Author: ln

Do Remittances Keep Households Out of Poverty? Evidence from Georgia

Posted on February 16, 2026 | Policy Brief

Remittances play an important role in household living standards in Georgia, alongside labor income and public transfers. Using 2024 household data, this brief estimates the contribution of remittances to poverty reduction by simulating household welfare in their absence. The results indicate that removing remittance income would raise the share of households below the subsistence level by more than four percentage points, with smaller increases in relative poverty and inequality. Income composition patterns further show that poorer and rural households rely more heavily on remittances. Overall, the findings underscore the significant role of private transfers in shaping household welfare and vulnerability in Georgia.

Introduction

Despite notable progress in recent years, poverty reduction remains a central development challenge in Georgia. An important policy concern is whether recent poverty reductions are sustainable or leave households vulnerable to economic shocks.

Assessing this vulnerability requires understanding what keeps households above the poverty line. In Georgia, household consumption is financed not only by labor earnings but also by non-labor income sources. Many households rely heavily on remittances from family members working abroad as well as public transfers such as pensions and social assistance.

While official poverty indicators track overall trends in household welfare, they do not reveal how different income sources contribute to keeping households above the poverty line. Understanding whether poverty reduction is primarily driven by labor income, private transfers, or public support is essential for assessing household vulnerability and the sustainability of poverty reduction.

This question is especially salient in Georgia, where remittance inflows amounted to around 10 percent of GDP in 2024. Such dependence raises concerns about the resilience of household welfare to external shocks that could disrupt migration or remittance flows.

Recent World Bank analysis of fiscal incidence in Georgia highlights that transfers and social expenditures have played a significant role in reducing poverty and inequality, with overall taxes and benefits lowering the share of the population in poverty and compressing the distribution of income (World Bank, 2025). Evidence from studies on international migration and remittances also suggests that private transfers help smooth household consumption and provide critical support to low-income families in contexts with high migration and remittance flows (World Bank, 2023).

Building on this body of evidence, this brief quantifies the short-run welfare impact of remittances in Georgia by simulating household consumption in the absence of remittance income. Comparing observed outcomes with the counterfactual scenario provides clear evidence on the contribution of private transfers to household living standards and the vulnerability of households to changes in remittance flows.

Descriptive Statistics

Household incomes in Georgia are composed of labor earnings, public transfers, and private transfers. Labor and market income, including wages, self-employment, and agricultural sales, accounts for roughly two-thirds of total household resources on average. Transfers nonetheless play a substantial role in household welfare: public transfers such as pensions and social assistance represent over one-fifth of total income, while private transfers, largely driven by remittances from abroad, contribute more than one-tenth. Capital and other income sources remain marginal. In level terms, average monthly cash income and transfers amount to GEL 1,714 per household but fall to GEL 971 among households below the subsistence minimum and rise to GEL 1,814 among those above it. Rural households report lower average cash resources (GEL 1,434) than urban households (GEL 1,877), underscoring both welfare gaps and the differing reliance on income sources across population groups.

Figure 1. Income composition by source and household group

Source: Household Incomes and Expenditures survey, Geostat, 2024.

Income composition differs markedly across household groups, indicating that transfer flows play a particularly important role for households at the lower end of the welfare distribution and in rural areas. Among households below the subsistence minimum, public transfers account for nearly half of total cash resources – roughly equal to labor and market income – highlighting a strong reliance on transfer income for meeting basic living standards. In contrast, households above the subsistence minimum derive over two-thirds of their income from labor earnings, with transfers playing a much smaller role. Rural households are also substantially more dependent on public transfers than urban households, where labor income dominates. Private transfers, largely driven by remittances, constitute a meaningful but secondary income source, particularly among urban and better-off households.

Data and Methodology

The analysis uses microdata from Georgia’s Integrated Household Survey (IHS) for 2024. Household welfare is measured using total consumption expenditure per equivalent adult, which is widely regarded as a reliable indicator of living standards than income, as it better reflects households’ ability to smooth temporary income fluctuations. All results are weighted using survey weights adjusted for household size to reflect population-level outcomes.

Absolute poverty is assessed using the national subsistence level, which varies by quarter to account for seasonal price changes. Relative poverty is defined as consumption expenditure below 60 percent of the median within each quarter. Inequality is measured using the Gini coefficient, and Lorenz curves are used to illustrate changes in the consumption distribution.

To quantify the role of remittances, a counterfactual welfare scenario is constructed by simulating household consumption in the absence of remittance income from abroad. The simulation subtracts the estimated consumption-financed portion of remittances from observed household consumption, while allowing for the share of remittances saved or used for non-consumption purposes. Poverty and inequality indicators are then recalculated under this counterfactual scenario. The approach captures the short-run direct impact of remittances.

As with any short-run simulations, this analysis assumes no behavioral adjustment by households following the removal of remittance income. In practice, households may respond through changes in labor supply, borrowing, or expenditure patterns, which are not captured. In addition, the estimation of the consumption-financed share of remittances is based on observed saving behavior and may vary across households and over time. Despite these limitations, the approach provides a transparent and relevant estimate of the direct welfare role of remittances.

Results

Remittances from abroad play a substantial role in sustaining household living standards in Georgia. In 2024, 13.7 percent of households lived below the subsistence minimum. Simulating household welfare in the absence of remittance income shows that the poverty rate would rise to 18.1 percent, an increase of more than four percentage points. This implies that remittance inflows keep a significant share of households above the minimum living standard threshold.

Table 1. Poverty and inequality indicators with and without remittance income

Source: Author’s calculations based on Geostat data, 2024. Note: The Gini coefficient is a numerical measure of income or wealth inequality that summarizes how evenly income or wealth is distributed across a population. It ranges from 0, indicating perfect equality where everyone has the same income or wealth, to 100, indicating perfect inequality where all income or wealth is concentrated in a single individual.

Relative poverty also increases in the counterfactual scenario, rising from 18.7 to 21.4 percent, though the magnitude is smaller than for absolute poverty. This reflects the stronger role of remittances in preventing extreme vulnerability rather than reshaping the overall income distribution.

Inequality, measured by the Gini coefficient of consumption expenditure, increases modestly from 32.4 to 32.8 in the absence of remittances. The corresponding shift in the Lorenz curve confirms that remittances slightly compress the lower tail of the distribution, benefiting poorer households disproportionately.

Figure 2. Lorenz curves with and without remittances

Source: Author’s calculations based on Geostat data, 2024. Note: A Lorenz curve is a graphical representation of income or wealth distribution that plots the cumulative share of the population (ordered from poorest to richest) against the cumulative share of total income or wealth they receive, illustrating the degree of inequality in a society.

Conclusion

The results indicate that remittances from abroad play a substantial role in sustaining household living standards in Georgia.  In  2024,  removing remittance income would increase the share of households living below the subsistence minimum by more than four percentage points, with a smaller but noticeable rise in relative poverty. The persistence of this pattern under both absolute and relative poverty definitions confirms the robust poverty-reducing role of remittances. Inequality, measured by the Gini coefficient, also increases modestly in the counterfactual scenario, consistent with remittances disproportionately supporting lower-income households.

Income composition patterns further show that poorer and rural households rely more heavily on transfer income than better-off and urban households, underscoring the importance of remittances as a buffer against economic vulnerability. Overall, the findings highlight the significant contribution of private transfers to poverty reduction and the sensitivity of household welfare to changes in remittance flows.

As reliance on external income sources remains high, diversifying income opportunities and improving domestic labor market conditions will be essential for sustainable poverty reduction in the long term.

References

  • World Bank, 2023. Migrants, Refugees, and Societies.
  • World Bank, 2025. Navigating Fiscal Realities for Equitable Growth in Georgia

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Strategic Integration of the Belarusian Business and Policy Implications for the EU

Posted on February 9, 2026 | Policy Brief

The forced internationalization of Belarusian businesses since 2020 has transformed a localized economic crisis into the formation of a sophisticated, high-growth-potential economic diaspora within the European Union. Drawing on a novel survey of over 114 Belarusian-rooted businesses, this brief analyzes their integration patterns and value alignment with Western markets. The findings reveal a cohort characterized by high entrepreneurial orientation, a rejection of state paternalism, and significant growth potential. This makes them a valuable asset to host-country development and a vital resource for Belarus’s future economic reconstruction.

