Solve for the Italian-Libyan equilibrium

Failing to stem the tide of refugees arriving Europe, Italy and the rest of the European Union have agreed to pay Libya’s Government of National Accord (GNA), the UN-backed interim government that is struggling hold control of the country, to keep them from arriving in Italy and instead put them into detention camps in Libya.

The accord signed Feb. 3, provides for Italy to pay €220 million ($236 million) to the Libyan coastal guard and provide training to help them catch the vessels—primarily rubber dinghies. The Libyan coast guard will be charged with sending the boats back to Libya and putting people into camps. The political instability of Libya is such that there would be little guarantee of the conditions in which the migrants would be kept, according to Arjan Hehenkamp, general director of Médicins Sans Frontières (MSF).

Here is one story.  In Libya they understand the Coase theorem:

A security source in Libya spoke to Associated Press late last month saying: “Yesterday’s traffickers are today’s anti-trafficking force.”

I believe the size of the Coasean payments will rise.  If Libya is paid to halt migrants, and finds this a satisfactory or indeed even profitable arrangement, they also will act to…boost the supply of potential migrants.  “Producing potential migrants” will at some point become one of their more significant economic sectors.  And the larger the number of bottled up would-be migrants, the more Italy and/or the EU will pay to stop them.

Yet what is Italy otherwise to do?  I find it striking how underreported this story has been.

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