Do Countries Have a Right to Screw Up?

I found this op-ed by Luis Alberto Moreno, president of the Inter-American Development Bank, at the Washington Post troubling, raising as it does issues of sovereignty, responsibility, property rights, and moral hazard. He’s writing about the strain that the situation in Venezuela is putting on the other countries of North, Central, and South America, the burden of which increases the closer to Venezuela the countries are:

Consider this: While the United Nations estimates that 1.8 million immigrants have arrived in Europe by sea since 2014, up to 2.5 million Venezuelans have left their homeland during the same period. Roughly one-fifth of them have gone to Europe, the United States and Canada. Nearly all the rest — around 2 million individuals — have gone to Latin American and Caribbean countries. Colombia alone has received close to 1 million, while Peru, Ecuador, Chile, Brazil and Argentina, in descending order, have taken in most of the rest.

But while average per capita income in the six European countries that have received the most immigrants during this period (Germany, France, Italy, Sweden, Austria and Britain) is around $46,500, measured in purchasing power, in the six Latin American countries listed above, the figure is less than $17,000.

Europe can rely on modern civil services and well-staffed clinics and schools to process and care for immigrants. In Latin America, despite considerable progress in reducing poverty in recent decades, public services are underfunded and ill equipped to cope with local demand, much less to deal with this emergency.

In Colombia, an economist with the Inter-American Development Bank has estimated that the government will need around $1.6 billion per year to fully respond to the emergency, a sum equal to 0.5 percent of GDP. This amounts to a negative shock to the economy at a time when Colombia urgently needs to accelerate growth.

Venezuela’s neighbors have so far been sympathetic and generous toward the immigrants, not least because they remember how Venezuela welcomed millions of political exiles and economic refugees during the 20th century.

In addition to waiving many traditional visa requirements, the region’s governments have used scarce public resources to provide food and shelter for the Venezuelans, while reassigning thousands of security and health officials to deal with the surge.

Unfortunately, the situation has reached a breaking point. In recent weeks, we have seen incidents of violence and public protests against the immigrants, as overwhelmed officials struggle to prevent lawlessness and meet the needs of local residents who, in many cases, are also very poor.

That raises a number of questions that I don’t believe are easy to answer. The first, obviously, is who decides? Venezuela has brought this situation on itself. It used to be among South America’s richest countries. Now it’s among its poorest and the damage is entirely self-inflicted.

The second is who pays? Since Venezuela cannot pay its own way and its neighbors have reached the end of their willingness to pay, does that put the United States in the position of financier of last resort?

Does Venezuela have an unlimited right to screw itself up regardless of its impact on its neighbors? Do its neighbors have an unlimited responsibility to pay? Do we? Again, who decides? This is a familiar story of stockholders and stakeholders.