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European Security Needs Ukraine’s Lessons to Deter Russia
Russia’s full-scale invasion of Ukraine has shattered Europe’s long-held belief in lasting peace. The continent now faces its most serious security crisis since World War II. In response, Ukraine’s battlefield-tested innovations offer a powerful blueprint for a stronger and more resilient European defense system.
In their latest report, “Rethinking European Security in the Face of the Russian Threat,” authors from the KSE Institute, Olena Bilousova, Pavlo Shkurenko, Kateryna Olkhovyk, Elina Ribakova, and Lucas Risinger, outline how Europe can integrate Ukraine into its defense strategy to build lasting protection and deterrence against future aggression.
Europe’s Wake-Up Call on Security
For decades, Europe’s defense relied heavily on U.S. military power. But with Washington’s commitment increasingly uncertain, European nations must prepare to defend themselves. Years of underinvestment have left defense industries underdeveloped and ammunition stockpiles dangerously low.
Meanwhile, Russia continues to expand its military capabilities well beyond the war in Ukraine. This shifting landscape makes Ukraine’s role, both as a frontline defender and a hub of defense innovation, indispensable to Europe’s long-term security.
How Ukraine Became a Model for European Defense
For over three years, Ukraine has resisted a larger, nuclear-armed aggressor through speed, adaptability, and rapid technological innovation. From AI-driven battlefield systems to anti-drone warfare, Ukraine demonstrates how creativity and decentralization can offset limited resources.
Europe can learn from Ukraine’s experience to modernize its own defense systems and close existing capability gaps.
Key Research Insights
- Combat-tested technologies: Ukraine’s AI-based DELTA systems and digital command tools provide models for next-generation European defense.
- Cost-effective innovation: Interceptor drones and low-cost countermeasures can neutralize expensive Russian weapons at scale.
- Decentralized procurement: Streamlined processes speed up the delivery of critical battlefield tools and reduce bureaucratic delays.
- Strategic integration: Including Ukraine in European defense programs enhances deterrence and joint security across the continent.
Building a Future-Ready European Defense
The report calls for full integration of Ukraine into Europe’s defense ecosystem — from procurement and research to industrial planning. This includes:
- Granting Ukraine access to EU defense funds
- Embedding Ukrainian military expertise in European training programs
- Co-producing weapons and defense technologies
Such integration would not only bolster European security but also make rearmament faster, more affordable, and more coordinated across the EU and its partners.
Meet the Researchers
- Olena Bilousova: KSE Institute
- Pavlo Shkurenko: KSE Institute
- Kateryna Olkhovyk: KSE Institute
- Elina Ribakova: KSE Institute
- Lucas Risinger: KSE Institute
Read the Full Report
Explore the complete findings and recommendations in the full report on the KSE Institute website. You can also explore more policy briefs covering conflict and sanctions in the FREE Network’s policy briefs section.
Inequality in Europe: The Role of EU Enlargement
A new study reveals that the 2004 enlargement of the European Union helped narrow inequality in Europe. Using data from the World Inequality Database, researchers found that Eastern European countries joining the EU saw strong income growth across all income groups. This growth reduced inequality across the bloc, even though some countries experienced rising gaps internally. The study was conducted by Jesper Roine of the Stockholm School of Economics and Svante Strömberg of Uppsala University.
The Divide Before Enlargement
Before 2004, inequality in Europe reflected a clear divide between richer northern and poorer southern nations. Eastern European countries outside the EU were still adjusting to the post-communist era, facing both rapid economic changes and widening income gaps.
How Enlargement Shifted the Balance
The 2004 expansion brought ten mainly Eastern European states into the EU. These countries experienced rapid income growth that reached both rich and poor households. In contrast, many older member states—especially in Southern Europe—saw stagnating or shrinking incomes for lower- and middle-income earners.
Key Research Findings
- New Eastern European members saw faster income growth than older EU states across all income levels.
- The poorest 50% of the EU population enjoyed annual growth three times higher than the top 10%.
- Many income groups in Southern Europe lost ground in the EU-wide income rankings.
- Overall inequality in Europe fell after enlargement, despite mixed trends within individual countries.
