29 April 2015

Rethinking Dealing with Illegal Migrations across the Mediterranean

After paying the money and getting in the boat, a "lucky" Eritrean Illegal Migrant crashed up on the shores of Rhodes in Greece. She is now free to travel to Athens, and after that Sweden. Earlier in the week, up to 900 illegal immigrants drowned when their boat sank off Italy, bound from Libya. Both are tragedies, but thankfully only one of them includes mass death. Most of the people of the boat from Turkey made it to shore, with three deaths when the boat ran aground and broke up. Most of the people on the boat from Libya drowned, with some, including the captain being rescued.

The next tragedy was an opinion piece in the Huffington post by John Wight. John's opinion piece made me mad. Really mad. And insulted. Does John take us all for simpletons, or is he so blinded by hate of governments that have to make difficult choices?

His piece certainly is emotive, and lays the blame for the 900 deaths at our feet, as Europeans and our Western governments. Does insulting his readership help to advance to reduce the carnage on the Mediterranean? Does his article include any recommendations on how to improve the situation? I'm afraid not, and it is pity, because the answers, in my opinion, do not include opening the doors to anyone who will pay a people smuggler to help them commit a crime, thus making both the smuggler and the economic illegal migrant criminals.

Note the use of words here; Illegal Migrant vs Refugee. Words are so important. If these people are refugees, then we feel guilty that somehow our stable societies are somehow responsible for people, and therefore we must make amends. Call them Illegal migrants and we are facing a wave of people who are making a calculated though risky investment in a better future for themselves and their families. Good for them.

"Her family paid more than 10,000 dollars to give her the chance of starting a new life in Europe hoping that she would eventually reach Sweden." (Lucky Eritrean)

That does not sound like a refugee from a war-torn country ripped apart by Western intervention. We can go into the detail - yes Eritrean has been a war-torn country, much of that caused by their own war with their neighbour and former master Ethiopia. But $10,000 is a huge amount of money in Eritrea, where the per-capita GDP is $1200. That money could have been applied to help her family build a better future in Eritrea.

John Wight's first paragraph reads: "The drowning of 800 people in the Mediterranean is a crime against humanity, the ultimate responsibility for which lies not with the people traffickers operating the boats involved, as some assert, but Western governments that have destabilised the nations from which those refugees are so desperate to escape they are willing to risk their lives in the process." (Blood on our hands)

John, I'm afraid that you and I will disagree, but in a nuanced way.

There are three groups to blame here, not just Western governments. And where our governments are to blame, it is not for the reasons you bleat on about. Those to blame are:

  1. The Illegal Migrants who hope to buy their way into Europe. The Illegal Migrants, having broken the law to get "here", have invalidated any moral right they may otherwise have to be "here".
  2. The traffickers who take their money and put them into unsafe boats filled vastly over their capacity.
  3. European governments that do not return those people to their last ports of call on their journey to Europe.

I will expand on each of these.

  1. The Illegal Migrants are buying their way across the sea. They are not fleeing with what they can put into a hand-cart or on the top of a car. Getting across North Africa to Turkey is not cheap, especially if you start in Eritrea, or Somalia, or Iraq, or Guinea-Bissau, or any of a host of other countries. These people are not rich by European standards; they are poor, very poor. But for countries with an annual GDP equivalent of between $600 (Somalia) and $1200 (Eritrea) per person equivalent. These people are well-off by their local standards. And they have not paid for this trip on their credit card or some other promise of future payment. The traffickers do not take credit, they take cash. 
  2. The traffickers are cashing in on a combination of political instability and a market. Get into Europe for a price. These traffickers are advertising on Facebook, and have little difficulty gaining clients. There are advantages to being a people-smuggler. Compared with drug smuggling, the rewards are comparable, the penalties less, and the market booming.
  3. European governments treat Illegal Migrants arriving in boats dramatically differently from Illegal Migrants arriving by aeroplane. Should you attempt to enter Europe illegally by an airline, the airline carries the cost or flying you back to the airport at which you embarked. This stops people who can afford $10,000 from simply flying to Sweden - they will be put on a plane back to where they came from. So why is it acceptable to arrive by boat and stay, but not to arrive by aeroplane and stay? Instead, they will commit a number of crimes, with the hope that if caught, they will fall on our mercy they will be allowed in.

So let's be realistic about a few things.

First, Illegal Migrants are not the people that we want to bring into Europe. Why? For the simple reason that their illegal actions have marked them out as individuals who will break the law to get what they want. These are not "innocents" cast out onto a dangerous sea. Most countries require background checks to confirm that migrants do not have criminal records, and in most cases will not grant admission to criminals. This is not unusual or in any way in violation of anyone's human rights. Image owning a shop, and in walks someone that you have on CCTV stealing from you yesterday. That person then asks you for a job working in your store. Are you going to hire this person? Do you have a moral obligation to help them? Countries are the same, and have the right and obligation first to their own citizens, and then to the rest of the world.

