These are the criminals and corporations that have gotten really, really rich off the refugee crisis.

The 21st Century Gold Rush

How the refugee crisis is changing the world economy. By Malia Politzer and Emily Kassie

The biggest refugee crisis in recorded history has engulfed continents, swung elections and fueled the rise of nativism. It has also made a lot of people very, very rich. These are the stories of the CEOs, criminal masterminds, pencil-pushers and low-flying vultures who have figured out how to profit from global instability, also known as human suffering.

Niger. Smugglers’ Paradise.

The migrant crisis has converted a tiny city in Niger into one of the continent’s most prominent and cruel smuggling hubs. Weapons, drugs, laundered money, hapless migrants, indentured prostitutes—they all pass through Agadez. And then the trouble radiates out from there. (This entire piece was completed with support from the Pulitzer Center on Crisis Reporting.)

On a baking-hot day in August, Bilal Garo, a distant relative of the current sultan of Agadez, was sitting on a carpet on the dusty floor of his traditional mud house. He is more than 80 years old, with deep laugh lines etched around his cataract-clouded brown eyes that have witnessed the transformation of Agadez from a place he loved into a town run by traffickers. “We cannot go back” he said.”We can only move on.”

In the 15th century, Agadez emerged out of sandy nothingness to become a trading outpost on the southern edge of the Sahara Desert. Tribesmen would come through town to exchange millet, cloth and gold, before moving on to their next destination. Centuries passed, the city grew and regional tourism replaced low-level trade as the primary driver of the economy (the center of Agadez is a UNESCO World Heritage Site). Then, beginning in 2007, a series of rebellions scared away the tourists. That was followed by the collapse of Libya, which left the country’s borders open and unguarded and made the smuggling of Africans into Europe a structured, multinational, multi-million dollar industry.

As recently as 2013, the Global Initiative Against Transnational Organized Crime reported that all the trans-Saharan migrant smuggling networks combined were making $8 to $20 million per year. By 2015, according to the same organization, they were making more than $300 million in Libya alone. And a high percentage of people who travel along the sub-Saharan route have to go through Agadez before heading north. By even the most conservative estimates, migrant traffic (to say nothing of the more profitable trade in weapons and narcotics) brings in about $20 million per year to Agadez, according to Tuesday Reitano, deputy director of the Global Initiative.

As a result, the city’ elite business classes now include drug dealers, smugglers and pimps – the type of people who rape newly trafficked women to “break” them, beat migrants who haven’t paid their passage or bribe officials so that all this illicit work may continue. The downtown is dotted with Western Union signs and storefronts for banks. Brand-new McMansions are sprouting up on the fringes of town. Just taking photographs of these homes can be dangerous.

The criminal influence of smugglers can seem inescapable here. Consider the tiny corner store that sells baby shampoo, diapers and grain staples that could somehow afford an air-conditioning unit and flat-screen TV, rare luxuries in this part of the world. If you walk through the back door into an open-air courtyard, you’ll find its real income source: a dozen near-starving migrants, sleeping on plastic mats, waiting to be loaded onto trucks destined for Libya. Then there’s the Nigerian restaurant that doubles as a brothel, located on a road a short stroll from the main mosque. After the sun goes down and devout Muslims answer the fifth and final call to prayer, the pimps release the prostitutes they lock up all day into the streets to approach potential clients.

The government has made some cursory attempts to crack down on all this misconduct, but mainly it just finds ways to benefit from it. Before leaving for Libya, smuggling vehicles are stopped by police who demand a “transportation tax” of $3 to $80. The reason for that wide margin is that only a few bucks goes to the city of Agadez; the rest presumably lines the border agents’ pockets.

As long as there’s poverty and unrest that makes people want to leave their homelands, and as long as people can find a way to profit off migration, the smuggling business will continue. Migrants and refugees will suffer, criminals will enrich themselves and Bilal Garo’s hometown will become even more treacherous.

The Unvirtuous Cycle

Here’s what the Agadez-based smuggling operation actually looks like.

The Escape

In high season, an estimated 5,000 people from neighboring countries arrive in Agadez each week in the hopes of eventually making it to Europe.

The Wait

These people are housed in ghettos until they are stuffed onto trucks headed for Libya.

The Secret Cargo

But unbeknownst to the migrants or the drivers, some of the trucks are also loaded up with drugs and foreign currency.

The Fire

Once the drivers offload the migrants, drugs and money in Libya, their trucks are packed with fresh contraband for the return journey—usually weapons.

The Twist

After being sold in Agadez, these weapons will often end up in the hands of groups like the Islamic State, Boko Haram in Nigeria and al Qaeda in Mali—the groups many of the migrants were fleeing from in the first place.

The Players

Now, let’s meet the people who make the system go round and round.

The Passers

This guy on the bike, his name is Khalid. He’s a “passer.” That means he functions as an all-inclusive travel agent for migrants, someone who provides for their food, transportation and sleeping arrangements at every point along their journey. He spends much of his day talking on his orange Nokia cell phone (one of several he keeps with him at all times) monitoring their progress, first from their home villages in Gambia and Burkina Faso to Agadez, then from Agadez to Libya.He has a massive network of local contacts in the villages along migrant routes that keep him informed of his clients’ progress. If they run into problems along the way-maybe they don’t have enough money to pay bribes at roadblocks-Khalid will intervene to ensure they make it to their next destination, often loaning them cash and occasionally driving to pick them up.

Passers like Khalid are among the highest-paid players in the migrant smuggling business in this part of the world, charging $200 to $400 per person to see migrants safely to Libya. Not all of this is profit. Unless they are also ghetto owners, passers pay an average of $50 per week to rent space in Agadez’s ghettos. They also cover food costs and are responsible for paying truck owners once a migrant calls to confirm he has safely arrived at the drop-point in Libya.

Khalid is a slim man in his mid-30s, though he looks much younger. He speaks softly, almost in singsong, and emphasizes his words with delicate, precise gestures. During our interview, which was frequently interrupted by his “Ave Maria” ringtone, he fielded panicked calls from clients, managing to reassure them in a tone that was deliberately calm, level and low. “I do not believe in losing my temper” he said, after finishing a conversation with migrants who were stranded at a roadblock in Burkina Faso, unable to pay an $80 bribe. “What is the point? Things happen. If you stay calm, it is easier to focus on what needs to be done”.

Once upon a time, Khalid, a native Gambian, was a government contractor who helped build middle schools. But after the World Bank cut the project that funded his contract, he decided to leave Gambia to find work in Europe. On his way north, he met up with other migrants making the same journey, loaning money to those who didn’t have the funds to pay for transportation. He soon realized he had a knack for organizing people, and for negotiating business deals.

He never made it to Europe. Instead, he started a business in Morocco, coordinating migrants’ journeys into Spain. When the Spanish route started shifting to Libya, he moved to Agadez. “I have been doing this kind of work for years, and I don’t charge interest,”; he said. “I am a good person.”

The migrants in the compound he’s renting, and the compound owner he’s renting from, say otherwise: They claim he gives them only rice and water to eat, and that he took all the money the migrants brought with them, leaving them completely broke. “I am always loaning them money, and helping them when they get into trouble,” Khalid said, examining his fingernails. “I basically work for free.”

The Ghetto

The word “ghetto” doesn’t mean the same thing in Agadez as it does in the U.S. In Agadez, ghettos are dusty, open-air courtyards hidden from view behind rust-colored mudbrick walls. They’re the places migrants stay until their relatives wire payments for the next leg of the journey, and each one can hold anywhere from just a few people to nearly 100. No one knows exactly how many ghettos exist within the city limits, but locals estimate the number to be between 70 and 200.

We visited three ghettos in Agadez, one of them owned by a tall, brisk man in a brightly colored pineapple print shirt named Ahmed Mouhamed. Originally from Agadez, Mouhamed started working in the migrant business in 2003, when he acquired a compound. Today, in addition to the ghetto he owns, he rents out two others. “You have to move people sometimes,” he explained. “You don’t want the police to find you.” He also owns three trucks and works as a passer.