Implications for Future Growth
The findings suggest that future EU expansions—such as the possible accession of Ukraine, Moldova, and Georgia—could also reduce inequality in Europe if new members experience inclusive growth. However, continued stagnation in older members could deepen political divides.
Read the Full Peer-Reviewed Research Paper
Explore the complete findings and analysis by reading the full report in the International Tax and Public Finance journal.
Russia Sanctions: Effectiveness and Enforcement Gaps
Russia sanctions have curbed some revenues, yet loopholes remain. A SITE seminar on June 18, 2025, reviewed what works and where enforcement fails. It also launched SanctionsRussia.org, a public hub for data and tools on Russia sanctions. The event featured experts from SITE, the KSE Institute, Corisk, and Sweden’s Ministry for Foreign Affairs.
Tracking Sanctions in a Changing War Economy
Since 2022, governments have implemented a range of energy, trade, and finance measures targeting Russia. But Russia adapts, often via third countries. Researchers at the SITE seminar explored how to close these gaps and how new tools can guide better policy. The event also unveiled the SanctionsRussia.org portal, SITE’s new open-access platform for sanctions-related data, research, and policy tools, which centralizes evidence on Russia sanctions.
Plugging the Enforcement Holes
Speakers examined war financing, circumvention routes, and data transparency. They stressed that smarter enforcement is as vital as new rules. The new portal aims to help policymakers, journalists, and researchers compare evidence and design stronger Russia sanctions.
Key Rakeaways
- Russia earned about $235 billion from oil and gas in 2024, less than in previous years due to sanctions pressure.
- Price-cap enforcement is the weak link; attestation rules need reform to ensure accurate pricing data.
- Shadow-fleet listings lack force without tighter, coordinated follow-up actions and secondary measures.
- Evasion routes have shifted from Belarus toward Turkey, the Caucasus, and Central Asia, raising enforcement risks.
From Rules to Results
Experts urged Europe to strengthen its enforcement capacity and prepare for scenarios with weaker U.S. involvement. They called for volume-focused energy measures and better export-control policing. The new portal will track evidence, rank compliance, and support future research on Russia sanctions.
Speakers
- Torbjörn Becker: Stockholm Institute of Transition Economics (SITE).
- Erlend Bjørtvedt: Founder and CEO, Corisk.
- Benjamin Hilgenstock: Head of Macroeconomic Research & Strategy, KSE Institute.
- Anna Ekstedt: Sanctions Coordinator, Ministry for Foreign Affairs, Sweden.
- Moderator — Maria Perrotta Berlin: Assistant Professor, SITE.
Further Reading
- Event summary and slides: visit SITE’s website
- Sanctions Web Portal: https://sanctionsrussia.org
- Seminar recording: visit SITE’s YouTube channel
Financing the Russian War Economy: SITE Presents New Report on Russia’s Wartime Economy
The Stockholm Institute of Transition Economics (SITE) has released a new policy report analyzing how the Kremlin finances its war efforts under growing economic pressure. The report, titled “Financing the Russian War Economy”, was presented to Sweden’s Minister of Finance, Elisabeth Svantesson, on April 17, 2025.
This new publication builds on SITE’s 2024 report, The Russian Economy in the Fog of War. It offers updated insights into the financial structure behind Russia’s wartime economy. Notably, it highlights the sharp rise in off-budget military spending. Consequently, SITE argues that the real cost of financing the Russian war far exceeds official data.
Key Insights: How Russia Is Financing the War
The report identifies four major developments in Russia’s war financing strategy:
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Off-budget expenditures: A significant share of military spending flows through state-owned enterprises and regional programs, bypassing the federal budget.
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Depleting fiscal reserves: While oil prices continue to fall, Russia’s financial buffers are shrinking at a rapid pace.
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Hidden liabilities: SITE stresses that true financial obligations—especially future costs—remain largely unaccounted for in government figures.
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Economic instability: Sustained military spending, without major adjustments, may soon trigger painful policy trade-offs.
As a result, SITE warns of growing risks. These include deeper financial imbalances, limited fiscal flexibility, and long-term damage to Russia’s economic stability. Moreover, the report reveals how Russia’s financing model has become increasingly opaque, masking the true scale of war-related expenses.
