, Romanians from rural areas who had previously migrated to industrial centres within the country found those industries were disappearing, leading them to look abroad. There has been a similar pattern in other post-communist countries.

This was what led many to leave their home countries, with most assuming it was only a temporary move, but a separate set of factors then encouraged them to stay in their destination countries.

“Most plan to stay only as long as they need to help their family have a better life, but what they find there clashes with this idea,” continues Tarnea. “It’s not just money and a job, they discover a better governed society with functional administrations. Specifically, they find they don’t have to bribe somebody to get a hospital bed, their children are well taken care of in school, trains and buses run on time… this makes it more difficult for them to return.”

“In a nutshell, bad budget management, personal interest for political parties, corruption,” says Gabriel Popescu, a Romanian working in London, commenting on his reasons for moving. “When Romania needs better managed car parks, money is spent on projects like a channel for boats on the Danube, when Romania needs less pollution and for dust to be removed from the streets, money is spent on projects that serve personal political interests... then I think twice about whether I want to continue living in Romania.”

The other pull factor outlined by Tarnea is the structure of western economies, which need a specific workforce their own populations cannot provide. The hospitality and care sectors, encompassing everything from tourism to cleaning to care for the elderly, have come to rely heavily on migrant labour.

Loosening ties

The time it takes to integrate fully into their host communities varies, and may take more than one generation. Romanians in particular have integrated rapidly into Italy and Spain, with a consequent loosening of ties to their home country. Of course, the process is not always smooth and nationalist opposition to immigration is growing in many countries across Europe, fuelled by the media and the newly resurgent populist right.

This has caused some emigres, particularly in the UK as it prepares for Brexit, to question their decision. Popescu’s wife Claudia says her life in London has changed following the June 2016 referendum, “because the pound has dropped down, and because of the uncertainty about the terms and conditions we will have to live and work here after UK leaves EU”.

Other migrants have faced discriminatory working conditions in their host countries. Radu, a Romanian who declined to share his surname, was working as a technician for a French company which suddenly stopped paying his salary. Running out of money and unable to find legal support he was forced to borrow money from his family to pay for his flight home. But Radu says he hasn’t given up on working abroad again. “I’m hoping to move to the UAE next month,” he says.

For the most part, the reasons to relocate remain compelling, and over time have resulted in a loosening of ties between the emigres and their home countries. This has led governments and NGOs to look at ways to reverse the brain drain by preserving and strengthening ties with their diasporas.

Even where strong ties do exist, the contributions made by migrant workers are often mainly in terms of remittance payments sent back and - in many cases - investments into property.

The Mândrie și Beton (Pride and Concrete) project launched by Romanian photographer Petrut Calinescu and journalist/ethnologist Ivana Hodoiu has documented the impact of migration on communities in the regions of Maramures, Moldavia and Bucovina. They describe villages where “the old traditional houses have become storage space for construction materials for the villas to be built” - huge concrete villas in the Mediterranean style destined to be occupied only in August when the migrant workers come home for their holidays.

They also describe the growing gap between the first and second generations of migrants. “The first generation dream of returning home, while the latter dream of breaking ‘the curse of the concrete’ which forces them, according to tradition, to invest their hard-earned money in multi-floored houses in their native villages.”

This is fairly typical of investments by emigres from across the region. Diaspora investments are very often focussed almost exclusively on the most tangible asset possible - real estate - rather than the wider economy. The low levels of retail investment in most stock exchanges in the region, and the administrative barriers to investing, block off another potential channel for investment.

The Bosnian diaspora “offer huge potential, sending $3bn annually into the country; 32% of them invest worldwide and 26% of them intend to invest in Bosnia, but only 6% actually invested in Bosnia,” says Salih Music, Managing Director of Restart, a project launched in 2016 to help the diaspora invest in Bosnia.

Restart, like RePatriot, is one of a handful of initiatives from across the region aimed at reconnecting with the diaspora and channeling their energy and expertise to boost economic growth in their home countries. It’s website says it “operates as a business embassy for the diaspora organisations and foreign companies”, offering services including registering businesses and providing expertise in areas such as tax and employment. There are now plans to launch, a website with databases and platforms to exchange information.