Mouhamed was skittish about showing us his ghetto, allowing us fewer than 15 minutes before shooing us out the door. His compound was spartan, consisting of a small open-air area and several stuffy rooms, with more than 30 men crowded inside. Some were lounging on plastic mats laid out over the dirt without the luxury of pillows or blankets. A thatched canopy provided the only protection from the scalding sun. In the corner of Mouhamed’s ghetto were four large plastic barrels full of water, where several men were washing their clothes.

When we arrived, Mouhamed had just told the group they would be leaving on trucks to Libya the next morning, and the ghetto buzzed with nervous excitement. One of Mouhamed’s migrants, a 19-year old from Gambia, had been stuck there for two weeks. “I am going to Spain,” he said. “I have a cousin there who picks olives. He says there is good work there.” He explained that his cousin makes about $40 a day, excellent money as far as he was concerned. He was so happy to be leaving Agadez, to finally eat something other than the curry and rice he’d been served over and over. “There are no jobs in my village,” he said. “In Europe I have a future. This is why I must go.”

The Prostitutes

On a Friday evening, in a filthy alley on the outskirts of Agadez, more than a dozen young women had just been let out of the compounds where they are kept under guard during daylight hours. They wore tight spandex pants and shirts with plunging necklines and stood in silence waiting for the men to arrive. Their pimp, who refused to give his name, was a scrawny, scowling man with lightning-bolt sideburns and multiple gold chains around his neck. He monitored the women from his seat on a rusted motorcycle nearby, a red baseball cap shading his small, squinting eyes from the rays of the setting sun.

Most of the women were lured from Nigeria, though others came from Ghana and Gambia. Very few knew what they were getting into. They just wanted to get away from Boko Haram, or the bruising poverty and food shortages in their hometowns. And traffickers have learned exactly how to seduce them. Wealthy madams fly down from Europe to regale them with stories of riches. Other recruiters are family friends, who convince parents that their daughters are their tickets out of poverty. In rare cases, traffickers pose as boyfriends or potential husbands, then bring them north telling them they’ll get lucrative jobs in Europe as saleswomen in bakeries and boutique clothing shops.

Before departing, many Nigerian women participate in a binding ritual called a “juju oath.” (Voodoo is referred to as “juju” locally.) In this pact, a local priest puts strands of a woman’s hair, slivers of her nails or items containing her bodily secretions (like a pair of panties stained with menstrual blood) in a bag that also contains her photograph. This packet represents spiritual control over a woman, and she is made to believe that she or her family will be killed unless her debt to her trafficker is repaid.

For many years, the Nigerian mafia primarily sent women to Italy on planes, with fake passports. But increased airport security checks and the collapse of Libya have caused the mafia to shuttle women along the same routes used by economic migrants and refugees. Agadez is often the first stop for Nigeria’s sex traffickers. Here, a representative from the International Organization for Migration reports, women can be “broken in”—repeatedly raped by traffickers, then forced to have sex with eight or more men per day. The women say they earn $3 per sex act in Agadez, money that goes straight to their pimp, to whom they owe a debt of up to $3,000 for “travel expenses.” After paying that off, they are taken to Libya, where they live in a compound called “La Maison Blanche,” or the White House.

There, they also suffer sexual violence until the gangs put them on boats to Europe. And then once they reach the continent, they are hidden away in brothels in countries such as Italy, France, the United Kingdom, Belgium and Finland.

“I thought we were going straight to Libya,” a 26-year old woman named Manuela explained, twirling a braided extension around her hand. “Then they told us we would be doing this work. This isn’t what I wanted. I will work off my debt, then I want to go home.”

The Transporters

Francois (not his real name) is a charming and friendly man in his early 30s with blindingly white teeth and a neat goatee. He’s very well connected—one of our interviews took place in the compound of a close relative of the current prime minister of Niger—and his business has made him an upper-class citizen in Agadez. He runs a fleet of vehicles: 10 white 4×4 Toyota Hilux pickup trucks and six Toyota Land Cruisers that he sends between Libya and Agadez. But he never does the driving himself. He’s merely a truck owner, one of the cushiest jobs to have in the human migration business. He leaves the risky stuff to his drivers.

Every Monday, a military convoy leaves Agadez for Libya to escort legitimate (or “legitimate”) businesses that conduct trade between the two countries. Many migrant truck drivers tag along, paying around $400 in bribes and tolls for the privilege of doing so. But Francois’ fleet avoids this route, preferring secret paths through the desert that circumvent the many roadblocks, bribes and vehicle searches that hamper traditional routes. This also allows him to ship cargo of a more illicit nature.

Polishing off a plate of french fries at an Agadez hotel restaurant, he illustrated his business model with a napkin and a pack of cigarettes. He unfolded the napkin. “These are the migrants,” he said. Then he placed the pack of cigarettes on the table. “But this is where we make the money,” he continued, draping the napkin over the cigarettes. “The migrants—they’re just a cover.”

Before Francois’ trucks leave for Libya, drug bosses pay to fill them with kilos of hashish, cocaine and tramadol, an opioid painkiller. Francois hides the drugs in secret compartments, or in innocuous-looking “migrant” luggage. Other times, the cargo isn’t drugs, but millions of dollars worth of foreign currency. Once the freight has been securely stowed, he calls his drivers to pick up the trucks and load them with migrants. For security, he never tells his drivers what else they might be carrying.

Once they arrive in Libya, and the migrants depart, drivers park the vehicles at a pre-established drop point. There, out of sight of the drivers, the drugs are removed from the car and parceled out to the drug bosses’ Libyan contacts. Before returning to Agadez, the trucks are serviced and filled with new contraband, usually weapons. According to data published by the United Nations Office on Drugs and Crime, Agadez has become a wholesale marketplace for illicit arms, most likely including Kalashnikovs and lightweight machine guns. Some of these weapons will end up in the hands of al Qaeda in the Maghreb, the Islamic State, secessionist groups in Niger and Boko Haram in Nigeria, among others.

Francois won’t disclose what he makes from moving drugs or weapons. But his profit on migrants alone is substantial; he reports making about $3,500 per trip, after paying routine expenses, which include bribes, gas and car repairs, as well as his driver’s salary of about $700 to $800. “It’s a good business, and it has a good future,” he said, smiling as usual. “I don’t see it slowing anytime soon.”

The Drive North

When the migrants get picked up for their ride out of the ghettos of Agadez and into Libya, they have little idea of the risks ahead. They cover themselves with scarves to protect their skin from the scalding sun and hold onto sticks to keep from being jostled out. Not that that’s likely. Migrants are so tightly packed that they barely have space to move.

It’s hard to overemphasize the dangers of the Sahara—the largest, hottest desert in the world, which covers 3.5 million square miles of land, including large swaths of 12 different African countries. In the summer, temperatures can soar above 125 degrees Fahrenheit and, in the winter, can drop below freezing. There are scorpions, poisonous vipers, deadly sandstorms and 600-foot sand dunes. Much of the desert lacks obvious landmarks, making it easy to get lost. Those who do will likely die of dehydration or exposure—a painful process that can take days, ending in hallucinations and convulsions.

To lower their chances of steering off-course on the two- to three-day journey, the drivers keep in touch with one another via satellite phones and memorize the locations of the few lifesaving rivers and oases. But it’s not possible to avoid hazards entirely. Trucks break down, and cell phones run out of batteries. There are no search and rescue teams; a simple vehicle malfunction can mean death.

And many do die. A report released earlier this year by a group called the 4Mi, an affiliate of the Danish Refugee Council, suggested that more migrants are dying in the Sahara than on Mediterranean crossings. Based on the witness testimony of 1,300 people that had made the trip between 2014 and 2016, the report estimated 1,245 desert deaths in Libya, Sudan and Egypt alone. “The relatively small number of migrants interviewed … suggests the 1,245 figure is a conservative estimate of those who actually perished,” the report said.

When they reach Libya, migrants will call their passers in Agadez to tell them they’ve arrived safely. At that point, the passers will pay the truck owners a portion of the migrants’ fee in cash. Some migrants try to cheat the passers by not paying at all. That’s a bad decision. According to Amnesty International, those who choose that option are routinely imprisoned by passers’ contacts in Libya and are forced to work off their debt. Others are made to call home, so their horrified families will hear them being beaten.

