From the issuer side, the solution to remove this risk is simple (and I believe I was told it in an EMV implementation seminar 10 years ago):

If the incoming transaction lists that the terminal is chip&pin capable, so you'd simply automatically reject a magstripe transaction with a code that should result in POS showing "please insert card in the chip reader";

If the incoming transaction lists that the terminal is not chip&pin capable, the merchant has chosen to be liable for all fraud cases themselves, so it can't cause a loss for you and your customers. It is an inconvenience, but as all the fraud in the country concentrates on the (fewer and fewer) merchants accepting these transactions, it causes an increasing financial pressure on them to switch.