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It took a while for my eyes to adjust to the darkness and chaos around me, after I stepped from a sunny street in downtown Frankfurt into the basement of a half-abandoned church. What I was seeing were dozens of makeshift rooms, created by hanging tarpaulins from ropes criss-crossing the basement; in each of these tiny tent-spaces were two or three men, along with a couple families, all of them of African or Middle Eastern origin.

Some had been living in this squalor for more than two years. They don't have anywhere else to go: They, and hundreds of thousands like them, reside legally in Europe but are forbidden from seeking housing or work. Of ambiguous status, they are caught in the interstices of the world's most dysfunctional asylum system.

"I didn't choose this life – to sleep here like this, it's not even human," says Aziz Ahmed, a 45-year-old man from Ghana who speaks with a sad resignation. After he fled Ghana (his family faced persecution, he says) to Mali and then Libya and then Italy and now Germany, he is stuck.

"This is terrible – they would not allow people to live like this in Mali. I can't go home and I can't live a normal life here. What do I do?"

These are the lost men of Europe. Their fate says more about the problem with Europe's refugee crisis than the overcrowded boats do. It isn't that the system is too lax, or too strict, but that it isn't a system at all – at a moment when a system is badly needed.

Mr. Ahmed, like most of the lost men, was accepted as a legal and legitimate refugee, under the terms of the 1951 United Nations Refugee Convention, by the government of Italy, after a lengthy review of his documentation. During the six months between his arrival and his legal refugee status, Italy kept him in a detention facility and he realized he had no future in that country: It made much more sense to settle in Northern Europe, where there are networks of established Ghanaians and employers seeking labour from people like him. Moving between European Union member states is easier than moving between Canadian provinces and their citizens are generally free to live and work in any country they choose.

But it doesn't work that way for refugees. Italy may have accepted him, making him a legal resident of Europe, but Germany and other countries do not recognize that acceptance, meaning that he can't work or get a place to live in Germany. This isn't because Germany is more strict – it settles more refugees than any other European country, far more than Italy does – but because their systems are different. And Mr. Ahmed was subject to the Dublin Regulation, a 1990 treaty that says refugees should be processed and accepted not in the country where they're seeking asylum, but in the first place in Europe they land.

That makes little sense, since refugees tend to arrive on the periphery of Europe, where countries have few resources and little demand for migrants, while the countries that are eager to take people receive very few initial arrivals.

It was supposed to be replaced with something called a Common European Asylum System, in which the 28 EU countries divide up responsibility for assessing, receiving and settling legitimate refugees, and quickly deporting illegitimate ones (even in a liberal asylum regime, quick and decisive deportation is important), according to the size of their population and economy.

That system was adopted in 2003, but never implemented: Some countries feared it would be inhumane, others feared refugee floods. So settlement and deportation were left to the vicissitudes of European life – manageable in calm years (there were few refugees in the decade before 2012) but utterly chaotic during a moment of crisis, such as now.

In June, German Chancellor Angela Merkel tried to persuade her fellow leaders to share the burden: "It cannot be that three-quarters of all asylum seekers are taken in by only five European Union member states," she told them in Brussels. She had the moral authority to do so, since Germany settles half of Europe's refugees. But her plea was ignored.

It's a huge political failing, both inhumane and insufficiently rigid. It's one area where Europe could learn from Canada, of which the minuscule refugee system, based mainly on sponsorship, works better. We could use more of their scale and they could use more of our co-ordination – and until that happens, Europe's big cities will be filled with these lost men.

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