by Kaisa Stucke, CFA

There is no doubt that the EU migrant crisis is a catastrophe in terms of human costs.  It is fairly evident that the EU was not prepared to deal with the magnitude of migrant movement into the region.  This crisis also presents a political dilemma for Europe and may lead to the re-establishment of border controls, intensify internal schisms over the extent of sovereign/EU authority and possibly sow the seeds of the dissolution of the EU.

Migrant flows from the Middle East and Africa have affected European countries unevenly.  The border countries have received heavy inflows of migrants, some of whom wish to stay in those countries, but most continue on to Germany and Sweden, which have indicated openness to accepting immigrants.  However, many countries are not open to taking immigrants, either due to a lack of ability or willingness.  Each of these countries is dealing with the flow of asylum-seekers differently as their approach is determined by relative economic wealth, number of immigrants and societal structure.

Hungary has received an overwhelming number of immigrants due to its location on the main migrant routes to Germany and Sweden.  The large number of immigrants, both in absolute terms and relative to Hungary’s population, has overwhelmed the country’s refugee facilities.  Hungary has indicated that it cannot accept all refugees without a clear plan from Brussels and has tried various tactics to control the immigration flow, from erecting a 108-mile barbed wire fence to simply facilitating refugee transportation to the Austrian border.

This week, we will look at how Hungary is handling the immigrant crisis and what its actions may signal for other European countries.  We will start by looking at Hungary’s history and its position at the crossroads of empires which have shaped Hungary into a country that often directs a changing tide for Europe.  As always, we will conclude with geopolitical and market ramifications.

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