For some, the journey will end in Libya. Without a government and without rules, Libya can be punishing on migrants and refugees. They can be kidnapped by militias or enslaved by businessmen. Even those who are able to leave still have to secure their places on a rubber boat and cross the turbulent Mediterranean Sea, a passage that human rights activists have coined the “migrant graveyard” for the thousands of deaths by drowning over the years. But all the pain and the risk is worth it, they say, because a better life awaits them in Italy.

Italy. The Mafia meets the Black Axe.

The Sicilian Mafia has parlayed human suffering into profits for over 150 years now. So the hundreds of thousands of refugees who risked their lives to cross the Mediterranean don’t pose a threat to Cosa Nostra. They present a brand-new business opportunity.

Because of a recent drug charge, Samora Santi wasn’t allowed to leave his apartment building after dark. So we sat on the broken stone steps of his musty, unlit stairwell to talk. He lives in Ballarò, an historic district in Sicily’s capital city of Palermo. During the day, the outdoor market—filled with stalls of Italian cheeses, freshly caught fish and artfully displayed fruit—is lovely enough to be a tourist trap. But at night, Ballarò loses its charm. It becomes a mafia town. There are brothels every few blocks, and the disembodied whistles of drug dealers announcing that they have product to sell echo through trash-strewn plazas.

A Ghanaian man in his late twenties with smooth dark skin and long eyelashes, Santi would be good-looking if it weren’t for the fact that part of his nose is missing: Someone had bitten a chunk of it off during a fight at the refugee shelter where Santi first stayed when he arrived in Italy in 2008. “There were no jobs in my village,” he said. “I had two sisters and three younger brothers, and there was no money to take care of any of us, so I decided to go.” It didn’t take him long to realize that the employment situation in Sicily wasn’t much better than the one he had left.

He managed to get a job arranging flowers at a shop, but lost it when he had to travel to Rome for a meeting about his immigration case. He tried earning money by parking cars and looked for work in construction, but the competition with the locals was too fierce. (Youth unemployment for native Italians hovers around 42 percent in Sicily.) “If you don’t have a friend or don’t have documents, it’s really difficult to get a job for us Africans,” he explained in his soft voice that occasionally drops to a whisper. “You really need to know someone.”

Desperate and poor, Santi eventually caved. He began selling drugs that he bought from a Nigerian gang. “I didn’t want to,” he said “But if you don’t have anyone or anything, you do what you have to do to survive.” Now that he has a rap sheet, finding a job is even harder, and the idea of making a life for himself within the law seems less and less attainable. He has to rely on his friends to give him money for food and for rent.

His story is a familiar one in Sicily. This year, a record 175,000 people, primarily from war-torn countries such as Nigeria, Eritrea, and Somalia, have landed on Italian shores. These migrants wait in refugee camps for the roughly six to 18 months it takes for their asylum applications to be processed. Those who are granted asylum are resettled in towns throughout the country. Those who aren’t usually end up staying anyway, since there aren’t bilateral agreements between Italy and many of the countries of origin. That means there’s been a population infusion at a time of widespread joblessness. It’s almost too much to bear. The drug trade has picked up. So has prostitution. And benefitting from all this instability, perhaps more than any other group in the country, is the Sicilian Mafia, otherwise known as Cosa Nostra.

The Mafia’s New Friends

At the height of its power, between the 1950s and 1990s, the Sicilian Mafia touched every level of the economy and government here. Local businesses had to pay up to one-third of their profits in pizzo, or protection money, just to keep the lights on. Bought-off cops and corrupt politicians were everywhere. It was a sprawling, humming, vicious monopoly.

The Mafia is not as all-powerful as it once was, however, kneecapped by the arrests of key figures and a breakdown in omertà, the infamous code of silence. So Cosa Nostra has had to diversify. Beyond its usual revenue streams (pizzo, local construction), it has branched out into areas like clean energy, securing lucrative projects funded by the European Union and the Italian government. But nothing has been better for Mafia business over the last 20 years than the hundreds of thousands of foreigners who have arrived in Sicily with too little to do.

“Do you have any idea how much we earn off migrants?” one mob leader was heard saying over a wiretap. “Drugs are less profitable.”

First, there’s the money the Mafia is extracting from the refugee camps themselves. Italian prosecutors are currently investigating three separate skimming operations, including one at CARA Mineo, largest camp in Europe. Mineo divvies out approximately 100 million euros in service contracts each year, and with all that money sloshing around, it’s no surprise that Carmelo Zucchero, the chief prosecutor of Catania, Sicily’s second biggest city, suspects that the Mafia intimidated other contractors to drop out of the bidding process. He also believes that the Mafia-affiliated cleaning and catering operations that won the bids are providing lower-quality services than the legitimate ones would have, thereby driving up their margins.

A recent visit to Mineo, a fenced-off cluster of buildings in the middle of miles of open fields, revealed evidence that the Mafia is up to even more tricks. Under Italian law, asylum-seekers are entitled to receive pocket money of 2.50 euros per day. But migrants staying at the camp say they never receive that.

“This is what they give us,” said a lanky Gambian man named Sirrif, waving a pack of cigarettes in the air. “Me, I don’t smoke cigarettes. What do I do with this?”

Several other migrants interviewed separately outside the entrance to Mineo also claimed to have received cigarettes instead of cash. A worker for a local nongovernmental organization, who wouldn’t give his name for fear of reprisal, provided the details of the scheme. “The cigarettes come from a company owned by a Mafia boss’s brother-in-law,” he said. “If the refugees want their pocket money, they have to sell the cigarettes.”

But these kinds of skimming operations are small potatoes for the Mafia—it’s been pulling similar schemes for more than a century now. What has ballooned the mob’s migrant-related profits into the billions, prosecutors say, is its increased emphasis on human trafficking. And this has required a level of collaboration with African criminal syndicates that was previously unheard of in Sicily.

A recent police investigation revealed that, for around five years now, the Mafia has been conspiring with North African smugglers to deliver tens of thousands of refugees from Egypt to Sicily. On a wiretapped phone call, a Mafia boss told an Egyptian trafficker involved in organizing boat trips about the best way to avoid trouble from the authorities. “If they find you,” the Sicilian said, “throw them all [the migrants] into the sea.”

Once the refugees reach Europe, the Mafia offers them lodging, food and transport to the northern part of the continent “in exchange for vast sums of money,” in the words of a police report. The Mafia’s role in human trafficking is actually similar to the passer’s role in Agadez—all the way down to how the Sicilians launch extortion campaigns and threaten to kidnap and torture migrants who fail to pay their full freight.

For all of its influence, Cosa Nostra doesn’t have much of a physical presence on the streets of Ballarò. Instead, the area is filled with different African criminal groups at war with each other over territory and power. And the one that appears to be winning is known as the Black Axe.

Members of the group don’t carry guns because Cosa Nostra doesn’t let them. They wield machetes and (yes) axes, and according to Gaspare Spedale, a prosecutor who is leading the government’s investigation into the group’s activities in Sicily, they rather enjoy using them. From his heavily guarded offices downtown, Spedale explained that the Black Axe’s recent slashing of a Nigerian boy “was part of a pattern. They use violence for stupid reasons, to show everybody that they can do everything they want their way, and to make everyone understand that they are in charge.” Last month, in an announcement publicizing the arrest of around 20 Black Axe members, Sicilian prosecutors made the revolutionary move of declaring the Nigerian group to be an official mafia. “For the first time in Palermo, we have another mafia other than the traditional one,” said Calogero Ferrara, one of the prosecutors. “It is very weird for us.”

The Black Axe was founded in the late 1970s, as a confraternity at the University of Benin, in Nigeria. The group was quickly outlawed across the country for being too violent, too cult-like. Members allegedly forced female students to pay them protection money, or risk being raped. One initiation ceremony involved drinking human blood.

While the group’s presence in Sicily can be traced back a couple decades, its power was, until recently, kept in check by Cosa Nostra. Black Axe members were allowed to push drugs only to other African immigrants. If one was caught selling to an Italian, he would be trussed up like a goat and strangled (the signature Cosa Nostra style of execution).

Authorities noticed the Mafia loosening its grip around 2013, the same year that large numbers of asylum seekers and immigrants started arriving in Italy. The timing couldn’t have been more fortuitous for the Sicilian Mafia. It had just suffered another wave of arrests, and it needed more people to do the kind of daily dirty work that carries a high risk of imprisonment. So it started leaning on the Black Axe and other African groups to deal drugs, even to Italian clients.