The Context: Scale and Scope of the Exodus

Before 2020, Belarusian business migration was a predominantly economically driven phenomenon of “gradual Europeanization” – businesses strategically pursued access to larger markets, more stable legal frameworks, and new technologies. Moreover, many Belarusian companies were born-globals (Vissak & Zhang, 2016) and considered the domestic and even Russian market as a launch pad for further expansion into developed technological markets (Marozau et al., 2021). By 2020, the private sector’s contribution to Belarus’s GDP reached 55%, surpassing that of state enterprises (Daneyko et al., 2020). However, the political crisis following the 2020 elections and the 2022 invasion of Ukraine fundamentally altered this trajectory, turning migration into a “survival strategy”.

This “forced internationalization” occurred in two distinct waves. The 2020-2021 wave primarily consisted of individual entrepreneurs, top managers, and IT specialists who fled direct political repression. In turn, the post-2022 wave was driven by the relocation of entire high-tech and knowledge-intensive companies in order to preserve client bases and financial access after international sanctions were imposed on Belarus following Russia’s invasion of Ukraine.

Today, the EU has inadvertently become the custodian of a substantial portion of Belarus’s future economic potential. Over 300,000 Belarusians have emigrated, with an estimated 87% of them holding higher education degrees—a dramatic “brain drain” for Belarus that translates into a “brain gain” for the EU (Lvovskiy et al., 2025).

Figure 1. Origin of surveyed Belarusian-rooted businesses

Source: Authors’ estimation.

The number of enterprises with Belarusian founders operating across Central and Eastern Europe is estimated at approximately 10,000 (Marozau & Danilchuk, 2024).

This study utilizes a mixed-methods approach, centered on a 2024 proprietary survey of 114 founders and executives of Belarusian-rooted businesses, primarily located in Poland and Lithuania. The sample covers micro- (62%), small- (30%), and medium enterprises across ICT (39%), services/trade (48%), and manufacturing (13%).

Portrait of the Belarusian Business Diaspora

The Belarusian business presence in the EU is characterized by heavy geographic concentration on the eastern flank (Poland, Lithuania, Latvia), though it shows signs of maturing into a global network.

Nearly half (49%) of the surveyed companies were new local startups that were established from scratch in the current primary jurisdiction (Figure 1). Meanwhile, relocated firms – those that operated in Belarus and have fully or partially moved – make up 42% of the sample. Only 6% continue to operate in Belarus while opening branches abroad. This distribution underscores a shift toward local entrepreneurial formation, suggesting that the diaspora is not merely transplanting existing structures but actively generating new ones. The nearly even presence of relocated and new local startup firms reflects a dual pathway: one of continuity and adaptation, and another of innovation and reinvention.

Analysis of workforce composition reveals a heavy reliance on Belarusian talent, both from recent relocations and the existing local diaspora (Figure 2). Many businesses are still relatively small and founder-driven, with hiring networks often rooted in trusted Belarusian professional circles. However, as these companies grow and mature, many may begin to prioritize specialized skills and experience over nationality, leading to more diverse and internationalized teams over time. In their current phase, however, they continue to play a crucial role in employing and integrating Belarusian talent across EU labor markets (Lvovskiy et al., 2025).

Figure 2. Staff composition of surveyed Belarusian-rooted businesses

Source: Authors’ estimation.

Business Dynamics and Resilience

Despite the trauma of forced relocation, these businesses exhibit a remarkably entrepreneurial orientation and a focus on expansion rather than mere survival. An overwhelming 74% of firms prioritize expansion, a stark contrast to businesses remaining inside Belarus, where only about one-quarter plan to expand (BEROC, 2023). 64% of respondents anticipate increasing their staff over the next year. While they initially provide a “safety net” for other Belarusian emigrants, 40% of firms are now actively recruiting local Polish or Lithuanian specialists to help with localization.

Only 18% of firms would consider moving back to Belarus even if the political situation changed immediately. This indicates that the “exodus” has resulted in a permanent structural change; these businesses are becoming European entities with Belarusian roots.

Navigating the European Market: Challenges, Responses, and Support Needs

As the Belarusian-rooted business becomes more established in new countries, issues of initial adaptation and legalization are becoming a thing of the past.

The most frequently reported barrier is difficulty entering new markets, selected by 39% of respondents (Figure 3). This is followed by high labor costs, particularly in terms of salary expectations (30%), and disparities in treatment of companies with Belarusian origins (29%). These three factors reflect a combination of structural and perception-based challenges that affect firms’ ability to scale operations across borders.

Figure 3. Key barriers hindering growth and expansion

Source: Authors’ estimation.

A substantial share of firms, citing a lack of qualified personnel or management (25%) and noting difficulties related to the legalization of founders and employees (23%), point to significant constraints in human capital and the administrative burdens associated with cross-border employment and residency requirements.

Meanwhile, Belarusian entrepreneurs have shown a high entrepreneurial orientation, focusing on two main strategic directions: optimization of internal processes and adaptation of product/market strategy (Figure 4).

Figure 4. Steps taken to minimize the impact of risks and enhance competitiveness

Source: Authors’ estimation. Note: Several options could be selected.

When asked what would most help the company’s development, Belarusian entrepreneurs in the EU expressed a strong consensus that political and legal normalization is far more relevant than immediate economic aid or market-specific support. The end of the war in Ukraine (58.8%) as the highest-ranked factor underscores that the geopolitical instability caused by the war is the single largest drag on their business, impacting everything from security to market perception (Figure 5).

Figure 5. What would most help business development?

Source: Authors’ estimation. Note: Several options could be selected.

The Analysis of Value Alignment

In general, previous research collectively positions the entrepreneurial class – and by extension, the business diaspora – as a proactive, motivated, and democratically aligned segment of Belarusian society (Bornukova & Friedrich, 2021). The combination of a long-term societal shift toward market principles (Daneyko et al., 2023) and the unique psychological profile of Belarusian entrepreneurs has profound political implications. Their strong preference for self-reliance over state welfare, their belief in the benefits of competition, and their demonstrated risk tolerance are not merely business characteristics; they are foundational democratic values centered on individual agency and responsibility (Audretsch & Moog, 2022).

Compared to a survey of businesses inside Belarus in 2018, the 2024 the Belarusian business diaspora operating outside the country holds a stronger commitment to self-reliance, risk-taking, and core market principles than business representatives operating inside Belarus just a few years earlier (Marozau & Apanasovich, 2026). It strongly supports free pricing, the end of subsidies to uncompetitive firms, and rejection of economic paternalism (e.g., guaranteed jobs over higher salaries) (Figure 6). This alignment means that the diaspora has internalized the “European” institutional mindset, making them natural partners for EU economic initiatives and the primary “agents of transformation” for a future democratic Belarus.

Moreover, the shared experience of forced migration, combined with the resilience and adaptability of Belarusian entrepreneurs (Marozau, 2023), has fostered collaboration and ecosystem-building across Poland and the Baltic states. This commitment to market principles is evident in the rapid emergence of Belarusian business associations and informal networks across the EU (Krasko & Daneyko, 2022). While such spontaneous civil society development is atypical for Belarus, it aligns closely with the EU’s decentralized business environment (Greenwood, 2002). In contrast to post-2020 Belarus, where the state restricts independent business organizations and advocacy (Marozau, 2023), the diaspora has quickly formed self-governing, trust-based networks. These organizations substitute for weak institutional trust at home, mitigate geopolitical risks,   and   provide   advocacy,   networking,   and representation to host-country and EU institutions (Marozau & Danilchuk, 2024), demonstrating the diaspora’s capacity for democratic self-organization.