Read More
- Read the full report “Financing the Russian War Economy” (2025)
- Related: The Russian Economy in the Fog of War (2024)
About SITE
SITE was set up as a research institute at the Stockholm School of Economics (SSE) in 1989 with the mandate of studying developments in the Soviet Union and Eastern Europe. Today, SITE is a leading research-based policy institute on these issues. SITE has also built a network of research institutes in the region (FREE Network) that includes the Kyiv School of Economics (KSE). KSE not only provides a premier economics education to future leaders in Ukraine but is also involved in the analysis of the Ukrainian as well as Russian economy, including analysis of the role of sanctions in limiting Russia’s destructive capacity. KSE has been an important contributor of data and analysis that underlie this report.
Nobel Laureate Simon Johnson Shares Insights on Strengthening Sanctions Against Russia
The Stockholm Institute of Transition Economics (SITE) recently hosted a seminar featuring Professor Simon Johnson, the 2024 Nobel Laureate in Economic Sciences. The event centered on strengthening sanctions against Russia and strategies to reduce its capacity to sustain the war in Ukraine. It highlighted the vital role of economic measures in addressing geopolitical conflicts.
During the seminar, Professor Simon Johnson provided actionable insights into improving the effectiveness of sanctions. Specifically, he discussed mechanisms like the oil price cap and their importance in limiting Russia’s economic resources. Furthermore, he emphasized how these measures could strengthen European security while remaining aligned with international law.
Prof. Simon Johnson
Professor Johnson received the 2024 Sveriges Riksbank Prize in Economic Sciences. He is renowned for his research on the influence of political and economic institutions on national prosperity. With expertise in macroeconomic policy, institutional economics, and technology’s role in economic growth, he offers valuable insights. His experience as Chief Economist at the International Monetary Fund informed his recommendations on strengthening sanctions against Russia to counter its aggressive actions effectively.
Maria Perrotta Berlin, SITE’s sanctions project lead, presented the institute’s latest research findings. Her presentation laid the foundation for an engaging Q&A session. Experts from Ukraine and Sweden contributed additional perspectives, sparking a well-rounded discussion on the global implications of strengthening sanctions against Russia.
The seminar attracted policymakers, academics, and industry stakeholders. Together, they examined how economic tools can help address pressing geopolitical challenges. Specifically, the discussions underscored the importance of strengthening sanctions against Russia as a tool for ensuring international stability and peace.
Professor Johnson’s remarks were rooted in years of groundbreaking research and his tenure as Chief Economist at the IMF. He highlighted the interplay between macroeconomic policies, institutional frameworks, and global stability. His analysis reinforced the value of strengthening sanctions against Russia to disrupt its ability to sustain prolonged conflict.
For updates on SITE’s research and future events, visit SITE’s official website.
Further Reading on the State of Russia’s Economy
Read the report on Russia’s economy: A new analysis reveals that Russia’s economy faces mounting financial imbalances due to the ongoing war against Ukraine. The Stockholm Institute of Transition Economics (SITE) found that strengthening sanctions against Russia has placed significant pressure on its fiscal resources. As a result, Russia’s economic stability is expected to deteriorate further in the coming years.
The Russian Economy in the Fog of War | Video
Torbjörn Becker, Director of the Stockholm Institute of Transition Economics (SITE) at the Stockholm School of Economics, participated in a seminar to present the report, The Russian Economy in the Fog of War. Commissioned by the National Institute of Economic Research (NIER), this report provides a detailed analysis of Russia’s economic situation amid the ongoing war in Ukraine. It also examines the impact of international sanctions on Russia’s economy.
“We aim to understand the state of the Russian economy using all available analytical tools,” says Torbjörn Becker. “However, we must also adapt to grasp the full scope of the propaganda war surrounding the data provided by Russian institutions.”
Russia’s Pre-War Economy: An Oil-Dependent Powerhouse on a Fragile Foundation
Before Russia’s full-scale invasion of Ukraine, its economy relied heavily on oil and gas exports. These exports accounted for a significant portion of Russia’s GDP. Despite its global political influence, Russia’s economic power was modest, trailing other BRICS nations such as Brazil, India, and China. According to SITE researchers, this reliance on oil prices made Russia vulnerable to global market fluctuations. Moreover, the government strictly controlled economic narratives, shaping public perception through a centralized, politicized economic structure.