Prosecutors believe that the Sicilian Mafia has implemented a double-dip strategy with the Africans. First, the Sicilians force groups like the Black Axe to buy all of their drugs from them. Then, they collect money for rental of their territory. That way, the Italians can focus on large-scale drug trafficking while still profiting off street sales—and at no real risk to themselves.

“Cosa Nostra sees the Nigerians as expendable,” an undercover cop told us. “They don’t care if they get arrested. Their lives are cheap.”

Spedale and several other prosecutors made a point of saying that the growth of African criminal organizations isn’t the fault of all the new immigrants and asylum-seekers. It’s mainly that the government’s attempts to integrate Africans into society have been so clumsy and ineffectual that migrants are often left with no other ways to make money. Or as Leoluca Orlando, the mayor of Palermo, told the Telegraph last year: “[Similarly to how] prohibition in America produced Al Capone, [the lack of] permits for migrants is producing a new form of organized crime.”

In 2013, the government ramped up a program that placed 16,000 refugees in 500 towns and villages that had lost most of their youth population to the big cities. These towns, dreaming of economic revitalization, provided the refugees with housing, Italian language classes and job training. But even with that, they couldn’t hold their new residents’ attention. Most of the refugees also left for the big cities as soon as they could.

Alex Omoregbe still lives with his wife and three children in Sutera, a quaint hilltop village in southwest Sicily. “It’s a cool place, but it’s meant for old people, not people like us,” he said. “There is nothing to do here, only go to school, go inside the house and sleep.” He’s looking forward to a day, very soon, when he can move his family out of town and try to find more rewarding work. And if the experience of Samora Santi or any number of other refugees is any guide, the Black Axe is looking forward to that day, too.

“They Are So Numb”

Historically, the Sicilian Mafia has shied away from prostitution because it considers itself to be a Catholic organization and the practice violates Catholic values. But that doesn’t mean the Mafia refuses a cut. For decades, it has countenanced the Black Axe’s sexual enslavement of tens of thousands of women so long as the Nigerian cult remains “respectful” and pays a fee for the privilege of working in Cosa Nostra territory, according to Spedale.

And business has only improved since the refugee crisis. Simona Moscarelli, an anti-trafficking expert at the International Organization for Migration, estimates that the number of Nigerian sex workers smuggled into Italy by sea has increased more than 300 percent over the past three years.

Women can fall into the Black Axe’s net in a number of ways. Prosecutors say some are ordered like menu items from Nigeria to Italy by madams. Others are recruited straight from refugee camps. There, according to Charlotte Baarda, a doctoral student at the University of Oxford who is doing her thesis on Nigerian sex trafficking networks, madams essentially tell them: “You could either be stuck in this asylum center, or you could start working for me, and I’ll help you get a residency permit or marry an Italian guy.”

And then there are those who arrive in Sicily from Agadez and Libya believing that their enslavement days are over, only to discover that they are simply entering a new phase of indentured servitude. Moscarelli says that many women are handed a slip of paper on their journey to Europe with a phone number for someone they are told will help them get settled in their new home. But what that number really does is alert the traffickers that they’re on their way, and soon enough, the women are back out on the street.

“By the time they cross the sea and arrive in Italy, they are so numb it is like they are broken,” said Sister Valeria Gandini, an elderly Catholic nun who has given much of her life to anti-trafficking causes.

Gandini spends several nights a week strolling through Ballarò, seeking out trafficking victims with people from local NGOs and other members of the church. “We don’t go with the intention of rescuing them because you can’t rescue them, it is impossible,” Gandini said. “We go to talk to them and establish a friendship with them. It is a moment where they can be natural, where they can have friends.”

Other African women enter into sex work willingly; they see it as their only financial option in an economy that’s even harder on women than it is on men. But what they don’t know, Gandini says, is “how big their debts are until it’s too late.” Father Enzo Volpe, a Catholic priest based out of Ballarò who accompanies Gandini on her walks, estimates that women need to pay their captors between 30,000 to 50,000 euros to buy their freedom. A report by the Finnish Immigration Service says women can owe up to 80,000 euros. In any case, the mathematics of the trade are unimaginably brutal. The prosecutors we spoke to said a prostitute could make up to 40 euros per act, while some of the women said they only made 5 to 10 euros.

“Many women don’t have money for food, or for rent,” said Gandini. “And they won’t denounce their traffickers or try to leave because they are too afraid.” Often, Enzo said, the juju pacts they entered into back at home still have a hold over them—they believe that either they or their family members will be killed if they stray.

And their relatives have no idea of the suffering they’re enduring. “Families think it will be easy for their daughters to earn money in Italy,” said Osas Yvonne, a former prostitute who co-founded an anti-trafficking group in Palermo called the Association of the Women of Benin City. “They think the white people have so much money, you can just ask them where they get it from and you can take it. Maybe there’s a tree and you can pluck the money from the tree. They don’t always know they have to become prostitutes. They don’t know that you have to suffer before you can feed yourself.”

In a cruel twist, many of the women live in houses where their activities are strictly monitored by madams who themselves are former prostitutes. These madams have paid off their debts. Some have even lived in government-funded protective shelters or taken subsidized Italian language classes meant to help them find jobs. But after some time, they saw no other way to make money other than to stay in the business as a captor. “Women don’t have the same rights here. They are not even second-class people, but slaves,” Gandini said. “We just don’t see a way out for them.”

An Unsteady Truce

Whenever a new criminal group takes root in a territory dominated by another, older criminal network, there’s the risk of a turf war. So far, the Sicilians have been careful to keep the newcomers in check. “If a Nigerian boss would try to rebel against the Sicilian Mafia, he would end up killed like a goat in the countryside,” said Leonardo Agueci, a deputy chief prosecutor in Palermo. “We’d find his head cut in the garbage.”

But that doesn’t mean the dynamic won’t change in the future. For one, the numbers might get too lopsided for the status quo to hold. As Maurizio Scalia, another deputy chief prosecutor in Palermo, explained: “Once you arrest one member in a human smuggling organization, another just comes in to take his place.” And then there’s the cultural aspect.

“The Italian Mafia’s ability to influence and be strong is that they have social currency in their locale,” explained Tuesday Reitano, the deputy director of the Global Initiative Against Transnational Organized Crime. “They threaten local businesses, local families and there’s this memory of the threat of violence that gives them power. But when you have a big immigrant population—there’s no memory of massive violence. What can they be threatened with? They already suffered violence at home, they don’t have businesses and often their families aren’t with them.”

Still, there’s not much reason to think that a war between the Sicilian and Nigerian criminal organizations is imminent. All sides are benefitting too much. The Black Axe, in particular, is likely to expand over the next few years—and not just in Italy. Its relationship to the Sicilian Mafia has “bolstered its international image,” said Dr. Anna Sergi, Deputy Director of the Centre for Criminology at the University of Essex. “Since it has good support in Nigeria and now in Italy, if it wanted to pursue other markets, or if it wanted to get into counterfeiting, identity cards or anything that requires transnational activities, it’d be in a good position to do so.” Baarda also believes that the Black Axe’s reputation has become strong enough that African migrants in other countries—such as the United Kingdom and the Netherlands—are claiming allegiance to the group, even if the ties are thin to nonexistent.

The rise of the Black Axe—and of Nigerian gangs in general—could be viewed as a hard lesson in unintended consequences. If Muammar Gaddafi hadn’t been killed, throwing Libya into chaos, and Middle Eastern countries hadn’t sealed their borders to asylum-seekers and migrants coming from Africa, the Libya-to-Italy migrant route would probably never have become such a lucrative magnet for organized crime. And if the economic crisis hadn’t hit Italy so hard, and migrants and refugees had better job opportunities in Europe, they wouldn’t have been so vulnerable to recruitment into drug dealing or prostitution. And if the Sicilian Mafia hadn’t been weakened by all the police busts, it might not have been so eager to do business with the Nigerian gangs in the first place. Now, prosecutors don’t just have the Sicilian Mafia to contend with. An entirely new criminal network has been loosed on the continent, with both the connections and ability to expand.

Turkey. Kids, Guns and Steel.

