Inside, Outside: Diasporas and Modern States

By: Sam Vaknin, Ph.D.

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A speech given at the meeting of the Canada-Macedonia Chamber of Commerce in Toronto, Canada on December 4th, 1999

Updated November 2013 for the promotion of Dr. Zlatko Nikoloski’s book “The Macedonian Diaspora”

Distinguished Guests,

I was born to working class parents in Israel, in 1961. It was a grim neighbourhood, in a polluted industrial area, a red bastion of the "socialist" labour party. The latter would have easily qualified as Bolshevik-communist anywhere else. It exerted the subtly pernicious, decadently corrupt kind of all-pervasive influence that is so typical in one party states. Sure, there were a few token fringe opposition parties but Labour's dominance went uninterrupted for more than 90 years. And corruption was both rife and rampant: nepotism, cronyism, and outright venality.

During the 70s, the recently appointed governor of the central bank was imprisoned and a minister committed suicide. Many more immolated themselves or ended serving long sentences in over-crowded jails. Massive scandals erupted daily and still do, to this very day: Israel’s former President is doing time on a rape charge, several of its former Prime Ministers are being investigated for being on the take. Some of these scandals have cost the country more than 10% of its GDP each (for example, the crisis of the bank shares in 1983). In the 80s, privatization turned into an orgy of privateering, spawning a class of robber barons. Red tape is still a major problem - and a major source of employment. And then there were the wars and armed conflicts and vendettas and retributions and mines and missiles and exploding buses and the gas masks. In its 65 years of independence the country has gone through 6 major official wars and more than 15 war-sized conflicts.

Yet, despite all the above, Israel emerged as a most outstanding economic miracle. Its population grew tenfold with surges of immigrants. During the 50s, the Jewish population tripled from 650,000 (1948) to 2,000,000. The newcomers were all destitute, the refugees of the geopolitics of hate from both the Eastern block and from the Arab countries. The cultural, social and religious profile of the latter stood in stark contrast to that of their "hosts". Thus the seeds of long term internecine, inter-ethnic, inter-cultural, social and religious conflicts were sown, soon to blossom into full fledged rifts.

During the 1990s, 800,000 Russian immigrants flooded a Jewish population of 4,500,000 souls. But these demographic upheavals did not undermine a pattern of unprecedented economic growth which led to a GDP per capita of 32,000 USD. Israel is a world leader in agriculture, armaments, information technology, and research and development in various scientific fields. Yet, it is a desert country, smaller in area than Macedonia and with much fewer and lesser natural endowments. It was subjected to an Arab embargo for more than 40 consecutive years. On average it had c. 3 million inhabitants throughout its existence.

Israel's secret was the Jews in the Jewish Diaspora the world over.

From its very inception as a budding concept in the febrile brain of Theodore Herzl the Jewish State was considered to be the home of all Jews, wherever they are. A Law of Return granted them the right to immediately become Israeli citizens upon stepping on the country's soil. The Jewish State was considered to be an instrument of the Jewish People, a shelter, an extension, a long arm, a collaborative and symbiotic effort, an identity, an emotional apparatus, a buffer, an insurance policy, a retirement home, a showcase, a convincing argument against all anti-Semites past and present.

There was no question whatsoever regarding the implicit and explicit contractual obligations between these two parties. The Jews in the Diaspora had to disregard and ignore Israel's warts, misdeeds and disadvantages. They had to turn a public blind eye to corruption, nepotism, cronyism, the inefficient allocation of economic resources, blunders and failures, and rampant malignant nationalism coupled with atrocities and human rights abuses. They had to support Israel financially.

In return, the Jewish State had to ensure its own successful survival against all odds and to welcome all the Jews to become its citizens whenever they chose to and no matter what their previous record or history is. Hence the constant arguments about WHO is a Jew and which institution should be allowed to monopolize the endowment of this lucrative and, potentially, life-saving status. Hence the bitter resentment felt in many circles toward the 300,000 or so non-Jewish immigrants, the relatives of the Jewish ones, who flooded Israel's shores in the last two decades.

