Germany Explores Limiting Migrant Remittances to Deter Immigration

As Germany grapples with regional election defeats and a rightward shift in political discourse, the government is exploring unconventional approaches to deter irregular migration, reports DW.

The latest proposal comes from Christian Lindner, leader of the Free Democratic Party (FDP), which has seen a significant drop in voter support. Lindner’s proposal involves investigating the technical and legal feasibility of preventing asylum-seekers from sending benefits received in Germany back to their home countries.

This move is being considered at a time when many developing nations rely on diaspora remittances to stabilize their foreign exchange markets. The proposal is expected to serve as a deterrent for potential migrants.

The influx of individuals from developing countries seeking opportunities in developed nations has been further compounded by recent conflicts in Ukraine and Afghanistan, leading to a surge in the number of refugees seeking asylum.

While the situation presents a challenge for countries like Germany, it inadvertently offers an opportunity for financial inflow to developing nations.

Remittances play a crucial role in global financial flows, surpassing development assistance from donor states. World Bank statistics indicate that remittances contribute significantly to poverty reduction, improved nutrition, and enhanced education opportunities for children in disadvantaged households.

In developing countries, families often pool resources to send an individual abroad with the hope that they will earn enough to send back home and alleviate their poverty. This practice has proven effective in many cases. For instance, in 2022, the 20.13 billion U.S. dollars in personal remittances received in Nigeria amounted to nearly half of the nation’s earnings from oil.

Amidst this backdrop, some German politicians are advocating for providing asylum-seeker benefits-in-kind through payment cards, rather than cash. Joachim Stamp, the German government’s commissioner for migration agreements, supports this shift, as do Chancellor Olaf Scholz and all of Germany’s state leaders.

However, skepticism surrounds the effectiveness of discontinuing remittances in Germany as a means to deter immigration.

“You can think of migration as a portfolio investment decision,” said Tobias Heidland, an economics professor at Kiel University. “Migration is for many people in the world the most profitable investment they can make. That’s why they take substantial risks.”

Migration experts question whether this would significantly impact the money sent home, given the relatively low benefits received by asylum-seekers.

Matthias Lücke, a migration expert at the Kiel Institute for the World Economy, told DW that the meager asylum-seeker benefits are unlikely to serve as a major pull factor for migration. He also raised moral concerns about inhibiting individuals from supporting those in need.

“I don’t think this has been thought through yet. When people come here they want to work properly and support their families, but the idea that the little asylum-seeker benefit is some kind of ‘pull factor’ — I don’t think that’s credible.

“I think it’s a very strange definition of freedom, to say: ‘Here’s a poor person, and they want to give money to even poorer people, and I want to forbid that,’ — I can’t understand how that is supposed to work legally or how it makes sense politically,” he said.

Heidland suggested that even if such a policy were to slow remittances, it could come at the cost of hindering integration efforts.

“I don’t think this would make a big difference. I think it’s mostly going to be a policy that has an impact as a signal to the population here that something has to be done,” he said.

While it remains uncertain if the German government will pursue this idea, its implementation, if undertaken, could set a precedent with potential ramifications for FX inflows in numerous countries.