Source: Marozau & Apanasovich (2026)

Conclusion and Implications

The relocation of Belarusian entrepreneurs to the EU does not represent a break with the past so much as a fulfillment of long-standing aspirations, but these values appear to have developed before, often in defiance of a more centralized and restrictive policy environment in Belarus. Consequently, success abroad is based on the entrepreneurial principles already cultivated under challenging conditions and is not merely the result of adapting to new institutional settings. Strong alignment with liberal market values – including private ownership, individual initiative, fair competition, and transparent governance – positions Belarusian entrepreneurs as a foundational pillar of a future democratic Belarus integrated into the European family. Therefore, supporting this diaspora is not merely a question of solidarity or migration management. It is a high-return strategic investment that strengthens the EU’s economic base, supports democratic transition in its neighborhood, and affirms the values that underpin the Union itself. Tailored interventions are needed to address their legal vulnerabilities and enable their full participation in EU markets.

To unlock the full value of this asset for regional growth and long-term transformation, a strategic recalibration of policy is needed.

First, the Belarusian business diaspora should be understood as a distinct and underutilized contributor to the European economy—shaped by geopolitical disruption yet strongly aligned with EU market norms and integration pathways. The barriers these businesses face are not typical SME challenges but structural frictions that limit investment, scaling, and value creation in host countries. Addressing these frictions would deliver direct benefits to local economies through job creation, tax revenues, and industrial capacity. Fuller market participation could be supported through trust-building within local business ecosystems, consistent access to finance, greater legal predictability for founders and key staff, and appropriate risk-sharing instruments for capital-intensive sectors such as manufacturing. In parallel, regulatory clarity enabling banks to distinguish between sanctioned or state-linked entities and independent Belarusian firms would reduce unnecessary de-risking that suppresses legitimate economic activity within the EU.

Second, the Belarusian business diaspora represents a strategic asset for the future economic and democratic reconstruction of Belarus, whose value depends on being anchored and strengthened within the EU today. Operating in European markets allows these entrepreneurs to accumulate capital, managerial experience, institutional trust, and familiarity with EU regulatory and governance standards – assets that will be critical in a post-authoritarian transition. Retaining this community within the European economic space ensures that future reconstruction efforts can draw on actors already embedded in EU value chains, rather than relying solely on external assistance or ad hoc capacity-building.

Targeted funding mechanisms and professional networks can support this long-term role by enabling transparent links with the remaining private sector in Belarus, preserving skills, business relationships, and market knowledge that would otherwise erode over time. Finally, cross-sectoral initiatives involving entrepreneurs, civil society, and democratic actors can strengthen diaspora cohesion and amplify its contribution as a carrier of economic know-how and democratic practices. Joint efforts around education, skills development, and employability are particularly valuable, as they address EU labor market needs while preparing the groundwork for Belarus’s eventual reintegration into the European economic and institutional space.

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Income Polarization and Climate Policy Backlash

Posted on February 2, 2026 | Policy Brief

20231201 The Impact of Rising Gasoline Prices Image 03

A recurring challenge for climate policy is political backlash. Over the last decade, we have seen prominent examples like the repeal of the carbon tax in Australia in 2014, the ‘Yellow Vests’ protest against the French carbon tax between 2018 and 2020, and the rollback of climate policy in the transport sector in Sweden between 2022 and 2024. A common argument put forward to explain this backlash is distributional concerns – that carbon and fuel taxes are regressive, disproportionately burdening low-income households. Yet, these prominent episodes often look like middle-class revolts. Studies find that the Yellow Vests supporters in France had ‘modest incomes’, but few came from the poorest deciles of the income distribution. Similarly, a study of Swedish fuel tax protesters found that they had relatively high incomes. This brief proposes a complementary explanation to regressivity: when the income distribution becomes more polarized – with stronger growth at both tails relative to the middle – the tax burden can shift toward the middle. A simple three-agent example illustrates how polarization can ‘squeeze’ the middle class, potentially undermining the durability of climate policy even when the poorest are compensated.

Climate Policy Backlash: Why “Not Just the Poor”?

Fuel and carbon taxes have repeatedly triggered political controversy and, in some cases, reversals. In France, the planned 2018 increase in the carbon tax became a focal point of the Yellow Vests protests. In Australia, the economy-wide carbon pricing introduced in 2012 was repealed just two years later. And in Sweden, the current government has reduced transport fuel taxes and the biofuel mandate to lower pump prices.

These episodes are often interpreted through the lens of tax progressivity (Douanne and Fabre 2022; Ewald et al. 2022): if energy and transport fuels are necessities, the tax-to-income burden can be higher for low-income households, with implications for policy stability. But the political patterns are frequently more complex. In France, many protesters were working or middle-class rather than poor (Dormagen et al. 2022). In Sweden, fuel tax protesters had, on average, relatively high incomes (Ewald et al. 2022), and households in the bottom third of the income distribution have no transport fuel expenditure at all, which weakens a simple “regressivity” narrative.

Figure 1. Share of Swedish households with zero transport fuel expenditure, by income decile.

Source: Household expenditure survey data 1999-2012 from Statistics Sweden.

This motivates the question: what if the distributional conflict that matters politically is not only bottom-versus-top, but, more importantly, concerns what happens to the middle class?

This brief introduces a three-agent model to show that under income polarization, the relative tax burden may shift to the middle. Traditional tax progressivity indices may fail to capture this shift as they weight different parts of the income distribution. At the same time, such a change is likely to have large implications for the political action and ultimately, the environmental policy design.

A Simple Model of Tax Burden Shifts

Consider an economy with three types of households: low-income (L), middle-income (M), and high-income (H). When a good like gasoline is taxed at a constant rate, each household’s tax burden depends on how much of their budget they spend on the taxed good; their ‘budget share.’

As incomes grow over time, these budget shares change. The direction of change depends on whether the taxed good is a necessity or a luxury. For necessities — goods where spending doesn’t keep pace with income growth — the budget share falls as income rises. For luxuries, the opposite occurs. The speed at which budget shares change over time is thus governed by two factors: how responsive spending is to income changes (the income elasticity), and each household’s income growth rate.

To track how tax burdens shift between different income groups, we can examine the relative changes in their budget shares. With three income groups, we need to make three comparisons: poor versus rich, poor versus middle, and middle versus rich. If the budget share falls faster for the relatively richer household in all three comparisons, the tax becomes more regressive. If it falls faster for the relatively poorer in all three comparisons, the tax becomes more progressive.

However, a third pattern is possible: the burden can shift in a ‘polarized’ way, where the middle class loses ground relative to both the poor and the rich. In this case, whether the tax is progressive or regressive is ambiguous – it depends on which comparison we prioritize in our social welfare function.

Polarization Squeezes the Middle

We use the example of income polarization to illustrate how this middle-squeeze can occur. Following Esteban and Ray (1994) and Wolfson (1994), we define income polarization as a situation where the middle group’s income grows more slowly than both the bottom and top groups. Under polarization, the middle class shrinks as a share of total income, while both the poor and rich expand their shares. Such income polarization has been well documented in the US and Europe (e.g., Goos et al. 2009; Autor 2022).

Table 1 shows a stylized numerical example of income polarization. Low- and high-income households have higher income growth compared to the middle, whose income share shrinks. Furthermore, gasoline is a necessity (in high-income countries), and we assume uniform income elasticities so that the budget share declines as income grows for all three income groups.

Table 1: Example of income polarization

What happens to relative tax burdens under these conditions? Because low-income households have the fastest income growth, their gasoline budget share falls the quickest. The middle class, with much slower income growth, sees its budget share fall more slowly. This means the middle class shoulders more of the tax burden relative to the poor.

Similarly, high-income households also experience faster income growth than the middle class, so their budget share also falls faster. Again, the middle class ends up shouldering more relative to the rich. The middle is thus ‘squeezed’ from both directions.

Importantly, when we compare the poor directly to the rich, the tax burden shifts in a progressive direction — the poor’s relative burden falls compared to the rich. Yet this ‘traditional’ progressive pattern masks the fact that the middle class is bearing an increasing share of the burden compared to everyone else.

The political implication is clear: when taxing a necessity under income polarization, the middle class can become relative losers even when the tax appears progressive in traditional comparisons between top and bottom. In this case, climate policy backlash would come from working and middle-class groups rather than the absolute poorest, and compensating mainly the poor may be insufficient for political durability.