Second, allowing the Illegal (Economic) Migrants to stay sends a powerful message to the home country that Europe is open, and all they need to do is sell-up, and buy their way north.

Third and completely missing from the discussion; allowing the conditions for mass Illegal migration undermines and weakens the countries from which the migrants originate. Where an Illegal Migrant can raise, individually or through family, the $10,000 required for the migration, that is $10,000 that will never be invested in the home country. It is also $10,000 invested in undermining the confidence in their future, for those remaining in the home country.

So how do we stop the Illegal Migrations? Instead of just blaming, I'm going to give some concrete suggestions.

  1. Care for the Illegal Migrants, house them in camps and determine which are legitimate asylum seekers. Feed them, educate them while they are in the camps, treat their illnesses. Show compassion. Show respect.
  2. Perform true and detailed screening to identify the legitimate refugees in danger if returned to their home countries. This is compassionate, legal, and moral.
  3. Then automatically return all Illegal Migrants to the country from which they departed to arrive in Europe. I am not suggesting sending them back to a place where they are being (if they were being) put at danger (and if that were the case, then they would have a legitimate claim to refugee status). But if they climbed on a boat in Libya or Turkey, then just as is they climbed onto an aeroplane, they are the responsibility of that country.
  4. Publicize in home country journals the return of the Illegal Migrants to the country from which they departed (not their home country). Make it clear that Europe will accept legitimate asylum seekers, and will return those that are not.
  5. Invest in development programmes in the home countries, where such development is possible. After all, Somalia is a source of Illegal Migrants, a home to radical Islamic fanatics who would love to butcher non-believers anywhere (sleeper cells anyone), and a country in which effective development aid is almost impossible.

None of this is cheap, but it is much cheaper than dealing with the waves of Illegal Migrants yet to come, and far more humane then suggesting through our actions that their best option is to cast themselves into the sea. Europe has a right to accept the immigrants that European countries select, not any criminal that manages to make it to shore.

(Disclaimer: I am a serial economic migrant, who has done so legally every time I have moved between countries.)

15 April 2015

Why the Grexit is inevitable - and some singing PIGS

In the past few days, we had the pleasure of a (very) extended lunch with a good friend from high school days in Thessaloniki, Greece. Of course we talked about mutual friends from those years - how So-n-so hadn't changed, how (yes, you know who you are) actually did become a (prominent) doctor much to all of our and our teachers', surprise. And what about, you know who, I heard he died. No, not true, he's alive an well and playing the electric guitar.

Of course there have been some deaths, and more than a few divorces, but many children who are now beginning to have children of their own. Some sing, including the snarlingly lovely Talking Pigs: We Won't Pay (As in Portugal, Italy, Greece and Spain).

Talking P.I.G.S.

One thing in common for almost all of my Pinewood International Schools (TiHi to some) class of '78 is that we left. Many still live in Greece and in Thessaloniki or have returned, and they are closest to the pain. The real pain of the past decade, that has destroyed wealth and hope. Unemployment is running at levels not see in Europe since after the war, and at levels that encouraged the socialist - fascist civil wars of the 1930s. Those did not end well.

But that does not explain why the Grexit is inevitable, and why it will happen very soon.

  1. This is what the Greek people voted for. No, they did not vote to stay in the Euro, they voted for the party that said it would reduce the debt and meet pension obligations. The Greek people and voters are not stupid. They knew this could only happen by either the rest of Europe bailing out Greece again, or by leaving the Euro. 
  2. The Greek people know perfectly well that Europe is not going to bail them out, because to do so will only set everyone up for the next bailout.
  3. The Greek people, and the rest of Europe, know full well that the debt will never be repaid, and that the Troika are now acting as nothing better than the enforcers of loan sharks.
  4. Syriza knows that it had six months before the voters would throw them out, and once out, Syriza would never come back. 
  5. The Greeks needed to show "good faith" in actually attempting to negotiate a resolution with the Troika. This has now been done, and is failing.
  6. The demand for reparations from Germany is designed not to actually extract the reparations, but to anger the Germans to the point that they will block any compromise that Syriza would have been required to accept.

The Greek government, elected by a battered and exploited Greek people, has been establishing the conditions that will give them the moral high ground (in the eyes of their voters) needed to actually leave the Euro.

Having set the conditions, when will it happen?

"Predicting the future is easy, getting the dates right is almost impossible." I would attribute that quote, but so many people have said that any attribution would be inadequate. But it certainly is true, and while I love to predict, getting the dates wrong is a specialty.

That being said, I'm still guessing May 9th.


