Is it time to start making 'refugee cities'?

Syrian refugees are pictured at Jordan's Zaatari refugee camp. AFP

Six years ago, the Oxford University development economist Paul Collier and his colleague, Alexander Betts, were walking through a special economic zone in Jordan when they had a wonkish revelation. The SEZ, which was newly built, lacked enough workers to operate, whereas the nearby Zaatari camp for displaced Syrians had a large and largely unemployed population, though it was legally prohibited from seeking employment.

So determined were the professors to rectify this artificial imbalance in the local labour market that they lobbied to broker a grand bargain between Jordan and the EU on economic rights for refugees. A year later saw the "Jordan Compact", a deal in which Jordan would set up more SEZs, where companies could operate under favourable tax rules and were incentivised to hire Syrian refugees (along with Jordanians). Companies that hired a certain proportion of Syrians would be given preferential access to the European market. The compact would attract foreign companies to Jordan, give Syrians jobs without taking any from Jordanians and give them fewer reasons to want to go to Europe.

Implicit in the Jordan Compact was the idea that Syrian refugees are not leaving Jordan any time soon. Their humanitarian plight has become an economic plight, and local jobs are the only answer.

The trouble with most refugee policy is that it is based on pretending that refugee crises are a short-term disaster rather than an intergenerational, demographic event. That pretence in turn shapes many refugees' daily experience – life denied the ability to settle down with work and land, reliant on a tent for shelter and rations for food.

It is as though governments are sure to pull together any day now to solve the war in Syria, Afghanistan and other conflict states, and those who left will be keen to return immediately. Many of today's armed conflicts are too complex for that – 78 per cent of refugees are in "protracted situations", where their exile from home is either long-term or permanent.

Killian Kleinschmidt, the former UN administrator of Zaatari, has said that "killing the myth of return" – for agencies, authorities and populations to come to terms with the fact that refugees are likely to stay – is a critical step in improving conditions on the ground.

Some refugee populations have existed in limbo for so long that their encampments have morphed into de-facto towns. "Camp" seems an absurd label for Shatila in Beirut and Yarmouk in Damascus. They are miniature cities, that have existed for decades, built on grey economies with ill-defined legal structures.

A large number of refugees in Lebanon and Jordan live outside organised camps, in overcrowded or informal accommodation. Reuters

Refugee policy is based on pretending that refugee crises are a short-term disaster

The Jordan Compact, in theory, provided a sense of autonomy, in the form of employment, to refugees. But the opportunity to work in a manufacturing plant in a SEZ is only a very narrow kind of economic freedom. While the Jordan model is being replicated elsewhere, it has thus far only yielded mixed results. Syrian workers often found the zones too far away from where they lived, and many of the jobs available were restricted to specialised sectors. Some refugees could not afford the cost of paperwork needed to get their work permit. It was not a straightforward path to a stable living. An under-the-table career running a cash-only restaurant in the camp seems better.

Profs Collier and Betts, along with Mr Kleinschmidt and others, want to see the camp economy brought out of the shadows, by expanding the SEZ into a more comprehensive autonomous zone for refugees and international business. The Sustainable Development Zone (SDZ) Alliance, of which Mr Kleinschmidt is a member, envisions zones with more comprehensive independent legal jurisdiction and places for refugees to live, socialise and operate businesses. High-tech multinationals could lease land in the zone to train and employ refugees in a liberalised city – Yarmouk meets DIFC or Silicon Valley.

The idea of SDZ is an intellectual descendant of "charter cities", a concept coined by the economist Paul Romer in the early 2000s. Prof Romer advocated for developing countries to lease land to companies to create sovereign cities that competed with one another over residents like businesses. The idea is finding a second wind in refugee policy circles, with papers being written on how charter cities could be the answer to long-term refugee camps.

If refugees cannot be integrated into a country's economy, then the refugee economy could come to exist on its own – or rather, under lease in special jurisdictions from large, multinational corporations.

All of that seems like a faraway concept, but the global refugee population is only growing, along with the appetite for special economic zones, cheap labour and strategies to keep refugees employed. A network of "refugee cities" may one day be a real thing.

It would be a pity. The emergence of a formal economy off the back of forced migration would be the clearest possible sign of our total failure to tackle the problems that create migrants.

Moreover, there is a more obvious, though somehow less politically palatable solution, which is to accept that populations are not static things, and to better integrate refugees into the national economy. A few host countries, including Uganda, Canada and Germany, grant refugees the right to work, start businesses and own property, but these policies are not the norm. Growing the economy by absorbing large numbers of new workers is not without complications, but it is likely to be easier than creating a new economy altogether.