What This Suggests for Climate policy design

The mechanism illustrated above does not deny that tax progressivity matters. Rather, it highlights an additional vulnerability: in a polarized economy, a carbon tax on necessities may face backlash when the middle class is squeezed. Three practical implications for climate policy design follow from this.

First, protecting the bottom is essential, but may not be sufficient for political durability if the middle becomes the relative ‘loser.’ The traditional focus in the economics literature on the political economy of climate policy and its potential distributional effects is on measures like revenue recycling (‘carbon dividends’) – especially to the poor – to counter regressivity. This compensation may be insufficient for policy stability, however, and targeted measures toward the middle class may be needed (such as a reduction in middle-income tax rates).

Second, backlash may potentially be lower when there are credible substitutes, thereby reducing the budget share of the taxed goods over time. If, for instance, the middle-class are relatively more dependent on private transport, compensatory policies aimed at making electric vehicles more affordable may reduce both the objective burden and the intensity of climate policy aversion.

Third, summary indices of tax progressivity — like the Kakwani (1977) and Suits (1977) indices — may obscure ‘middle-squeeze’ patterns. A useful complement to these summary measures would thus be to report incidence separately for bottom–middle and middle–top comparisons, and to track how polarization changes these margins over time.

References

  • Andersson, J. J., & Atkinson, G. (2025). The Progressivity of Gasoline Taxation: The Role of Income Inequality. Working Paper.
  • Autor, D. (2022).  The labor market impacts of technological change: From unbridled enthusiasm to qualified optimism to vast uncertainty. National Bureau of Economic Research.
  • Dormagen, J-Y., & Michel, L., & Reungoat, E. (2022).  United in diversity: Understanding what unites and what divides the Yellow Vests. French Politics, 20(3), 444–478.
  • Douenne, T., & Fabre, A. (2022).  Yellow vests, pessimistic beliefs, and carbon tax aversion. American Economic Journal: Economic Policy, 14(1): 81–110.
  • Esteban, J.-M., & Ray, D. (1994).  On the measurement of polarization. Econometrica, 62(4), 819–851.
  • Ewald, J., & Sterner, T., & Sterner, E. (2022).  Understanding the resistance to carbon taxes: Drivers and barriers among the general public and fuel-tax protesters. Resource and Energy Economics, 70.
  • Goos, M., & Manning, A., & Salomons, A. (2009).  Job polarization in Europe. American Economic Review, 99(2): 58-63.
  • Kakwani, N. C. (1977).  Measurement of tax progressivity: An international comparison. Economic Journal, 87(345), 71–80.
  • Suits, D. B. (1977).  Measurement of tax progressivity. American Economic Review, 67(4), 747–752.
  • Wolfson, M. C. (1994).  When inequalities diverge. American Economic Review, 84(2), 353–358.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

A Highly Likely Turning Point for Belarus: Can Early Action Shape the Outcome?

Posted on January 26, 2026 | Policy Brief

Turning Point for Belarus illustrated by a Ferris wheel overlooking a Belarusian city park in autumn

This policy brief analyzes Belarus’s likely return to economic stagnation as the post-2022 growth rebound fades, and assesses the political-economy implications of this trajectory. Recent growth, primarily driven by cyclical export dynamics and favorable shocks from Russia, is shown to be unsustainable and consistent with a low equilibrium growth path constrained by weak productivity and the prevailing institutional regime. As growth slows and income dynamics deteriorate, stagnation is expected to reshape social preferences and intensify pressures on the existing political-economic status quo. The brief argues that this environment makes a future turning point increasingly likely, while path dependence strongly biases outcomes toward deeper dependence on Russia. Against this backdrop, it discusses whether early, preventive external actions focused on reshaping incentives and expanding the set of perceived strategic options can influence Belarus’s post-turning-point trajectory.

Belarus’ Economic Path: A Likely Return to Stagnation

The years 2021–2025 were dramatic, leading to significant structural changes in the Belarusian economy. However, there are increasing indications that the positive dynamics observed during this period may be reaching their limits, with 2025 potentially marking a dividing line between the short- and long-term effects of Belarus’s economic adjustment to the new environment.

After two and a half years of accelerated growth (around 4%), economic growth began to slow markedly in 2025 and is expected to end the year at 1.3–1.5%. The key reason for this sharp deceleration was the weakening of external demand. Its contraction implies that the physical volume of exports in 2025 is roughly 10% lower than in 2024: approximately two-thirds due to a decline in exports to Russia and one-third due to reduced exports to other countries (see Figure 1).

Figure 1. The Dynamics of Physical Volume of Belarusian Exports by Geographical Destinations, total exports 2022=100

Source: Own calculations based on Belstat data.

The growth in the physical volume of exports was precisely the foundation of the recovery and accelerated growth observed in 2023–2024. First, it constituted a positive demand shock that directly stimulated output growth. Second, it created a buffer for the external position (the current account balance), mitigating one of Belarus’ chronic growth constraints. This consideration has become particularly relevant in recent years, as access to external financing has been severely limited due to the war, sanctions, and the country’s status as a default borrower. Third, in 2023–2024, the accumulated buffer in the external position enabled export growth, creating additional space to stimulate domestic demand.

Export dynamics by destination indirectly indicate that the export surge in 2023–2024 was cyclical rather than a reflection of productivity improvements. Significant export growth occurred only to Russia, reflecting major disruptions to the operating environments of both the Belarusian and Russian economies amid sanctions. The gradual decline in export volumes to Russia since the second half of 2024 signals that even after these disruptions, the existing productivity base does not allow Belarusian exporters to sustain output near previously reached peaks. Exports to other countries have been excessively volatile. It again points to insufficient productivity as their underlying constraint, especially in a new environment.

Assessing likely developments in 2026–2027, the prevailing status quo implies that a slowdown in growth to 1.0-2.0% per year is the most likely scenario. This range corresponds to the growth forecasts produced by major professional forecasters for Belarus (BEROC, IMF, World Bank, WIIW, EDB). Qualitatively, nearly all forecasters converge on the same baseline scenario: the Belarusian economy remains overheated and exposed to inflationary pressures and accumulated macroeconomic imbalances (a weakening external position and a fragile financial position of firms); favorable external demand shocks from Russia have largely been exhausted (with Russia’s growth expected at 1.0-1.5%); and economic authorities will be forced to reduce domestic demand stimulus, leading growth to slow and converge toward its equilibrium level.

This leads to an important conclusion for the medium-term outlook: the elevated growth observed in 2023–2024 was the result of cyclical factors, while Belarus’s long-term equilibrium growth rate remains weak, likely in the range of 1.0–2.0% (which aligns with the estimates based on statistical filtering methods). Estimates of equilibrium growth were in the same range in 2020, prior to the economy entering a period of large-scale shocks (Kruk, 2020). From a long-run growth perspective, the period of 2023–2024 should therefore be interpreted either as a one-off positive level shift in equilibrium output or purely as a cyclical shock. Accordingly, all key considerations regarding Belarus’ weak long-term growth environment (Kruk, 2020) and the lack of productivity growth drivers remain fully relevant today.

It is therefore not surprising that long-term growth models produce a similar picture: growth in the range of 1.0–2.0% per year, under two basic assumptions: (i) productivity growth remains weak and does not exceed its average over the previous 20 years; and (ii) demographic dynamics follow long-term UN projections. Figure 2 presents simulations based on the World Bank’s Long-Term Growth Model (Loayza & Pennings, 2022) under three scenarios: (1) an inertial scenario, in which key exogenous variables (except demography) are extrapolated from historical data; (2) an optimistic scenario, assuming somewhat stronger productivity and human capital growth till 2050; and (3) a pessimistic scenario, assuming slower productivity and human capital growth till 2050 combined with a higher current account deficit.