In towns and cities across Turkey, Syrians have built an entire shadow economy. With the help of a growing pool of child workers, they’re manufacturing goods to send to their stricken homeland. And in the process, they’re fueling the very war that they fled from.

In the daytime, the streets of Istanbul’s Zeytinburnu district are quiet, almost eerily so. You might think that no one lived in the blocky Soviet-style apartment buildings, were it not for the sooty satellite dishes cluttering the edifices and the Turkish flags and clotheslines draped over cramped balconies. But the stillness is deceptive. Hidden below the streets, in hundreds of small, windowless basements, there is a booming textile industry employing thousands of workers. Many of them are Syrian children.

The market in Syrian child labor was born partly from demographics and partly from need. The refugee population here is strikingly young: Around half of Syrians in Turkey are under the age of 18. And while Turkey has been among the most generous countries to refugees during the crisis, most Syrians are struggling to support themselves. Some 90 percent of them live outside refugee camps with little government assistance. The vast majority have also been unable to obtain work permits, severely restricting their ability to earn money. So in order to survive, many families have put their children to work.

From Syria to Sweatshops

We visited more than a dozen workshops in the Zeytinburnu area, where we saw children crouched over sewing machines, shoulders hunched, feet dangling from chairs too large for their frames. We saw kids fetching tea and coffee, sweeping scraps of cloth from cement floors, and running between sewing stations, giving unstitched pieces of cloth to adults to hem. Some were as young as 8 years old. They perform many of the same duties as adults, pull the same 12-hour shifts—and get paid about half the wages, or even less. A Syrian boy who sewed jeans for export at a small textile workshop told us that he makes about $100 per month and that at night he and his cousin sleep on bunk beds in the factory’s back room. (All figures have been converted to dollars.)

Around one third of Syrian families in Istanbul now rely on their children’s income to pay rent and buy food, according to a survey by Istanbul Bilgi University. Another study, by the Migration and Politics Research Center at Hacettepe University in Ankara, found that Syrian refugees under the age of 18 have a better chance of finding work than adults. The practice is so common that managers often don’t even bother to hide their underage employees.

Some would explain, with varying degrees of sincerity and persuasiveness, that they had offered kids work out of compassion for the Syrians’ plight. Others were more business-like. “There are children in all of the workshops,” one owner told us. “Children are usually more wanted because it’s easier to ask the children to get coffee, get tea, do some cleaning. They learn fast and don’t cost as much as adults.”

Ali Al Hamid is a 40-year-old former high school math teacher from Idlib. His family fled Syria in 2012, after his wife and 2-year-old son were killed in a bomb blast. Upon arriving in Istanbul with his two remaining sons, Ali couldn’t find work of any kind. When his money ran out, Ibrahim, then 12, and Mohammed, then 10, started looking for work too. They were quickly snapped up by textile workshops, while Ali remained unemployed. A bookish man with delicate rectangular glasses and a receding hairline, Ali found this hard to accept.

“Instead of taking care of my sons, as a father should do, my sons were taking care of me,” he said.

After about a year, a Syrian acquaintance offered him a job as an accountant—not because he needed an accountant, the acquaintance later explained, but “out of pity.” Ali makes $285 a month, only a few dollars more than each of his sons. He considers the prospect that they will not finish their educations to be his greatest failure. “Every day I cry. I weep for my children. I know they are very smart,” he said. “My son Mohammed is a genius, but we have no choice.”

Child labor is especially common in the border areas, where most refugees live. Kids were present in every factory we visited, which included businesses producing plastic syringes, machines, tea and textiles. At a factory that makes sandals in Gaziantep, the plump 20-year old son of the owner ushered us into his father’s spacious office and assured us that his family would never employ children. He took us on a tour of his factory 15 minutes later but had apparently forgotten to clear out his child workers beforehand. Dozens of kids were clustered around a gigantic mechanized wheel, pasting soles onto leather sandals. The air was thick with clouds of plastic shavings and the stench of glue. None of the children wore protective gear and one sturdy little boy who wore cutoff pants that barely grazed his chubby ankles looked to be around 5 years old. Realizing his mistake, our tour guide became agitated. He tried to insist that we erase the footage, but we were able to smuggle it out.

Syrian children are involved in the production of almost every conceivable product—some mundane, others darkly ironic. They have been discovered making apparel for major international brands (Marks and Spencer, ASOS and H&M) and military uniforms for ISIS.

In January, a raid on a workshop in Izmir discovered two young Syrian girls making fake lifejackets filled with non-buoyant packing materials, which are marketed to migrants crossing the Mediterranean and cause their wearers to sink faster than if they weren’t wearing a vest at all. Not only do children regularly work with toxic chemicals and dangerous equipment, because of their age and inability to speak Turkish, they are also often unable to read safety warnings. Since 2013, according to the İstanbul Council for Workers’ Health and Safety, at least 19 Syrian children have died in the workplace.

Child labor is illegal in Turkey. But in the provinces with the largest refugee populations, the government’s unwritten policy seems to be to turn a blind eye. Hasan Baran Uçaner, the senior expert for the Gaziantep Chamber of Commerce, said the issue is “beyond our jurisdiction and control.”

“The Turkish government should do something about it,” he continued. “There are 500,000 Syrians here in Gaziantep, and these people need to find jobs so as not to create social problems from the Turkish side. Some Turks are already really unhappy about having Syrian refugees in the city and think they are taking our jobs,” he said. “So maybe the rules are a little more flexible for Syrian companies hiring Syrian workers. People have to survive somehow.” He added, “Child labor isn’t good, but that’s capitalism.”

The influx of Syrian workers, both children and adults, has resulted in what the World Bank has called a “pronounced change in the composition of Turkish employment.” Refugees have had little effect on Turks working in skilled occupations. But in its “informal sector”—under-the-table positions that make up about one third of jobs in Turkey—Syrians have caused “large-scale displacement.” In the informal sector, every 10 refugees who’ve found work have dislodged approximately six Turks. Most unskilled Turkish men who have lost jobs to refugees have been able to find better ones in regular workplaces. Turkish women, however, are more likely to remain jobless.

In Zeytinburnu, we came across two Turkish women in their late thirties, sitting with a baby on a marble stoop. The first woman, who did not want to give her name, told me she was looking after the baby for her friend, who was working fulltime but making only $257 a month, well below Turkey’s minimum wage of $446. “[Syrians] have a serious negative impact on us,” she said.

The second woman, Ayse Yilmaz, said she had recently left her job in the textile workshop where she’d been employed for more than 20 years, due to a back injury. When she was ready to re-enter the workforce, she said, no one wanted to hire her. Eventually, she found a position in a workshop whose Turkish owner refused to hire Syrians. Unsurprisingly, she blames the refugees for her difficulties. “Owners prefer them because they are working like dogs,” she said. “We know that some of them are good people, but they are not good for us.”

In 2014, protests erupted against Syrian workers in the border areas. In Gaziantep, groups of Turks wielding sticks and knives roamed the streets, attacking Syrians. Hundreds of Turkish workers in Izmir yelled slogans like, “The boss likes low-cost labor; we don’t want Syrian workers.” In an extensive survey conducted in Istanbul this December, more than 90 percent of people said that refugees had driven up rents and made it harder for them to find employment. Fourteen percent of respondents found refugees “disgusting.”

This hostility has made it harder for the government to address the root causes of the problem. When President Recep Tayyip Erdoğan floated a tentative proposal to offer citizenship to Syrians with specific skill sets, in order to better integrate them into the population, the announcement was met with a torrent of protest and went nowhere. In January, the government enacted regulations that would create a pathway for refugees to work legally. However, they contain a number of stringent provisions that will likely prevent most refugees from taking advantage of them.

Meanwhile, the government has done little to address the issue of Syrian child workers. In theory, Syrian children are entitled to attend Turkish public schools for free. But most don’t, either because they can’t speak Turkish, or because their families can’t afford to lose their incomes. The Turkish education minister said in early 2016 that at least 400,000 refugee children were not enrolled in formal schooling. This means that there are now thousands of children who have missed out on four or five years of education. The chances that they will ever be able to reclaim their childhoods seem slim. “We have warned so many times about having a lost generation of Syrian children,” said Juliette Touma, the chief of communication for UNICEF’s Middle East and North Africa office. “And the longer they stay out of school, the more likely that becomes.”

