Opinion: Europe Must Be Open To Refugees Fleeing Persecution

LONDON (CNNMoney) Investors are scouring Europe for ways to make money from its tentative recovery, and one U.S. firm thinks it has found the answer — buy Greek government bonds. Japonica Partners said it believed Greek debt was “massively undervalued” and should be rated several notches above the junk status assigned by the big credit rating agencies. Greece has been shut out of international bond markets since 2010, when its government borrowing spiraled out of control. It has been rescued twice by the European Union and International Monetary Fund and was forced to restructure its debt in March 2012, imposing losses of more than 100 billion euros on private bondholders. Related: Europe’s recovery is weak, warns ECB But hedge funds — such as Dan Loeb’s Third Point — and other niche investors who bought into Greek debt since the restructuring have made a killing. Yields on Greek 10-year debt in the secondary market have plunged from around 44% in March 2012 to 9%. Japonica’s statement was greeted with derision by some investors Thursday, but the firm that made its name restructuring bankrupt Allegheny International in the early 1990s believes it has spotted an opportunity others may have missed. It claims to have become one of the larger, if not the largest, holder of Greek government bonds, and has hired a former senior executive from Norway’s oil fund — one of the world’s biggest investors — to help manage the portfolio. Related: Investors embrace European stocks “Greece is one of history’s most extraordinary sovereign rejuvenations hidden in plain sight by pervasive systemic misperceptions,” Japonica said, adding it expected yields should break below 5% in 2014. It’s a bold prediction but Japonica may have a point. Greece’s headline economic data and social crisis remain as depressing as ever, and it may yet need another 10 billion euros in support. Still, the government is on track to deliver a primary budget surplus — stripping out the cost of servicing its massive debt this year — and hopes to return to the bond market in the first half of 2014. And the first green shoots of growth may be emerging.

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Dozens dead in Italian boat accident Given this, it’s reasonable to believe that a number of people on board were refugees, fleeing persecution and seeking safety in Europe where there are substantial and settled Somali and Eritrean communities. Yet there’s been considerable head scratching in the media about why people would put themselves at such risk. Why would you get on an overcrowded, potentially unseaworthy vessel and risk your life to make it to Lampedusa? For refugees, the answer is simple — what they’re leaving behind is much, much worse. Somalia and Eritrea’s human rights abuses are well documented. Sexual violence and torture are commonplace. For refugees, staying at home — or ‘going back to where they came from’ — is not an option. Difficult though it may be for us to comprehend, for refugees, paying smugglers and boarding these boats is a rational decision. The problem is compounded by the lack of safe, legal routes into Europe. The Refugee Convention — a legal framework which defines who refugees are, their rights and the legal obligations of countries — recognizes that people fleeing for their lives may have to resort to illegal entry. This drives refugees to take even greater risks to escape. European countries have a legal obligation to provide protection under the Refugee Convention but during the last decade the continent’s borders have become heavily securitized, with millions of pounds invested in Frontex, the agency established by the EU to strengthen Europe’s borders and protect the continent against unwanted illegal migrants. These measures should not apply to individuals escaping war and persecution — the theoretical beneficiaries of legally sanctioned protection and compassion — but refugees are often forced to resort to the same irregular channels to leave their country of origin and travel towards safety.

Europe’s tentative recovery spreads south in September

Indexes from China showed growth picking up there, even if data due later from the U.S. are expected to show a slight easing in the expansion for non-manufacturing companies, which have consistently outpaced their European peers. The main disappointment in Europe was Spain, where a rise in business activity during August – the first in more than two years – proved short-lived as firms slipped back into decline. Still, the data pointed to a broadening recovery across the euro zone, said Nick Matthews, senior European economist at Nomura, though that had yet to be borne out in official data. “The hard data so far for the third quarter has perhaps a bit more on the disappointing side – in particular industrial production …was very weak in July,” said Matthews. “We expect this to bounce back, but this suggests we could see a slightly slower pace of growth in the third quarter relative to the second quarter.” PMI compiler Markit said its surveys suggested the euro zone economy grew around 0.2 percent from July through September, a touch below the 0.3 percent registered in the second quarter. Nomura’s Matthews said they suggested a slightly stronger rate of growth for the final months of the year. STILL NOT ON SOLID GROUND Markit’s Eurozone Services PMI rose to 52.2 in September from August’s 50.7, little changed from a preliminary reading of 52.1. Readings above 50 signify growth. Businesses in No.1 economy Germany reported rising new orders and staffing levels, while France’s private sector grew for the first time in a year and a half. The upbeat mood was further bolstered by news that euro zone retail sales jumped 0.7 percent in August, month-on-month, hitting the top end of forecasts.