The State of the Russian Economy: Official Data vs. Reality
After the invasion, Russia stopped publishing some key economic indicators, only later resuming with limited transparency. Official statistics suggest moderate declines in GDP and rising inflation. However, SITE’s independent analysis suggests that the actual economic impact may be far more severe. Inflation, exchange rates, and GDP growth metrics are likely manipulated to create an optimistic narrative both domestically and internationally.
Economic Sanctions and Their Impact on Russia’s Economic Capabilities
Western sanctions target Russia’s energy exports and restrict essential technology imports. These exports and imports are critical for Russia’s economic survival. As a result, reduced oil and gas revenues have forced Russia to rely on less efficient trade alternatives. This shift further strains its economy. SITE notes that these sanctions contribute to a downward economic trajectory, limiting Russia’s fiscal resources and reducing its capacity to sustain military operations.
Medium- and Long-Term Economic Outlook: Structural Challenges and a Bleak Future
Looking forward, the SITE report warns of long-term challenges for Russia’s economic stability. Structural issues—like reduced foreign investment, a shrinking labor force, and declining productivity—severely affect the country’s growth prospects. Additionally, the exodus of educated youth and business leaders, paired with a growing dependence on military spending, leaves Russia in a precarious position. Declining oil prices, as forecasted, would likely worsen these pressures, weakening government budgets and increasing inflation.
The full report, The Russian Economy in the Fog of War, available on NIER’s website, paints a stark picture of the economic struggles Russia faces today and in the coming years. SITE researchers reveal a path forward for Russia that appears riddled with economic hardship, worsened by ongoing sanctions and an increasingly isolated position in global finance.
More About Torbjörn Becker
Torbjörn Becker has been the Director of the Stockholm Institute of Transition Economics (SITE) at the Stockholm School of Economics (SSE) in Sweden since 2006 and is a board member of several economics research institutes in Eastern Europe.
Read more policy briefs authored by Torbjörn Becker on the FREE Network website.
The Russian Economy in the Fog of War | New Report
A new report highlights the growing instability of the Russian economy as it grapples with the effects of war and sanctions. Official figures on inflation and GDP growth present an overly optimistic picture, according to the Stockholm Institute of Transition Economics (SITE). The report reveals that Russia’s fiscal resources are under severe strain, threatening its economic future.
Economic Instability in the Russian War Economy
Russia’s war in Ukraine has caused unprecedented challenges for its economy. The report shows that Russia’s heavy reliance on oil exports remains a double-edged sword. International oil prices continue to dictate economic performance, but sanctions and declining demand have strained this vital revenue stream. This has deepened the instability in the Russian war economy.
Sanctions have blocked Russia from Western markets, forcing it to use costly and inefficient trade routes through China and other “friendly” nations. As a result, costs have surged and profits have shrunk, further destabilizing the economy.
Key Research Findings
- Official statistics likely understate the real inflation rate and overestimate GDP growth.
- Russia’s financial reserves, vital for war spending, may be depleted within a year, raising economic risks.
- Fiscal policies are unsustainable, with rising public spending at odds with monetary tightening.
- Sanctions are undermining long-term economic growth, especially in the energy sector.
Sanctions and Long-term Risks for the Russian War Economy
The report explains how international sanctions are driving the Russian economy toward long-term decline. Sanctions are not only limiting financial resources but also cutting off access to key technology and raising trade costs. This erosion of Russia’s industrial base, coupled with heavy war spending, has reduced investment in critical infrastructure and innovation. The future of the Russian war economy looks bleak, with the risks continuing to grow as the conflict drags on.
Read the Full Report “The Russian Economy in the Fog of War”
For a comprehensive understanding of Russia’s economic challenges in the context of war, read the full report by the Stockholm Institute of Transition Economics (SITE). Access the complete report on the Institute’s website.