But the consensus was and is unharmed, appearances notwithstanding. And the Jews supported Israel in numerous straightforward and inventive ways. They volunteered to fight for it. They spied for it. They donated money and built hospitals, schools, libraries, universities and municipal offices. They supported students through scholarships and young leaders through exchange programs. They managed and financed a gigantic network of educational facilities from youth summer camps to cultural exchanges. They bought the risky long term bonds of the nascent state, which was constantly fighting for its life (and they did an excellent business in hindsight). Some of them invested money in centrally planned, periphery bound, lost economic causes: ghost factories which produced shoddy and unwanted goods.

Year in and year out the Jews of the Diaspora poured into Israel an average of half a billion US dollars (about 200 million US dollars a year in net funds). Most of the money did not come from the stereotypical Jewish billionaires. Most of it came through a concerted effort of voluntary (though surely peer-pressured) money-raising among hundreds of thousands of poor Jews the world over. The Jewish people set up a horde of organizations whose aim was collection of funds and their application to the advancement of Zionist and Jewish causes. Every Jew deposited a few weekly cents into the KKL’s "Blue Box" "for the cause": to redeem land, to establish settlements, to open educational institutions, to publish a Jewish newspaper, to act against anti-Semitism, to rebrand Judaism and fight nefarious stereotypes. It was a grassroots movement directed only by the post-Holocaust slogans "No Other Choice", “Never Again”, and "The Whole World is Against Us". First emanating from post-traumatic and paranoiac roots it later became a groundswell of goodwill, enthusiastic co-operation and pride.

And all this time, the Jews knew. Not only the sophisticated, worldly Jewish money men. Not only the cosmopolitan, erudite Jewish intellectuals. But also the more typical small-time tailors and shoemakers and restaurateurs and cab drivers and plumbers and sweatshop textile workers. They all knew - and it did not sway them one bit. It did not drive them away. They did not gripe and complain or abstain. They kept coming. They kept pouring money into this seemingly insatiable black hole. They kept believing. They kept waiting and they kept active. And all these long decades - they knew.

They knew that Israel was ruled by a caste of utterly corrupt politicians whose avarice equalled only their incompetence. They knew that central planning was going nowhere fast. They knew that elections were rigged, that red tape was strangling entrepreneurship and initiative, and that inter-ethnic tension was explosive. They knew that Israel lost its Jewish soul to a demographically exploding Arab population coupled with endless acts of terrorism. They knew that Israel's conduct was not fair, not always democratic, and often unnecessarily aggressive. They knew that tenders were rigged and bribes-ridden, that transparency was a mockery, that the courts were negligent and inefficient. They knew that property rights were not protected and that people were pusillanimous and greedy and petty and self-occupied (not to say narcissistic). They witnessed the waste of scarce resources, the indefinitely protracted processes, the bureaucratic delays, the free use of public funds for private ends. They watched as ministers and members of the Knesset and top law enforcement agent conspired to engage in crime and then colluded in covering it up. And they felt betrayed and agonized over all this.

Yet, they never ever, not even for a second, considered giving up.

They never ever cut off the funding and investment.

They did not discontinue the dialogue intended to make things better, over there, the land of their so distant ancestors.

They always donated and invested and financed and visited and cajoled and argued and opined and hoped and dreamed.

Because this was their country, as well. Because it was a partnership and the inexperienced, stray partner was given the benefit of indefinite doubt. Because they saw the opportunity - the economic opportunity, for sure - but, above all, the historical opportunity. When Israel did mature, when it became a state rules by law, orderly, transparent, efficient, forward looking, the high-tech Israel we all know - it repaid them over and over again. They all made money on their decades of patience and endurance. The rich made big money. The small guys made less. But there is no Jew today who can say that he lost money in Israel because he became financially or economically active there in the long run.

They stuck to Israel primarily because they were Jews (and, by easy extension, Israelis). And this is what being a Jew meant. And they were richly rewarded by the Justice Minister of history. Perhaps there is a lesson to be learnt here by Macedonians in the Diaspora. I, for one, am sure there is.

Thank you.