Average growth over 2026–2100 ranges from 0.9 to 1.5% per year across these scenarios. The core constraint on long-term growth remains insufficient productivity growth (Kruk & Bornukova, 2013), largely driven by the current political regime’s unwillingness and inability to remove existing barriers to productivity growth (Kruk, 2018; Kruk, 2020). In other words, this is not a technologically predetermined growth ceiling, but a political economy equilibrium shaped by the prevailing system of institutions, incentives, and constraints, compounded by demographic trends.

Figure 2. Belarus: Long-term Per Capita GDP Growth Projections, % per annum

Source: Own calculations based on WB LTGM Model (Loayza & Pennings, 2022.

Any of these scenarios implies a highly disappointing future for Belarus. By domestic standards, such sluggish growth effectively amounts to stagnation for a middle-income country. In the worst-case scenario, incomes double over the next 75 years compared to 2025. Essentially, with such a growth path, it will take Belarus 75 years to reach income levels already attained by the world’s richest countries today.

However, given that other countries will also continue to grow, this trajectory implies that Belarus will keep falling behind in relative terms. For instance, compared with Poland (the baseline LTGM simulations), Belarus will become increasingly poorer (see Figure 3). The only question is how fast and by how much.

Figure 3. GDP per capita (PPP, int$, 2024): Belarus as % of Poland, % per annum, projections

Source: Own calculations based on WB LTGM Model (Loayza & Pennings, 2022) and World Development Indicators Database.

The Political Economy of Stagnation and a Likely Turning Point

A return to stagnation will inevitably generate new social effects. The political economy literature documents a wide range of consequences associated with prolonged stagnation in income and economic performance. For example, persistent negative economic patterns are often associated with political anomalies such as polarization and households’ increased openness to political experimentation – such as voting for non-traditional/extremist parties as well as other forms of political backlash (Funke et al., 2016; Rodrik, 2018). These effects are largely driven by shifts in the political preferences of the middle class, which are more sensitive to relative decline and loss of social status than to absolute income levels (Gidron & Hall, 2017). Stagnation can also reduce the likelihood of gradual institutional reform while increasing the risk of abrupt political shifts (Acemoglu & Robinson, 2006; Guriev & Treisman, 2022). Which combination of these effects ultimately materializes, and in what sequence, is highly context-dependent.

As early as 2026, Belarusian households are likely to begin feeling the constraints to economic growth in their incomes. During 2022–2025, real wages and incomes grew much faster than the economy as a whole: by 2025, GDP was roughly 5% higher than in the pre-war, pre-sanctions year of 2021, while average real wages rose by approximately 37%. This huge gap was driven by labor supply shortages amplified by adverse demographic trends and mass emigration. Much of the adjustment burden was absorbed by a deterioration in corporate sector financial health. By 2026, the corporate sector will have limited capacity to continue sustaining such a divergence between economic growth and labor costs, while overall growth will slow. Consequently, already in 2026, income growth and consumer optimism are likely to weaken. As the economy settles into stagnation, this pattern is expected to intensify.

Exhausted income growth and declining consumer optimism, coupled with an increasingly tangible sense of relative impoverishment compared to Western neighbors, will almost certainly alter the social climate and household preferences in Belarus. But in what direction? And which political anomalies are most likely under Belarusian conditions?

An obvious analogy is the period of 2012–2020. Economic stagnation during that time generated public demand for expanded economic and political freedoms, culminating in the attempted democratic revolution of 2020. The internal state of Belarusian society and its prevailing attitudes (Chatham House, 2024) support such an analogy for future perspective. However, that period was characterized by fundamentally different domestic and external conditions. Domestically, policy was framed around gradual quasi-liberalization across social spheres. In foreign policy, authorities pursued a ‘multi-vector’ strategy, seeking to balance relations with several external partners. Economically, the state refrained from encroaching on the private sector’s autonomy and occasionally even created incentives for its development, alongside strengthening macroeconomic policy frameworks. Today, the situation across all these dimensions is almost the exact opposite. The Belarusian authorities have eliminated virtually all space for civic activity (Center for New Ideas, 2025), isolated the country from the developed world, and chosen total dependence on Russia (Kruk, 2024) as the lesser evil. While the private sector remains significant in scale (BEROC, 2025), its dependence on and subordination to political authorities has increased substantially.

The Belarusian case is too complex and context-specific to confidently identify a single dominant scenario. What can be stated with high probability is that the current political-economic status quo predetermines the search for a new steady state. Economic stagnation will make the environment more malleable and prone to change. Moreover, aware of this, key actors are likely to increasingly attempt to shape developments preemptively in order to strengthen their positions. From this perspective, there is a high likelihood that Belarus will pass through a new turning point in the foreseeable future. The key strategic question is which development trajectory will prevail afterward.

Policy Implications for the Future

In the tradition of modern political economy, a development trajectory depends on the balance of interests among key actors and the behavioral patterns they generate. From this view, following a new turning point, the most realistic scenarios for Belarus involve a continued drift toward deeper dependence on Russia. The already intensified de facto dependence on Russia (Kruk, 2024) strengthens actors whose interests align with such a trajectory. The interests of the Belarusian and Russian political regimes, as well as those of a broad range of Belarusian businesses, are largely tied to Russia. Society, whose dissatisfaction is likely to grow amid stagnation, has a limited set of instruments to influence outcomes. Those segments of society that oppose this drift may simply be ignored. Moreover, in the current environment—marked by modern authoritarian tools such as propaganda and manipulation (Guriev & Treisman, 2022) and reinforced by large-scale repression (Center for New Ideas, 2025)—there are signs that the range of publicly expressed demands in Belarusian society is narrowing (Chatham House, 2025). Taken together, this suggests a strong path-dependence dynamic in which stagnation is likely to deepen Belarus’s entrenchment within Russia’s orbit of influence. Within this paradigm, the only way to influence Belarus’s future development trajectory today is to preemptively shift the spectrum of interests. The desired strategic direction would be to constrain Russia’s capacity to provide patronage to Belarusian interest groups, while simultaneously strengthening Belarus’s institutional capacity as a country, rather than as the property of the current political regime.

Rodrik (2014) highlights a key shortcoming of contemporary political economy models: insufficient attention to ideas. In that context, ideas refer to actors’ perceptions of (i) their optimization specifications, (ii) how the external environment functions, and (iii) which instruments are at their disposal. Standard political economy approaches tend to assign actors a fixed, predefined set of such perceptions. In reality, however, this set is contextual, shaped by numerous factors, and subject to change.

This insight complements the desired strategic shift outlined above. Escaping the emerging political path will require new ideas – a new mental map through which actors can reinterpret their interests. At present, this ideation space, at least for actors within Belarus, is almost entirely monopolized by the concept of development within Russia’s orbit.

Efforts to distance Belarus from Russia (at least to some extent) and, more importantly, to construct a new mental map can already be undertaken today. Their primary temporal reference point, however, is the future turning point. The work by Bushilo et al. (2025) can be viewed as an example of translating these principles into practical policy terms today.

It argues for a calibrated adjustment of the international community’s approach toward Belarus within clearly defined limits, while fully acknowledging the Lukashenka regime’s complicity in Russia’s aggression against Ukraine. Central to this approach is a distinction between the regime and the country of Belarus itself—a distinction that remains analytically and strategically relevant.

This perspective has at times been mischaracterized as an effort to normalize relations with the Belarusian regime. However, the approach does not question the security rationale of sanctions or the responsibility of the regime; rather, it situates them within a broader strategic framework that seeks to avoid conflating pressure on the regime with the long-term prospects of Belarusian statehood.

Above all, it is about shaping a new strategic position, developing new ideas, and redefining the mental map regarding Belarus. Beyond the regime, it is important to recognize something more fundamental: the country of Belarus itself. A country whose future is not predetermined, and which retains the potential to alter its development trajectory beyond the lifespan of the current political regime. This is not about an immediate shift in actors’ preferences, but about reducing the rigidity of the dominant path dependence by expanding the set of strategies perceived as feasible, above all in the long-term perspective following a turning point. For international actors who recognize this potential and are interested in its realization, preventive action is already warranted today.