About SITE
SITE was set up as a research institute at the Stockholm School of Economics (SSE) in 1989 with the mandate of studying developments in the Soviet Union and Eastern Europe. Today, SITE is a leading research-based policy institute on these issues. SITE has also built a network of research institutes in the region (FREE Network) that includes the Kyiv School of Economics (KSE). KSE not only provides a premier economics education to future leaders in Ukraine but is also involved in the analysis of the Ukrainian, as well as the Russian, economy, including analysis of the role of sanctions in limiting Russia’s destructive capacity. KSE has been an important contributor of the data and analysis that underlies this report. For more information, visit SITE’s homepage.
To read more policy briefs published by SITE’s experts, visit the Institute’s page on the FREE Network’s website.
Disclaimer: The opinions expressed in policy briefs, news posts, and other publications are those of the authors and do not necessarily reflect the views of the FREE Network and its research institutes.
Belarus GDP Slows Due to Agricultural and Oil Processing Challenges
A new economic analysis reveals that Belarus’ GDP growth sharply slowed in August 2024, with agriculture and oil processing as major contributors. Published in September 2024, this report examines the complex factors influencing the country’s economy and explores the GDP slowdown of Belarus.
Belarus Economic Slowdown Driven by Agriculture and Oil Processing
Belarus’ economy showed strong growth early in 2024, but August experienced a contraction due to unpredictable weather and industrial bottlenecks. The country’s reliance on agriculture and oil refining made it particularly vulnerable, with harvests and oil production both facing disruptions. While GDP grew 4.9% from January to August, the slowdown in August highlights the economy’s fragility amid external pressures and regional instability.
Key Findings
- Belarus’ GDP grew 4.9% over the first eight months of 2024 but contracted by 3-4.5% in August.
- Agriculture dropped 15.5% in August after a 29.6% rise in July, significantly impacting growth.
- Oil refining and industrial output were hit by weather-related challenges, reducing production.
Economic Outlook and Necessary Reforms for Belarus
The report stresses that Belarus’ future economic stability depends on bolstering its agricultural output and resolving industrial weaknesses. The findings suggest that the economy is highly susceptible to external factors like weather patterns and geopolitical tensions. Future research should focus on diversifying the economy to ensure consistent growth and reduce reliance on volatile sectors.
Full Report on Belarus GDP slowdown for August 2024
Explore the full analysis and sector vulnerabilities on the BEROC website. This comprehensive report offers critical insights into Belarus’ economic trends, focusing on key sectors such as agriculture, energy, and industrial output, and aims to guide policy decisions.
Additional Resources
We invite you to view other reports produced by BEROC, all available on the BEROC’s website. Additionally, if you wish to explore more policy briefs published by the BEROC Institute, you can do so by visiting the Institute’s page on the FREE Network’s website.
Disclaimer: The opinions expressed in policy briefs, news posts, and other publications are those of the authors and do not necessarily reflect the views of the FREE Network and its research institutes.
Russia’s Shadow Fleet: Sanctions Needed on Core Tankers, KSE Institute Urges
A new analysis by the KSE Institute reveals details about Russia’s shadow fleet and urges immediate action. The report, titled “The Core of Russia’s Shadow Fleet: Identifying Targets for Future Tanker Designations,” uncovers 86 tankers evading sanctions. These tankers allow Russia to continue oil exports despite the G7 price cap.
Key Insights into Russia’s Core Shadow Fleet
From January 2023 to June 2024, 307 shadow tankers in the Russia shadow fleet carried Russian crude oil. During the same period, 432 tankers from the fleet transported Russian oil products across various regions. Of these, 45 crude oil tankers and 41 oil product tankers are core parts of the fleet. However, only eight core vessels from the Russia shadow fleet have been sanctioned by the US, EU, or UK. As a result, many critical Russian tankers still operate undetected, evading current sanctions. Although 64 shadow fleet vessels were sanctioned since the fall of 2023, much of the fleet remains active.
UAE and Turkey Fuel Shadow Fleet Growth
The report highlights how UAE and Turkish companies are central to Russia’s shadow fleet operations. UAE-based Stream Ship Management Fzco manages 28 of the 45 core crude oil tankers. Turkish firms oversee a large share of the core oil product fleet. Frequent changes in vessel management after sanctions make enforcement more difficult, allowing operations to continue under new entities.