Mohammed Bayrakdar is a third-generation licorice producer who owns a factory in Kilis. A border town where refugees now outnumber Turks, Kilis is known to be a popular location for ISIS recruiters. Bayrakdar proudly showed us around his factory, where a young man dried sprigs of licorice root on tarps spread over the dusty white tile floor and several teenaged boys sorted tea on a plastic table. Most of his younger employees come from the nearby refugee camp, he told us. But the phenomenon of child workers troubled him. “If the children haven’t education, perhaps someone takes these children and turns them into terrorists,” he said. “If there is no care for the children who left their countries, they will become a danger for all the world.”

Syria’s Shadow Economy

Border towns the world over are strange places: permanently transitional, magnets for opportunists and hustlers. Even by those standards, Kilis hums with an uneasy energy of peril mixed with rank opportunity. Many of the concrete buildings are pockmarked with shrapnel holes from the rockets that occasionally fly over from the other side. It’s not uncommon to see young men affiliated with ISIS around town, signaling their sympathy with black bandanas wrapped around the heads. And yet when we visited in May, the danger wasn’t exactly serving as a deterrent. Rows of semitrailers crawled like ants along the potholed road leading to the small customs checkpoint. They were loaded with vital goods bound for Syria—construction materials, food, medicine.

Around 75 percent of Syria’s economy has been destroyed since the war began, according to estimates by the International Monetary Fund. This is a more dramatic contraction than that experienced by Germany after World War II. The banking system has all but collapsed, more than 80 percent of people are living in poverty, and inflation has soared to nearly 50 percent. There are a few foreign players supporting the various sides—Syrian president Bashar al-Assad has Russia and Iran; the opposition has the Gulf States. But Syria’s primary lifeline is a shadow economy operating just over the Turkish border.

Early on, many Syrian businessmen fled cities like Aleppo and Idlib for Turkey, where they attempted to reassemble the enterprises they left behind. Their impact has been especially dramatic in Gaziantep, which is 40 miles from the border. Before the war, there were only 3 businesses registered by Syrians in the city. In 2016, there were 750—and those are just the legal ones. The local Chamber of Commerce, which has opened a Syria desk to handle the influx, estimates that there may be more than 2,000 unregistered Syrian businesses operating in the city. Many of them sell desperately needed goods to buyers within their homeland.

This trade is monopolized by Syrian middlemen, since it’s far too dangerous to operate over the border without ironclad connections. “For the people in the north, Turkey is almost the only source of basic goods,” said Wael Sawah, the editor-in-chief of the Syrian Observer, an online daily covering Syrian politics and civil society. The market for Turkish exports to Syria was practically obliterated at the onset of the war in 2011, but it has since bounced back to pre-war levels. In 2015, they reached $1.5 billion, with much of the growth driven by Syrian entrepreneurs.

The middlemen

The war came to Abdulrazak Kattan’s neighborhood in Aleppo in 2011, and it came quickly. After a bomb exploded in front of his house, Kattan, his wife and two young daughters didn’t pack—they just jumped in the car and drove. Eventually, they made it to Gaziantep. “We had only the clothes we are wearing, some money to make petrol in my car,” said Kattan, a stocky, animated 40-year-old. “We come with zero—not even one dollar.”

For the previous 15 years, Kattan had worked as the manager of a factory that produced a popular Indonesian brand of instant noodles. The company had a Gaziantep branch, but it refused his transfer request because he couldn’t speak Turkish. “I think, what can I do, what is needed?” he recalled. “And I thought that all the people living inside Syria need help, they need food items, because all the factories in Syria have stopped.” Kattan is now the biggest wholesaler of Syrian foods within Turkey. He also sells food to buyers within his homeland.

For him, it is a humanitarian obligation as much as it is a business. “Right now, I am sending 15 trucks per month of canned goods into Syria,” Kattan said. “I am sending it to Aleppo via Idlib, because otherwise they will have nothing to eat.”

Kattan started out by offering to sell flour on spec for Beşler, a major Turkish brand. He had no money to pay for it, only the promise of his trusted business contacts. Beşler entrusted him with a truckload of flour, which he drove to a meeting point on the Syrian side. There, a man Kattan knew from Aleppo paid him $30,000 in cash. Kattan’s commission was $50. In less than a year, he was sending 10 truckloads of goods across the border a day. Other factories in Gaziantep began approaching him, offering low prices for goods and extending lines of credit. Eventually, he was able to move his family out of the tiny studio they’d been living in and started to rebuild their savings. And then he lost all of his money in a single day.

In the absence of functioning banks, most transactions in Syria are done in cash. Kattan had delivered two truckloads of powdered milk to a buyer. The man loaded it into his truck, and then informed him that he didn’t have money to pay for it, but would come back tomorrow. “‘This is powdered milk, it is for the children, it’s very important,’” Kattan recalled the buyer saying. He added, “I am emotional, so I said, ‘I trust you.’” But he never saw the man again—to this day, he doesn’t know if he died or stole his money. The milk was worth $56,000. To pay his supplier, Kattan drained his savings and took out an $8,000 loan from a friend. “I had to start from zero again,” he said.

Doing business in Syria is fraught with such risks and many others. The country has fractured into four mini-economies that are controlled, respectively, by the Assad regime, ISIS, opposition groups and the Kurds. Although various combinations of these groups are attempting to annihilate each other, they also regularly trade in essential supplies. Some opposition areas sell electricity or oil to Assad-controlled territories. In early 2015, ISIS seized control of a gas plant that went on to supply both regime and opposition territory, via the national grid. Omran Darwish, a military leader for the Free Syrian Army whom I interviewed over Skype, said that his town, Hama, regularly buys sugar, rice, benzene, cement and fertilizer from the regime he is fighting.

This trade is made possibly because opposing groups often have access to vital commodities that the others lack. Until recently, ISIS held Syria’s biggest oil fields. The government dominates the supply of sugar, rice and cooking gas, while opposition lands grow a lot of Syria’s produce. All of the areas bring in additional revenue by imposing hefty “taxes” on the truck drivers who travel between territories.

In recent months, much of the cross-border action has moved from Kilis to Reyhanli, where drivers told us about 300 trucks were entering Syria each day, mostly carrying concrete and steel to repair ravaged buildings. Syrian trucks are not allowed to officially enter Turkey, and vice versa. Instead, drivers meet in a “neutral zone” a few miles from the Turkish border gate, where goods are transferred from Turkish trucks to Syrian ones. Whoever controls the border gate on the Syrian side collects a sizable tariff. In Syria, the drivers then take the goods to a market where they are bought by wholesalers for distribution. The further from the border the trucks go, the more expensive the goods become. According to an activist named Fadi Almaari, who is based in what was then Al Nusra territory, when regime traders have a monopoly on certain staples, they often withhold them from the market entirely. “Then when the price is high, they allow the rice to go in,” he said.

A similar system is used within Syria when drivers travel between zones. Deals are usually arranged on the phone—often by people who knew each other before the fighting broke out—and drivers then meet in a neutral area to transfer the wares. According to Almaari, the activist, driving a truck has become one of the most dangerous non-military occupations in Syria. “Every time they pass a check point, they put their lives in danger,” he said. “And there are many check points.” (There was a time when there were 34 on the 28-mile road from Aleppo to the Turkish border alone.) Zahir, a driver who would only give his first name, frequently transports vegetables to Abu Dali, a town controlled by pro-regime militias. “They rob us, and sometimes they take our trucks and use them for transporting fighters or weapons,” he said. When the trucks eventually come back, more often than not they are in “miserable condition,” forcing him to fork out additional cash for repairs. For his troubles, he earns approximately $50 per trip.

Not all of the trade is by land. In the Turkish port city of Mersin, we met a Syrian refugee-exporter we’ll call Ahmed Nashef, who sends large quantities of iron to Syria by sea. He makes deals over messaging services like WhatsApp and payments via the Hawala system, a regional network of money brokers that dates back to the 8th century. It works like this: The buyer delivers the money to a broker in Syria. The broker then calls a counterpart in Turkey, who pays Nashef. The money never actually moves between countries. (Since it is generally given in cash, it is also impossible to trace, making it an ideal transfer method for terrorist groups.) And for Nashef, business is steady. Every month, he ships eight containers of iron to regime areas, and about 15 trucks to opposition territories by land. Assuming a steady flow of goods across the border, his trade in Syria alone will bring in more than $4 million in revenue this year. “The [iron] is not sent to the regime because it’s the regime, or the opposition because it’s the opposition, or the Kurds because it’s the Kurds,” Nashef said. “We send goods because there are people living there. Not militias or soldiers, but normal civilians, human beings.”