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Russia’s New Strategy in Africa: Big Ambitions, Limited Gains

Posted on January 19, 2026 | Policy Brief

Russia’s renewed engagement with Africa has expanded rapidly since 2022, as Moscow seeks to counterbalance its growing international isolation. Drawing on trade, diplomatic, and UN voting data, this brief finds that while Russia has intensified relations with a handful of African states, the overall involvement remains limited in scope and depth. Economic ties are concentrated in fragile and politically isolated countries, while indicators of political alignment, such as UN General Assembly voting, suggest declining rather than increasing support. Russia’s new strategy may yield short-term geopolitical leverage but shows little sign of delivering durable economic or political gains.

Since the introduction of Western sanctions in 2014, and especially following its full-scale invasion of Ukraine in 2022, Russia has intensified its geopolitical and economic engagement across Africa. A previous brief (Berlin, 2024) outlined the main areas of Russian activity and the strategic objectives behind this renewed focus. As discussed there, Russia’s approach stands in sharp contrast to the longer-term strategies of both traditional Western partners and newer actors such as China. Rather than pursuing sustained investment or development-oriented cooperation, Moscow has adopted a realist and opportunistic stance, prioritizing short-term gains while paying little attention to potential side effects such as heightened instability and conflict. This brief examines whether this strategy is yielding tangible results for Russia; specifically, whether it has succeeded in strengthening ties with valuable new partners on the African continent and securing broader diplomatic legitimacy.

Uneven Economic Footprint

Trade statistics show a modest expansion of Russia–Africa trade since 2022, with growth concentrated among a few countries. Egypt shows the strongest increase in its share of Russia’s exports, while other countries with noticeable gains include Ethiopia, Tanzania, Uganda, and Madagascar. Many of these states are resource-rich, supplying Russia with minerals and agricultural goods, ranging from citrus, olives, and cocoa to gold, diamonds, and uranium. Some are former French colonies that harbor various degrees of anti-French or anti-colonial sentiment and, except for Egypt, maintain a degree of distance from Western trade and aid networks. This pattern suggests that Russia’s growing import links are concentrated among commodity-exporting and geopolitically flexible countries, reflecting a pragmatic effort to diversify supply sources rather than the emergence of deep economic partnerships.

Figure 1. Average change in export share to Russia, 2022-2024 vs 2019-2021.

Source: Mirrored trade data from CORISK.The countries showing the strongest increases in imports from Russia since 2022 include Libya in the north; Côte d’Ivoire, Ghana, and the Republic of the Congo in the west; and Tanzania, Uganda, Kenya, and Zimbabwe in the east and south. Most of these economies are net-importers of fuel, fertiliser, and grain. In the immediate aftermath of the full-scale invasion, Russia appears to have sought to gain market advantage over Ukrainian exports (and did so in part by capitalising on the Ukrainian port blockade). Several countries have also entered into cooperation in nuclear technology. These are all sectors in which Russia has for a while actively sought to expand its market presence. Arms sales had also been among Russia’s most profitable exports to the continent, until the escalation of the war in Ukraine tied up most of its capacity. Nevertheless, the overall volume of trade with Russia remains modest compared with Africa’s exchanges with other major partners.

Figure 2. Average change in import share from Russia, 2022-2024 vs 2019-2021.

Source: Mirrored trade data from CORISK.

Few of Africa’s most dynamic economies, those experiencing sustained growth and deeper integration into global markets, feature prominently in this trend. Only Ethiopia, Tanzania, and, to some extent, Kenya stand out as moderately growing economies with notable trade expansion toward Russia. This pattern could indicate that Russia’s engagement is driven more by short-term political expediency than by prospects for durable economic cooperation. At the same time, it may also reflect a reactive strategy, with Russia focusing on partners that remain accessible, while wealthier and more stable countries have limited need or willingness to risk established ties with Western markets.

Politics Over Partnership

Diplomatic data reveal a similar pattern. Between 2022 and 2023, Moscow’s state visits to Africa focused heavily on slower-growing or politically isolated countries, including Mali and Sudan. Only Egypt and Ethiopia, both larger economies with diversified external relations, received higher-profile visits and strategic agreements. Participation in the 2023 Russia–Africa Summit in St Petersburg, although broad, with 49 of 54 African countries represented, was lower than at the inaugural summit in Sochi in 2019, with only 17 heads of state compared to 43 in Sochi. Further, these came predominantly from slower-growing or politically isolated countries, including Mali, Burkina Faso, the Central African Republic, the Republic of the Congo, Eritrea, Libya, and Zimbabwe. While larger economies such as Egypt, South Africa, and Senegal also participated at a high level, the overall pattern suggests once more that Russia’s recent outreach has concentrated on politically receptive or less globally integrated states, reflecting both the reluctance of more dynamic economies to risk established ties with Western partners and Moscow’s limited room for maneuver.

In turn, Russia’s military cooperation agreements with African states have increased markedly in recent years. Documented cases include, again, many of the countries already mentioned above, such as the Central African Republic, Mali, Libya, Sudan, Burkina Faso, and Niger.

The combination of arms deals, Wagner-linked security arrangements, and elite-level political support reflects a transactional approach, where immediate influence outweighs sustainable cooperation.

UNGA voting patterns

If Russia’s growing presence were translating into stronger political alignment, one way this would be visible would be in international voting patterns. Yet UN General Assembly data indicate the opposite trend. While several African countries abstained, rather than siding against Russia on the three major resolutions on Ukraine, which has concerned many observers, in general, the average agreement rate of African countries with Russia, historically around 75–80 percent, has fallen to its lowest level since the 1970s.

Figure 3. Average agreement with Russia/USSR in UN resolutions over time

Source: Bailey et al., 2017

 

Figure 4. Distribution of agreement with Russia/USSR in UN resolutions over time

Source: Bailey et al., 2017. Lighter shades from blue to red to yellow represent more recent voting distributions.

The distribution of votes has become increasingly polarized, with more countries distancing themselves or adopting neutral positions. These patterns suggest that Russia’s efforts to leverage security and diplomatic engagement into broader political loyalty have met limited success. Despite increased activity, Russia’s influence appears confined to a narrow set of partners rather than expanding across the continent.

The Battle Over Hearts and Minds

Foreign presence, whether in the form of military, economic, or diplomatic engagement, can shape public attitudes in complex ways. During the Cold War, for example, development cooperation to Africa was widely used as a tool to project ideological influence and promote alternative institutional models, values, and norms. As the foreign aid paradigm came under critical scrutiny from the 1980s onward, the question of how aid affects attitudes toward donors and development models has become increasingly salient (Andrabi and Das, 2005).

The impact of foreign actors on local perceptions has been explored across various settings. A substantial literature has examined the United States and, to some extent, the USSR as two of the most prominent power actors in the international arena, spanning foreign aid, economic and diplomatic relations, and military involvement (Allen et al., 2020; Vine, 2015). Similarly, Chinese investment and lending have gained popularity in many countries but have also been linked to increased corruption and weakened governance in some contexts (Isaksson & Kotsadam, 2018a, 2018b).

In fragile or politically unstable regions, especially those marked by weak state control, violent conflict, or active competition for power among domestic or international actors, public opinion is particularly vulnerable to external influence. In such contexts, and particularly where Russia is present, disinformation campaigns, anti-Western narratives, and appeals to historical grievances can play a significant role in shaping attitudes and perceptions. Russian propaganda efforts are often focused on delegitimizing Western actors by invoking anti-colonial rhetoric and promoting authoritarian, revisionist alternatives (Lindén, 2023; Akinola & Ogunnubi, 2021). Indeed, information influence remains one of the domains where Russia can achieve the greatest impact at minimal cost. While resource constraints are beginning to limit Moscow’s ability to “buy” influence through trade incentives, arms deals, and other forms of economic cooperation, manipulating audiences on platforms such as X or Facebook through coordinated networks of bots remains inexpensive and effective. A recent study by Cedar reports that RT France (formerly Russia Today) has expanded its following on X by 80 percent and on Facebook by 35 percent since 2022. Ukraine’s military intelligence (HUR) notes that in 2025 RT also began translating content into Portuguese to reach audiences in Mozambique and Angola, and plans to launch programming in Amharic to target viewers in Ethiopia by the end of the year.