Practical Recipes for Diaspora-State Interactions

Barry Chiswick and Timothy Hatton demonstrated ("International Migration and the Integration of Labour Markets", published by the NBER in its "Globalisation in Historical Perspective") that, as the economies of poor countries improve, emigration increases because people become sufficiently wealthy to finance the trip.

Poorer countries invest an average of $50,000 of their painfully scarce resources in every university graduate - only to witness most of them emigrate to richer places. The haves-not thus end up subsidizing the haves by exporting their human capital, the prospective members of their dwindling elites, and the taxes they would have paid had they stayed put. The formation of a middle class is often irreversibly hindered by an all-pervasive brain drain.

Politicians in some countries decry this trend and deride those emigrating. In a famous interview on state TV, the late prime minister of Israel, Yitzhak Rabin, described them as "a fallout of the jaded". But in many impoverished countries, local kleptocracies welcome the brain drain as it also drains the country of potential political adversaries.

Emigration also tends to decrease competitiveness. It increase salaries at home by reducing supply in the labour market (and reduces salaries at the receiving end, especially for unskilled workers). Illegal migration has an even stronger downward effect on wages in the recipient country - illegal aliens tend to earn less than their legal compatriots. The countries of origin, whose intellectual elites are depleted by the brain drain, are often forced to resort to hiring (expensive) foreigners. African countries spend more than $4 billion annually on foreign experts, managers, scientists, programmers, and teachers.

Still, remittances by immigrants to their relatives back home constitute up to 10% of the GDP of certain countries - and up to 40% of national foreign exchange revenues. The World Bank estimates that Latin American and Caribbean nationals received $15 billion in remittances in 2000 - ten times the 1980 figure. This may well be a gross underestimate. Mexicans alone remitted $6.7 billion in the first 9 months of 2001 (though job losses and reduced hours may have since adversely affected remittances). The IADB thinks that remittances will total $300 billion in the next decade (Latin American immigrants send home c. 15% of their wages).

Official remittances (many go through unmonitored money transfer channels, such as the Asian Hawala network) are larger than all foreign aid combined. "The Economist" calculates that workers' remittances in Latin America and the Caribbean are three times as large as aggregate foreign aid and larger than export proceeds. Yet, this pecuniary flood is mostly used to finance the consumption of basics: staple foods, shelter, maintenance, clothing. It is non-productive capital.

Only a tiny part of the money ends up as investment. Countries - from Mexico to Israel, and from Macedonia to Guatemala - are trying to tap into the considerable wealth of their diasporas by issuing remittance-bonds, by offering tax holidays, one-stop-shop facilities, business incubators, and direct access to decision makers - as well as matching investment funds.

Migrant associations are sprouting all over the Western world, often at the behest of municipal authorities back home. The UNDP, the International Organization of Migration (IOM), as well as many governments (e.g., Israel, China, Venezuela, Uruguay, Ethiopia), encourage expatriates to share their skills with their counterparts in their country of origin. The thriving hi-tech industries in Israel, India, Ireland, Taiwan, and South Korea were founded by returning migrants who brought with them not only capital to invest and contacts - but also entrepreneurial skills and cutting edge technologies.

Thailand established in 1997, within the National Science and Technology Development Agency, a 2.2 billion baht project called "Reverse the Brain Drain". Its aim is to "use the 'brain' and 'connections' of Thai professionals living overseas to help in the Development of Thailand, particularly in science and technology."

The OECD ("International Mobility of the Highly Skilled") believes that:

"More and more highly skilled workers are moving abroad for jobs, encouraging innovation to circulate and helping to boost economic growth around the globe."

But it admits that a "greater co-operation between sending and receiving countries is needed to ensure a fair distribution of benefits".

The OECD noted, in its "Annual Trends in International Migration, 2001" that (to quote its press release):

"Fears of a "brain drain" from developing to technologically advanced countries may be exaggerated, given that many professionals do eventually return to their country of origin. To avoid the loss of highly qualified workers, however, developing countries need to build their own innovation and research facilities ... China, for example, has recently launched a program aimed at developing 100 selected universities into world-class research centers. Another way to ensure return ... could be to encourage students to study abroad while making study grants conditional on the student's return home."