After five years of chaos, Syria’s wartime economy is deeply entrenched. Smuggling, kidnapping, and imposing taxes on the flow of goods and people between territories is now a vastly more reliable source of income than what little remains of the traditional economy.

In fact, these practices have become so lucrative that it is “creating incentives for those now making money from the conflict to prolong it,” according to a study by Jihad Yazigi for the European Council on Foreign Relations. Some opposition forces, Yazigi noted, are now more preoccupied with their business dealings than their military activities against the Assad regime. He described an episode in which an opposition brigade prolonged its siege of a regime military base in order to bring in more foreign donations. In addition, the rebels had actually delivered food to the regime forces they were fighting in exchange for bribes.

The longer this system continues, the harder it will be to unravel. Too many people have too much to lose if Syria’s many fiefdoms and sub-fiefdoms are dismantled. “The people who benefit from such a situation would definitely object and hinder any attempt to change the status quo,” said Sawah. “This is one of the reasons why a political solution is not easy to reach. It’s a vicious cycle.”

Germany. The Crisis Goes Corporate

This isn’t a story about organized crime or small-time hustlers. It’s about what happens when a rich nation has to absorb more than 1 million people virtually overnight. Huge government contracts, guys who can build a shelter in 24 hours: Germany is showing the rest of the world how to monetize refugees on an industrial scale.

“We can do this,”Angela Merkel announced, and those four bland words brought a wave of humanity crashing over Germany’s borders. Since the refugee crisis began, most European nations have clung tightly to the Dublin Regulation, which generally requires that asylum applications be processed in the first country a person enters. But in an August 2015 speech, the German chancellor indicated that her country would accept refugees no matter where in Europe they’d landed. In less than a year, nearly 1 million people took Merkel up on her promise. The month that she gave her speech, trainloads of Syrians were met by crowds of cheering Germans at local stations. And they kept on coming. On some days that fall, 1,000 people were showing up in Berlin alone. They camped outside the city’s social services agency, waiting for housing and food vouchers. By the time winter arrived, there were thousands of people—young children, old men, pregnant women—amassed in the office’s open-air courtyard in below-freezing temperatures, lying on pieces of cardboard and using their backpacks as pillows.

The refugee crisis may be the greatest logistical, political, economic challenge to face Germany since reunification. The government has budgeted 98 billion euros to assist its new inhabitants over the next five years. But it has simply been unable to cope with the arrival of so many people, so quickly. And so the crisis has been privatized.

Gimme SHelter

Around 5pm on an icy Thursday in November 2015, Raif Kuhirt received an urgent phone call from Berlin’s State Office of Health and Social Affairs, known as LaGeSo. “We need you to manage an emergency refugee camp,” the officer said abruptly. “Can you do it?” Kuhirt, the 52-year-old manager of a job placement company, thought he probably could. So the officer asked if they could meet at a gymnasium in downtown Berlin in half an hour. “We need refugees in there by tonight,” he said.

Kuhirt had submitted an application to LaGeSo to run a refugee center a month earlier. He had no experience working with refugees or running residential facilities of any kind, but he did have contacts with cleaning and security companies. As far as LaGeSo was concerned, that was good enough. It took Kuhirt 10 minutes to do a cursory tour of the gymnasium, a two-story building that smelled of sweat and rubber and contained a basketball court, two locker rooms and several upstairs offices. When Kuhirt agreed to run the camp, the officer responded: “There’s another gym a few kilometers away. Can you manage that one, too?”

Minutes later, 30 volunteer firemen arrived in trucks stocked with food, water, towels and Ikea bunk beds. One team assembled the beds while another built the white cotton cubicles that would give refugees some semblance of privacy. Another team cleaned the bathrooms and stocked them with soap, shampoo, towels and diapers. They emptied the storage facilities of sporting equipment and filled them with water bottles, snacks and clean clothes.

By 11 p.m., just six hours after Kuhirt received LaGeSo’s call, the first buses began to arrive. By 2 a.m., the gymnasiums hosted around 650 people, about 300 people over capacity. Kuhirt ferried back and forth between the two facilities to make sure everyone got settled, finally going home around 4 a.m. to collapse on his bed. He returned two hours later to start hiring staff. “It was complete chaos,” he said.

In those early days, the government had one overriding priority: Get people out of the cold. Elsewhere in Germany, people were being hastily crammed into empty office buildings and army barracks; at one point more than 42,000 were living in “winterized” tents. In Berlin, LaGeSo set up a 24-hour emergency desk, staffed by any government employee willing to help. And in an effort to distribute the financial strain, the agency divided the people between Berlin’s 12 districts according to their birth month—a strategy that backfired badly.

Around a third of arrivals from Eritrea and Afghanistan registered birthdays in January, often because many hadn’t reported their date of birth. Thus, the Mitte district, one of the most densely populated areas of Berlin, ended up being responsible for about a third of the city’s refugees.LaGeSo had also been begging hotels and hostels to open their doors to refugees, without much success. As a stopgap, it started handing migrants 50 euro vouchers they could use for one night’s stay. All of a sudden, the agency was bombarded with phone calls from “volunteers” offering to “help.”

“If I got a call and the first sentence was ‘I would really like to help these refugees,’ or ‘I’m so depressed to see all the photos,’ blah blah blah, I knew they wanted the 50 euros,” recalls Stephan von Dassel, the mayor of the Mitte district. “And the more they talked about their personal attachment to helping, the more they wanted the money.”

Overnight, hostels that cost 30 euros per night had hiked rates to 50 euros. Handwritten signs reading “Refugees welcome to rent here” were taped inside windows and on banners draped from apartment balconies. One lawyer packed his tiny studio loft with six bunk beds, making 2,100 euros per week off an apartment that cost him less than 1,800 euros per month. Then there were the entrepreneurs who offered accommodations in garages and toolsheds. Von Dassel estimated that in the early days, the government overspent on housing by more than 100 million euros. “Every rat came out of the corner and started to have an accommodation business,” he says. “It was like where you find those gold nuggets in the U.S.—like the gold rush.”

One of the prospectors was Mustafa Islamoglu, a baby-faced 23-year-old Kurd whose family runs the V.M. Mansion hotel in central Berlin. Not long ago, the 32-room establishment averaged 80 percent occupancy with vacationers and business travelers who paid 30 to 90 euros for a sunny double or triple room. The hotel is now a full-time refugee facility under contract with the local government. The family has replaced the double beds with four bunk beds in roughly half of the rooms; the shelter currently houses 170 refugees of all ages from Afghanistan, Iraq and Syria. It is also twice as profitable as the hotel ever was. (Some hotels have complained that they were never reimbursed by the government for housing refugees and actually lost money by doing so.) Islamoglu knows that refugee accommodation is a temporary business and has plans to diversify: the hotel recently secured permissions to become an “integration center” offering language courses and skills training.

The second big problem was finding people to run all the makeshift emergency shelters in gyms and secondary schools, where the vast majority of refugees initially ended up. LaGeSo first turned to non-governmental organizations like the Red Cross, and then to private firms that ran public housing projects and homeless shelters, but there weren’t enough experienced organizations to go around. In the end, the agency simply suspended its online bidding system for government contracts and started cold-calling companies and businesspeople. They offered them 25 euros per refugee, which comes to more than 9,000 euros over the course of a year. From that sum, the shelters are responsible for providing food, utilities, cleaning staff and counselors. “The profit margins aren’t that high, but it’s a secure business,” said Kuhirt. And yet the number of people still arriving—and the expectation that many more will come—meant that this ad hoc shelter network was never going to be sustainable. The government needed an infrastructure on an entirely different scale.

The Nazi Airport They Call Home

In 1923, Germans built an airport not far from central Berlin called Tempelhof. Hitler would later give speeches from a podium near the hangars, framed by swastika banners. For a time, one of the Nazi regime’s first-ever concentration camps operated on the edge of the airfield. In the late 1940s, the United States and its allies used the facility for the airlifts that dropped supplies to starving West Berliners during the Cold War.