Strengthening Sanctions on Core Vessels
The KSE Institute urges governments to apply more pressure by targeting additional shadow fleet vessels. Sanctioning the remaining 45 crude oil and 41 oil product tankers from the core fleet would severely impact Russia’s ability to export oil. This would force reliance on mainstream tankers that are subject to the price cap, tightening existing sanctions.
Conclusion: Immediate Action Needed
Russia’s shadow fleet continues to grow, supported by entities in the UAE and Turkey. Current sanctions are weakening, and the KSE Institute calls for the urgent designation of the core vessels identified in its report. This would strengthen sanctions and reduce Russia’s capacity to fund its war in Ukraine.
Additional Resources
We invite you to view the full KSE Institute report, now available on the KSE Institute website. Additionally, if you wish to explore more policy briefs published by the KSE Institute, you can do so by visiting the Institute’s page on the FREE Network’s website.
Disclaimer: The opinions expressed in policy briefs, news posts, and other publications are those of the authors and do not necessarily reflect the views of the FREE Network and its research institutes.
Belarus Economy: GDP Growth, Inflation, Labor Shortages | August 2024
Belarus’ economy saw significant GDP growth in Q2 2024, accelerating to 5.5% year-on-year, compared to 4.3% in the previous quarter. Economic overheating has increased amidst persistent labor shortages, with unemployment at a historic low of 3.0%. Investment growth, high consumer demand, and the strong performance of the Russian economy have driven this acceleration.
Key Highlights:
- Belarus GDP Growth: 5.5% in Q2 2024, up from 4.3% in Q1 2024.
- Labor Market Tightness: Unemployment is at a record low of 3.0%, creating wage pressures.
- Economic Overheating: Consumer demand remains overheated, with demand exceeding supply.
- External Trade Challenges: Trade balance deteriorates amid sanctions and falling export prices.
- Belarusian Ruble: Slight depreciation due to moderate pressures on the internal currency market.
Labor Shortages and Wage Increases in Belarus
The labor shortage in Belarus has driven businesses to increase wages by over 22% compared to 2021 levels. This wage inflation is a direct result of a tight labor market, with fewer unemployed individuals per vacancy. The wage growth is adjusted for inflation and continues to pose challenges for employers.
Consumer Confidence and Inflation Trends
The Consumer Confidence Index in Belarus rose to -1.4% in July 2024, marking the highest level since December 2021. Inflationary pressures remain a key concern, with annualized inflation reaching 6.1% in Q2 2024. Consumer prices are being held in check by price controls, particularly in the non-food sector, though price increases in services remain significant due to pro-inflationary factors.
Belarus Economic Forecast for 2024-2025: Slower Growth Expected
Looking forward, the economic outlook for Belarus in 2024-2025 suggests a slowdown in GDP growth. For the full year 2024, GDP is expected to grow by approximately 4%. However, in 2025, the pace of growth is forecasted to slow to between 0.5% and 1.5%, as higher interest rates temper credit expansion and demand.
Inflation in Belarus is projected to remain elevated, with consumer prices expected to rise between 5% and 7% in 2024. By 2025, inflation could accelerate further, potentially reaching 6% to 9%, influenced by rising prices in Russia and sanction pressures.
Economic Risks and Challenges Facing Belarus
Several risks could impact Belarus’ economic growth and inflation in the medium term:
- Sanctions and External Trade: Ongoing sanctions are disrupting trade financing and supply chains.
- Labor Shortages: Continued shortages in the labor market could restrict production capacity.
- Russian Economic Slowdown: A deceleration in Russia’s economic growth could dampen demand for Belarusian exports.
Despite these challenges, increased investments and more efficient economic policies could mitigate some of the risks, potentially driving stronger-than-expected growth.
Additional Resources
We invite you to view the full BEROC webinar, which is now accessible on the official BEROC YouTube channel. Moreover, for further details, please visit the BEROC website. Additionally, if you are seeking to explore more policy briefs published by BEROC, you may do so by visiting the Institute’s page on the FREE Network’s website.
Disclaimer: Neither BEROC, the FREE Network, nor their representatives can be held responsible for the use of the information contained in this press release. Despite thorough preparation, BEROC and its representatives do not guarantee or assume responsibility for the accuracy, completeness, or reliability of the information. BEROC is not liable for any losses or damages arising from the use of the provided information.