Restart’s launch was inspired by what Music has observed of returnee needs. “They are faced with obstacles to doing business in Bosnia, including legal ignorance, lack of framework and little to no resources to help them,” he tells bne IntelliNews.

No perspective

Another initiative targeting the Bosnian diaspora was launched by the Swiss Agency for Development and Cooperation (SDC). “In 2015, in the context of an ongoing governance project we launched an initiative working with 10 municipalities to show them there is potential to really draw on the diaspora knowledge and investment,” says programme manager Irène Kränzlin.

She points out that about 80,000 people left the country in 2015, especially young and well-educated people. “You can imagine what this means for the country. On the other hand, the youth unemployment rate is between 50% and 60% so young people don’t see any perspective.”

Where investments have been made by diaspora Bosnians, they have often been beneficial to both sides. However, according to Music, there have also been bad examples that have served to deter investment. “Restart must constantly work to restore the lost and and shaken confidence of all those who have previously tried to invest or start a business in Bosnia, and who were defrauded or manipulated by false promises.”

He is also critical of the efforts by the Bosnian authorities. “Communication with the diaspora is very sporadic and disorganised; there are many individual initiatives but they are not strategically focussed and, therefore, we require a unique platform for such communication,” he says. “We have an awful image as a country devastated by war, without perspective, with an unstable political situation and as a country filled with nationalist tension. What are we doing to fix this? We run poorly performing foreign policy, we don't have enough organised embassies and we lack knowledge in promoting our country.”

Kränzlin reports a similar picture. “Many people from the Bosnian diaspora want to contribute to their country, not only by sending remittances,” she says. “One important point is to improve trust. Many people in the diaspora don’t trust the government back home and vice versa, and many Bosnian migrants don't want to invest because of the bad conditions for investment and complicated bureaucracy.”

Meanwhile in Romania, the issue was raised at the highest political level last year, with the launch of the Competitive Romania strategy by President Klaus Iohannis, central bank governor Mugur Isarescu and the country’s then Prime Minister Dacian Ciolos. The strategy targets 5% growth a year, with the aim of bringing GDP per capita to 70% of the EU average by 2020, but it also has a social dimension. The vision set out by Iohannis is to create country “where I want to like, work and raise my children, the country where I want to return” .

It’s unclear what will happen to the strategy now that Ciolos’ government has been replaced and Iohannis is locked in a political battle with its successors. However, Aspen’s Tarnea believes the Romanian authorities are now “slowly understanding” that the millions of Romanians abroad “represent huge potential benefit for the economy if you can convince a significant number to come back”.

Achieving this is not easy. Contrary to their portrayal in the British populist press in particular, most Romanian migrants are not benefit scroungers but workers in high demand, he says. “There is huge competition for these people, for their skills, ability to work and what they have learned as people that moved to another place in search of a better life… Romania is facing tough competition in getting those people back.”

Tarnea believes some may be enticed back as wages rise amid the ongoing rapid growth of the Romanian economy. However, he warns that, “we need more flexible and specialised approaches than expecting them to return lock, stock and barrel to their villages. This is not going to happen.”

The group of entrepreneurs that launched RePatriot agree on the need to convince fellow entrepreneurs from the diaspora that Romania “is a great destination for investment”. The organisation was initiated by Marius Bostan, an entrepreneur, co-founder of the National Foundation of Young Managers (FNTM) and communications minister in the former Ciolos government. 

“RePatriot proposes creating a movement which will promote the business opportunities in Romania and, for the first time, the opportunities offered to Romanians who are currently abroad. It is important for them to feel wanted back home,” explains Cenusa.

“The diaspora should be a national priority. Romanians that left Romania can be the best investors. We want Romanians to return with the expertise and knowledge they have accumulated,” she adds.

However, while many emigres, even those several generations down the line, maintain ties and still feel affection for their homeland, wooing the back or persuading them to invest is no easy task.

To a large extent, the policies needed to win back diaspora populations - whether from Bosnia or Romania or any of the other countries in Southeast Europe - are the same policies needed to develop the domestic economy. These are policies such as reducing and simplifying bureaucracy, tackling corruption, investing into infrastructure and overall providing a stable and secure business environment. The initiatives launched so far in countries across the region will contribute to this, but it is a task addressing some of the fundamental problems countries in the region face, and one that cannot be achieved quickly.