Last September, Berlin opened Tempelhof to refugees. The idea was to build a camp so large that no refugee would have to go homeless. The seven-hangar complex is run by a company called Tamaja Social Services. At the height of the crisis, it hosted up to 2,500 people.

The camp was set up in fewer than 24 hours, and it showed. At first, it had no showers and there were port-a-potties instead of toilets. Government buses made five trips a day to nearby swimming pools so refugees could wash in the changing rooms, but because there were so many people, most only managed to shower twice a week. (The airport has since installed both showers and bathrooms.) “No one has ever run a camp this big, so there was no blueprint for how to do it correctly,” said Maria Kipp, a Tamaja spokeswoman.

For migrants, Germany was supposed to be the promised land—a prosperous, orderly haven at the end of a journey marked by trauma and hardship. But the residents of Tempelhof haven’t found it to be that, exactly. They were supposed to live here for only a couple of weeks at most, before being moved to more permanent housing. Instead, many end up inhabiting this vast, concrete cavern for months on end.

As refugee housing has become more professionalized, the sector has attracted bigger players looking for bigger contracts. There is intense demand all over Germany for “container villages”—stackable housing units constructed from shipping containers that can be assembled within six weeks. One firm, Container-Handelsbüro, won the largest contract in its history—23 million euros—to build 1,700 units. Another firm called Paranet tripled its annual profits in 2015 by selling giant inflatable domes to house refugees. A company in southern Germany received so many requests for refugee “starter kits” containing basic furniture and utensils that orders were backed up for five weeks, even though they brought on more employees.

One of the largest corporate beneficiaries of the crisis is European Homecare, formerly a niche company that has offered services for asylum seekers since the early 1990s. Now, it is Germany’s largest refugee housing provider, operating 100 facilities capable of hosting 20,000 people. Its revenues spiked from 17 million euros in 2013 to more than 100 million euros in 2015, the year the crisis hit Germany, according to the Financial Times.

Handelsblatt a German business journal, found that the company’s return on equity is an astonishing 66 percent, which it has achieved by keeping costs as low as possible. European Homecare reportedly spends as little as 11 euros per refugee per day. Klaus Kocks, a PR specialist brought on to manage the company’s image as its profile grew, has said that its savings are made possible by economies of scale. He calls the company the “Aldi of shelter operators,” referring to a budget German supermarket chain.

But critics say that shelter operators have a clear incentive to skimp on services to maximize their gains. “You can’t say that all private companies are bad, but there are huge quality gaps between the services they provide and organizations that have more experience working with refugees,” said Christiane Beckmann, the spokeswoman for Moabit-Hilft, a non-profit that works with refugees in Berlin. “A lot of these camps don’t care about halal food; they don’t give refugees shampoo. They cut corners to make more profit.”

This dynamic is starkest when it comes to staffing. There has been an explosion of new companies seeking lucrative contracts guarding shelters, which pay more than most security jobs. Gerald Meinel, the founder of a well-established security company called SGB Sicherheitsgruppe Berlin, has observed a sharp increase firms operating in the “grey zone”: subcontractors employed by larger security companies to cover shortfalls. The rush to fill positions, and the high demand for Arabic-speaking guards, has sometimes resulted in the hiring of guards who haven’t been properly trained or screened.

According to Handelsblatt, an internal memo at one European Homecare facility noted, “We cannot pay the security personnel too much, or else we will no longer qualify for government housing benefits.” In 2014, prosecutors released pictures of a grinning guard at a European Homecare facility in North Rhine-Westphalia, posing with his boot on the head of a refugee. In a video filmed at the same camp, another guard forced a man to lie on a mattress covered in vomit. Security at the camp had been contracted out to a firm called SKI, which had in turn reportedly subcontracted with another company. A police investigation later revealed that at least two of the guards involved had a criminal record. European Homecare lost the contract for the shelter—but was awarded one for another large facility soon afterwards.

This is far from the only incident involving private security guards. A group of guards is under police investigation in Munich for allegedly blackmailing migrants. And in 2015, a senior LaGeSo official was fired after a new car and 51,000 euros in cash were found in his home—apparently a bribe for giving a security company a contract. Outside the LaGeSo facility in Berlin, guards were filmed calling for migrants to be sent to concentration camps and promising them that “work will make you free,” the words infamously posted above the gates of Auschwitz.

The Choice

Germany’s decision to accept more refugees than any other European nation was not strictly altruistic. A desire to atone for the sins of World War II was certainly part of the calculus, but Merkel and others also saw refugees as an answer to one of the greatest problems threatening Germany’s future: catastrophic demographic decline. Germany is one of the oldest countries in the world. By 2050, the number of people under the age of 15 is poised to fall to 13 percent. Given the high costs of Germany’s welfare state, it is facing a labor shortage of existential proportions. Here, all of a sudden, were hundreds of thousands of people, more than half of them under the age of 25, clamoring to build new lives in Germany. The CEO of Daimler described migrants as an “economic miracle.”

The reality is somewhat more complicated. A 2016 International Monetary Fund study found that in the long term, refugees could indeed rescue Germany from demographic doom. But an enormous public investment will be needed to make that happen. Less than 15 percent of Syrian refugees in Germany have a college degree or any form of vocational training, according to a government survey. Even when migrants do have qualifications, they often don’t meet the standards of Germany’s rigorous three-year apprenticeship system.

At the most basic level, migrants must learn German to become employable—and yet 98 percent of asylum-seekers don’t speak German. The government has doubled its budget for language instruction to 559 million euros, which will pay for 300,000 refugees to take a 660-hour course in basic German. Still, there is a huge difference between acquiring conversational German and the technical fluency needed to work as, say, a mechanical engineer, one of the occupations with the highest shortages. (Others include nurses, caregivers, IT professionals and plumbers.)“Let’s say you have a 17-year old from Afghanistan who wants to do an apprenticeship within a trade somewhere,” said Langenbach. “He needs specialized vocabulary. Simply learning ‘Hello, my name is Nassir, where is the way to the central station’ isn’t going to help him.”

And so even though 1 in 3 German companies have said they plan to hire refugees, a Reuters survey from September could find only 63 migrants who’d found work at 30 of the country’s largest firms. Language proficiency was cited as the main obstacle. “It’s not fair to expect the refugees to come, and in just a few years, solve all of our job problems,” said Michael Friedrich, a spokesman for Siemans, the electronics conglomerate. “If you want to do it right, you have to invest the time.” Germany’s interior ministry has described the challenge of integrating refugees as a “massive, long-term undertaking.” In the meantime, the labor minister has estimated that as many as 460,000 migrants may need some form of government assistance.

But Germans don’t seem to be feeling particularly patient. Over the past eighteen months, Merkel’s popularity fell to a five-year low this fall following a series of terror attacks in Europe. She faces an insurgent far-right party, the Alternative for Germany, whose leader, Frauke Petry, wants the German police to be empowered to shoot migrants entering the country illegally. The AfD’s popularity surged in the wake of hundreds of sexual assaults on German women that occurred on New Year’s Eve in Cologne—an incident that was largely blamed on refugees. It is now the third-most popular party in Germany and has secured seats in five state parliaments. There are other, more disturbing signs of discontent: Last year, there were more than 690 arson and other attacks on refugee camps.

And so the refugee crisis is, for Germany, a high-risk, high-reward proposition. If the public is prepared to pour billions into education and training, and to support refugees during an integration process that could take years, it could secure Germany’s future as the economic powerhouse of Europe for years to come. But if Germans get cold feet, if its current flirtation with nativism hardens into policy, that future becomes smaller and bleaker. The country will be left to absorb a giant population of migrants who will place a huge additional strain on the welfare state. The labor pool supporting that welfare state will continue to shrink, and resentment toward the newcomers will continue to intensify. In the end, Germany’s choice is not unlike that of many countries, the U.S. included, in this current moment. It hinges on the willingness of majorities to accept profound, often unsettling change as their countries become more diverse. Whether Germany or anywhere else will meet that challenge is the great test of the 21st century.

by Malia Politzer and Emily Kassie

Source: Huffington Post. Read the original article.