Western organizations must do a better job at communicating the benefits of their engagement and the values behind it. In regions saturated with Russian media messaging, proactively engaging local narratives by highlighting successful projects, promoting transparency, and countering misinformation is key to maintaining public goodwill.

Figure 5. Share of African audiences increased as RT’s access in Europe was restricted

Source: Cedar.

Conclusion

Russia’s engagement in Africa is driven less by economic partnership and more by opportunistic, short-term goals: access to strategic resources, military presence, and symbolic legitimacy. While these ties may help Moscow navigate temporary diplomatic isolation, they do not appear to generate lasting political or economic gains for Russia, for the time being.

A pressing question is whether they impact development outcomes for African counterparts, and in what direction. Ongoing work within the FREE NETWORK is now using geolocated data to identify how Russian and Wagner-linked activity shapes donor engagement, local development, and public sentiment across affected regions (see preliminary results in Berlin and Lvovskyi, 2025). The analysis is expected to provide a clearer assessment of whether Russia’s outreach in Africa delivers tangible influence or remains largely symbolic.

References

  • Akinola, Akinlolu E., och Olusola Ogunnubi. ”Russo-African Relations and Electoral Democracy: Assessing the Implications of Russia’s Renewed Interest for Africa”. African Security Review, 03 juli 2021. https://www.tandfonline.com/doi/full/10.1080/10246029.2021.1956982
  • Allen, Michael A., Michael E. Flynn, Carla Martinez Machain, och Andrew Stravers. ”Outside the Wire: U.S. Military Deployments and Public Opinion in Host States”. American Political Science Review 114, nr 2 (may 2020): 326–41. https://doi.org/10.1017/S0003055419000868.
  • Andrabi, Tahir, Jishnu Das. “In aid we trust: Hearts and minds and the Pakistan earthquake of 2005″. Review of Economics and Statistics, 99 (3), (2017) pp. 371 – 386
  • Bailey, Michael A., Anton Strezhnev, and Erik Voeten. “Estimating dynamic state preferences from United Nations voting data.”Journal of Conflict Resolution 61.2 (2017): 430-456.
  • Berlin, Maria P., 2024. “Russia in Africa: What the Literature Reveals and Why It Matters”, FREE Policy Brief.
  • Berlin, Maria P., and Lev Lvovskyi 2025. “Russia’s Involvement on the African Continent and its Consequences for Development: The Aid Channel”, SITE Working Paper No 64.
  • Isaksson, Ann-Sofie, och Andreas Kotsadam. ”Chinese aid and local corruption”. Journal of Public Economics 159 (2018a): 146–59. https://doi.org/10.1016/j.jpubeco.2018.01.002.
  • Lindén, Karolina. ”Russia’s Relations with Africa: Small, Military-Oriented and with Destabilising Effects”, 2023.
  • Vine, David. 2015. Base Nation: How U.S. Military Bases Abroad Harm America and the World. New York: Metropolitan Books/ Henry Holt.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Development Day 2025: Ukraine’s and Moldova’s Path Towards EU Membership

Posted on January 12, 2026 | Policy Brief

Speaker presenting at SITE 2025 Development Day conference on EU accession Ukraine Moldova, highlighting Ukraine’s and Moldova’s path toward EU membership.

The European Union’s enlargement policy has re-emerged as a central geopolitical instrument in response to Russia’s war against Ukraine and sustained destabilization efforts in its neighbourhood. For Ukraine and Moldova, EU accession is no longer a distant aspiration, but an existential strategic choice tied to security, economic development, and democratic survival. At this year’s SITE Development Day, policymakers, researchers, and practitioners gathered to take stock of where the two countries stand on their accession paths, which challenges risk undermining progress, and what role the EU and international partners can play in sustaining momentum. This policy brief synthesizes key insights from the conference discussions, focusing on three interlinked dimensions of accession: economic preconditions and foreign financing, democratic resilience under hybrid threats, and human capital development.

Introduction

The EU accession process continues to enjoy strong political and societal support in both Ukraine and Moldova, despite the profound challenges each country faces. Opening the conference, Dag Hartelius, State Secretary for Foreign Affairs of Sweden, emphasized that both countries have demonstrated sustained commitment to European integration, while underlining the need for stable, reliable, and predictable engagement from European partners. In Ukraine, Russia’s full-scale invasion has consolidated a broad societal consensus around a European future, with support for EU accession remaining high despite the immense economic and human costs of war. Moldova, meanwhile, has reaffirmed its European course through the election of a strong pro-EU parliamentary majority, even as it remains exposed to significant geopolitical pressure, as highlighted by Carolina Perebinos, State Secretary at the Ministry of Foreign Affairs of Moldova.

Yet, speakers stressed that political support should not be taken for granted. As noted by Vadym Halaichuk, First Deputy Chair of the Committee on Ukraine’s Integration into the EU of the Verkhovna Rada, prolonged delays, blocked negotiations, or unclear signals from the EU risk creating space for Eurosceptic narratives, particularly as wartime economic hardship persists in Ukraine.

Participants mentioned the risk of a “Balkan trap,” where candidate countries remain in prolonged negotiations despite credible reform progress. For Ukraine and Moldova, time is a critical factor.

Economic Outlook and Foreign Aid

Economic resilience is a central pillar of sustained support for EU accession. Ukraine’s economy has been recovering since the initial collapse in 2022, but the recovery remains slow and uneven across sectors. Wartime destruction, disrupted supply chains, labor shortages due to large-scale displacement, and rising defense needs continue to constrain growth. As discussed at the conference, Ukraine requires predictable external support to maintain macroeconomic stability and finance reconstruction.

In Moldova, decades of low growth, repeated external shocks, and adverse demographic trends, including population decline and ageing, have left the economy vulnerable. While macroeconomic stability has improved and inflation has fallen to historically low levels, productivity remains low and the economy insufficiently diversified, underscoring the need for greater access to capital and investment opportunities. At the same time, business sentiment has improved, with recent survey evidence (Partnerships for New Economy, 2025) suggesting that most firms believe the country is moving in the right direction and that the business community places significant importance on EU integration.

The economies of Ukraine and Moldova remain critically dependent on foreign support, but there is a need to adapt to a changing landscape for development cooperation. Potential reductions in traditional official development assistance, particularly from major bilateral donors, increase the importance of mobilising private capital, diaspora resources, and blended finance instruments. However, private investors continue to perceive Ukraine and Moldova as high-risk environments, often overestimating political and sovereign risk relative to actual default rates and recovery outcomes. Expanding guarantees and de-risking instruments in the form of EU grants for public sector projects and providing technical assistance to develop bankable projects are critical to narrowing this perception gap. Across both cases, conference participants stressed that EU accession is perceived not only as a political anchor but also as a central mechanism for addressing long-standing economic constraints.

Democratic Resilience and Hybrid Threats

A defining feature of both accession processes is the persistent pressure from Russian hybrid warfare. Moldova’s recent elections illustrated the breadth of these tactics, ranging from vote-buying schemes and disinformation to energy manipulation and attempts to overwhelm law enforcement institutions. Ukraine faces similar challenges under more extreme conditions, as democratic governance continues under martial law and constant security threats.

While corruption remains a serious concern, participants emphasized that institutions have been strengthened rather than collapsed despite the challenging circumstances. In Ukraine, anti-corruption agencies continue to function, and political scandals have not displaced the broader reform agenda or public support for European integration. Moldova’s experience demonstrates that coordinated institutional cooperation with European partners can significantly enhance the state’s ability to counter hybrid interference.

Crucially, supporting democratic resilience in Ukraine and Moldova is a core European interest, with direct implications for EU security, democratic stability, and the integrity of the enlargement process itself.

Human Capital Development

Investments in human capital are critical for long-term growth and development, yet brain drain is a major concern in both Ukraine and Moldova. Survey evidence indicates that many students are choosing to study abroad, driven by a combination of security concerns, education quality, and economic factors (see Vaskovska, 2025). At the same time, many students express willingness to return, with EU accession perceived as a key condition for long-term stability and opportunity.