The key to a pacific and prosperous future lies in a multilateral agreement between brain-exporting, brain-importing, and transit countries. Such an agreement should facilitate the sharing of the benefits accruing from migration and "brain exchange" among host countries, countries of origin, and transit countries. In the absence of such a legal instrument, resentment among poorer nations is likely to grow even as the mushrooming needs of richer nations lead them to snatch more and more brains from their already woefully depleted sources.

Conditions for a Successful Relationship between Diaspora and State

For a mutually-beneficial and long-term relationship between Diaspora and state to exist and develop, there are a few preconditions:

1.    That the center (the state) and the Diaspora share a strong, cohesive sense of national identity based on common and universally-accepted language, culture, and history and on a shared ethos and myth of the formation and propagation of the Nation;

2.    That there is a clear, territorially-bounded, and uncontested heartland or mother land which constitutes, for all intents and purposes, the center of gravity, yearning, and investments both economic and emotional of all the members of the Nation in and out of that territory;

3.    That the government in the Motherland and, indeed, the state regard the Diaspora as an equal partner in decision-making, identity-formation, and ultimate integration of the Nation and an inseparable and critical part of the Nation’s future well-being and prosperity;

4.    That all the successive governments in the Motherland are committed to a national strategy and to concrete steps to integrate the Diaspora in the political and economic processes in the state.

The following steps are considered to be the "minimum package" in the strengthening of relationships between countries of origin and national Diasporas:

1. The granting to the Diaspora of unlimited or, at the very least, restricted voting rights in the Motherland (e.g., Macedonia). Emulating the Estonian X-Road project (multisite or distributed nation or country-as-a-service: providing access to various programs, services, and data via unique ID number granted to every compatriot within the motherland and in the Diaspora;

2.  The institutionalized involvement of political structures representing the Diaspora in the politics of the Motherland (e.g., Israel) and vice versa (for instance, the Jewish Congress and the Jewish Agency);


3. Holding common sports events (e.g., the Maccabia or Maccabead Games as a Jewish Olympiad with participants from all over the world); the exchange and transfer of students and professionals between the Diaspora and the Motherland; “Peace Corps” style organization to encouraging volunteering and voluntourism in the Motherland; providing access to virtual tours online;


4. The establishment of a fund for the purchase of land, the restoration of national treasures to the Motherland, reforestation and preservation of nationally or historically significant sites (e.g., the Jewish Keren Hayesod and Keren Kayemet le-Israel); leveraging crowdfunding, P2P financing, and other alternative forms of finance and virtual banking to support specific projects and SME/SMB activities;


5. The solicitation of donations, scholarships, and sponsorships from wealthy individuals in the Diaspora;


6. Emphasis on cultural activities and the promotion of the national language (e.g., various Francophone activities by France);


7. Selling bonds and stocks exclusively to the Diaspora (e.g., the Israeli and Irish Bonds) and the creation of various investment funds and vehicles to encourage greater economic involvement of the Diaspora in the Motherland, possibly with multilateral financial institutions as guarantors or underwriters;


8. Leveraging the nation's common history, religious affiliation, and cultural roots to further national cohesion and political lobbying and support;


9. Encouraging remittances with the implementation of a special, lenient tax regime, the issuance of remittance-bonds, securitization of remittance flows, and by providing foreign investors with tax holidays, one-stop-shop facilities, business incubators, and direct access to decision makers;

10. Fostering knowledge-based networks of local and foreign (Diaspora-based exapts) businessmen, scientists, and experts as mentors or sponsors of their domestic counterparts; forming migrant associations to share contacts and business opportunities and otherwise socially network; conducting joint R&D projects; providing distance e-learning opportunities; encouraging returning citizens and providing them with tax concessions, loans, and employment opportunities (e.g., Israel, China, Venezuela, Uruguay, Ethiopia).

Also Read

Immigrants and the Fallacy of Labour Scarcity

The Labour Divide - II. Migration and Brain Drain 

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