Greece will leave the Euro, and they will do it sooner than later. They've made the April payment, but simply do not have the money for the May or June payments, and they cannot pass the legislation required by Europe and the Germans and stay in power. That gives us a late May or June date. So why earlier?

Capital flight.

Imposing currency controls will be a fundamental element of any Grexit. Accounts will be frozen, and any money in accounts will be re-denominated in New Drachmas. Once the bank accounts are unfrozen, the residual, former Euros will now be worth whatever the New Drachma has dropped to, and the drop will be significant, over--correcting to the downside.

Once it is accepted that the Grexit is coming and there will be no last minute deal, and with memories of Cyprus too fresh in every Greek's mind, the money will flow out of the country. Not just corporate money (most of which is probably off-share already) but any remaining personal money in bank accounts.

So Greece has to move before the coming Grexit is perceived as inevitable, and the money starts to flow out.

Weekend event.

When the Grexit happens, it will be on a weekend. The banks will be closed, parliament will be called into emergency session, and a packet of laws will be passed. As this needs to be on a Saturday to avoid wholesale capital flight the moment that parliament is called into session, were it a weekday.

This leaves only a few possible dates. And where there are few possible dates, I'm punting on the earlier date, so earlier in May. And looking at the calendar, that leaves us with May 2nd, 9th or 16th. My own guess is that the 2nd is too soon, and the 16th is too late.

That leaves me guessing May 9th.

10 April 2015

Lets talk Risk Registers - dead boring?

There seem to be two trains of thought on Risk Registers; they are terrible and should be banned, or they are a critical part of a risk management programme and environment. I can see both perspectives, though I come down on the side favorable to Risk Registers. I also have some sympathy for those that say "Risk Registers are dead boring".

A good friend is very happy to tell me that Risk Registers are the bane of the risk management profession, and that they do significantly more damage than any benefit the provide. Risk Registers, with their attempt (or not) to create a defined universe of risks only serve to distract management and the Board from the wider range of risks, and thus provide a completely false sense of security. Use a Risk Register, he says, and you will absolutely be blind-sided by the actualisation of a risk that will kill the business.

Risk Registers also do not facilitate the quantification of all risks, or even necessarily the quantification of the value at risk for any particular risk. And without a quantification of the risk, it is impossible to have confidence in the application of resources to manage the risk.

He is right, of course, while also being completely wrong.

Any methodology or framework applied without adequate thought will court disaster. Anyone who actually thinks that their Risk Register actually contains either all the risks, or even all the important risks, is deluding themselves. Equally, anyone who thinks that they can quantify all risks either has a bloated risk function, is a major engineering conglomerate, or is delusional. Quantification can only go so far, and over-reliance on models can be just as dangerous as no assessment of potential consequences.

However, Risk Registers are an important part of risk management's ongoing processes of assisting management in the identification and management of risk. Note "a part of" and "assisting". These are critical. A Risk Register is so much more than simply an enumeration of risks, even if each has an associated description and a likelihood / impact scoring.

But a Risk Register can contain and drive so much more.

So what then is the purpose of a Risk Register. I would suggest Risk Registers can provide the following:

1. A common framework for the understanding of risk and the language for describing and managing risk within the organisation.

2. An agreed view of risks (but not all risks, as this simply is impossible, and counterproductive to attempt).
3. A linkage between organisational objectives and the risks to achievement of those objectives (as per COSO '92).
4. A central repository of the key controls associated with the risks, at a high level. In this way a control could be considered the inverse representation of a risk, or a subset of category of a risk.
5. The ability to identify control gaps, and to identify controls that need to be put in place.
6. A single source for reporting to determine the current, past and future level of risk (subjective) against the organisation's Risk Appetite.

A Risk Register does not prove that risks are being managed, nor does it record all risks. It also does not, by itself, ensure that control are effective.

Finally, reiterating the "does not record all risks"  point - there are risks that should not be put on a Risk Register. I have this discussion frequently, sometimes with a look of incredulity and a statement that "of course all risks should be on the register". There are some risks that do not belong on the register. These range from exit strategy risk to some specific regulatory risk to name two types. We can have a discussion about other risks, and I'd be happy to hear views on what risks belong on, and which should not be on the risk register.

Why should some risks not be recorded? Ah, that is NOT what I am saying. I am saying that some risks should not be on the Risk Register. These risks should of course be recorded and considered, but a Risk Register frequently is a document, system, spreadsheet, SharePoint directory(ies) or other repository of risks that will be visible by a number of individuals in the business. The Risk Register is also a living entity, with risks changing, being added, upgraded and downgraded.

I think the best summary comes from another friend, who said after attempting to build his Risk Register, "This is dead boring, but the process has actually made me think about the risks in my business, and is showing me that we have a lot more to do before I'll be comfortable that we are managing our risks".