Strengthening demand for skills—through private-sector involvement and public-sector capacity building—was seen as essential to raising returns to local education. Moreover, speakers stressed the importance of treating the diaspora as an asset rather than a loss, and supporting targeted mobility schemes, professional networks, and research and teaching initiatives that facilitate knowledge transfer. Comparative reflections on Poland’s accession underscored that human capital and public infrastructure investments can start a path to sustained convergence even before formal membership.

Conclusion

Discussions at the conference underscored that Ukraine and Moldova have demonstrated a high degree of political commitment and societal support for EU accession under exceptionally challenging conditions. At the same time, the sustainability of this support depends on the credibility, pace, and predictability of the accession process. Prolonged uncertainty, blocked negotiations, or reduced predictability of foreign assistance risk creating space for Eurosceptic narratives.

Both countries face significant structural economic constraints and heightened financing needs, while private investment remains constrained by elevated risk perceptions. Addressing these challenges requires not only continued macroeconomic and financial support but also targeted assistance to develop bankable investment opportunities and reduce perceived risks. Effective implementation of reforms—particularly at the local level—and efforts to retain and mobilise human capital depend on sustained institutional cooperation, strengthened local capacity, and a visible European presence on the ground.

For the EU, supporting Ukraine and Moldova is of strategic self-interest. As emphasized throughout the conference, integration is not merely an enlargement decision — it is a long-term investment in Europe’s economic stability, democratic resilience, and security.

References

List of Participants

  • Torbjörn Becker, Director of SITE
  • Raj M. Desai, Professor of International Development at Georgetown University
  • Stefan Falk, Director, Swedfund Project Accelerator
  • Kata Fredheim, Executive Vice President of Partnerships and Strategy, SSE Riga
  • Vadym Halaichuk, First Deputy Chair of the Committee on Ukraine’s Integration into the EU of the Verkhovna Rada of Ukraine
  • Dag Hartelius, State Secretary for Foreign Affairs Anders Olofsgård, Deputy Director of SITE
  • Klara Lindström, Analyst at the Stockholm Centre for Eastern European Studies (SCEEUS)
  • Michal Myck, Director at CenEA, Szczecin
  • Anders Olofsgård, Deputy Director of SITE
  • Carolina Perebinos, State Secretary at the Ministry of Foreign Affairs of Moldova
  • Dumitru Pintea, Expert at Partnerships for New Economy, Chisinau
  • Rustam Romaniuc, Associate Professor at Montpellier Business School
  • Nataliia Shapoval, Chairman of KSE Institute
  • Tobias Thyberg, Deputy Director General, Ministry for Foreign Affairs
  • Viorel Ursu, Moldovan Ambassador to Sweden
  • Anhelina Vaskovska, International Relations Specialist

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Strengthening Human Capital: How Ukraine and Moldova Can Retain and Reconnect Their Students

Posted on December 22, 2025 | Policy Brief

As more young people from Ukraine and Moldova choose to study abroad, the question of whether internationally educated youth return home has significant implications for demographic sustainability and economic growth. This policy brief presents findings from a survey of young people from Ukraine and Moldova. It outlines their motivations and considerations when deciding whether to study in their home countries or abroad, as well as what it would take for states to transform potential “brain drain” into “brain gain”. The survey data reveal a generation of young people facing constraints and uncertainty, yet still willing to invest in their societies. The analysis highlights a dual task facing both states: They need to offer high-quality education for students who choose to study domestically, while also maintaining meaningful ties with students and graduates educated abroad. Meeting these challenges means contributing to national resilience and human capital development.

Introduction

Across Ukraine and Moldova, an increasing number of young people are choosing to pursue their studies abroad in search of high-quality education, international experiences, and stronger career prospects. The challenge for the two states is to encourage the return of the internationally educated youth to halt the loss of much-needed human capital. Two countries already face labour shortages and ageing populations. One-way student emigration risks weakening their innovation potential and slowing economic development, just as EU integration efforts intensify. Yet, with the right policies, this mobility can be turned from a “brain drain” into a “brain gain”.

This policy brief addresses two questions. First, how do individual, structural, political, and security-related factors shape the decisions of young people from Ukraine and Moldova to study at home or abroad? And second, under what conditions are students studying abroad willing to return, and what would it take for states to transform potential “brain drain” into “brain gain”?

To answer these questions, the analysis draws on a survey of young people from Ukraine and Moldova who studied domestically and/or abroad. The survey, which included multiple-choice and open-ended questions, collected responses from 118 individuals originally from either country (N = 236). These findings, complemented by several in-depth interviews with students and academics (conducted separately from the survey), provide insight into how young people from Ukraine and Moldova chose their study destination countries and how their states can better support and engage them at home and abroad.

Ukraine: Educational Choices and Emigration Under Wartime Conditions

Background: By October 2025, Russian attacks had damaged or destroyed 38% of Ukraine’s university facilities (Mykhailova, 2025). Despite the war, universities continue to expand student opportunities, strengthen institutions, and align with EU standards. To mitigate brain drain and performance risks, they draw on government, private-sector, and international support. Participation in Erasmus+, European Universities Alliances, and Horizon Europe helps build institutional capacity and sustain research funding (ERUA, 2025; European Commission, 2024).

In almost four years of full-scale war, the young generation in Ukraine had to adapt to new realities, where war became a backdrop to their formative years. For many, student life now means managing a “war-life balance”: attending classes in shelters, studying through power outages, fundraising for their friends and lecturers in the armed forces, and helping clean campuses after nighttime attacks.

Following the Russian invasion in 2022, the number of Ukrainian students enrolled in Western universities (EU, UK, USA, Canada) increased by 47% in the 2022/2023 academic year compared to the previous one, with Poland being the country with the largest share of Ukrainian students, accounting for 40% of the 115,000 Ukrainian students enrolled in Western higher education institutions in 2023/2024 (Stadnyi, 2025). This number is likely to rise further, given that 350,990 Ukrainian refugees aged 14–17 were living in Europe in September 2025 (Eurostat, 2025).

Survey responses: Students who chose to study in Ukraine highlighted the balance of education quality and affordability, as well as the convenience of staying close to family. Many also felt a strong patriotic commitment to contributing to Ukraine’s future and believed their chosen fields offered good opportunities at home.

Interviewees who had studied both in Ukraine and, at another stage of their education, abroad, noted that international experience broadened their expertise. They valued mobility programmes, double degrees, multicultural cohorts, and Erasmus exchanges. When reflecting on what could be improved in Ukrainian higher education, students prioritised more student-centred and practice-oriented teaching, such as interactive methods, discussion-based seminars, and case-based learning. They stressed the need for better access to international research databases, electronic libraries, and up-to-date literature, which remains limited in many universities. Interviewees also called for stronger career centres, internship programmes, company-based thesis projects, and mentorship.

More broadly, respondents argued that improving Ukrainian higher education requires increased investment in research, modernised infrastructure, deeper links with the private sector, and a stronger emphasis on critical thinking, analytical skills, and interdisciplinarity.

Safety has become one of the key determinants in the educational choices of Ukrainian adolescents, as parents encourage their children to seek safety abroad. However, a decisive factor for student migration is development and opportunities, rather than safety, according to the conducted survey (Figure 1). This finding is also consistent with the Index of the Future: Professional Expectations and Development of Adolescents in Ukraine (Shymanskyi et al., 2025, p.16).

Figure 1. Importance of different factors for Ukrainian students who chose to study abroad

Source: Primary survey data collected for this policy brief.

Speaking about the conditions under which they would be willing to return, respondents mentioned broader structural factors, including security and better career prospects in Ukraine after graduation (Figure 2).

Figure 2. Long-term return intentions of Ukrainian students studying abroad

Source: Primary survey data collected for this policy brief.

For many, Ukraine’s accession to the EU would signal long-term stability and opportunity (Figure 3). One interviewee described their participation in the Create Ukraine initiative, which brings internationally trained Ukrainians to work in government advisory teams on twelve-month placements. This example illustrates how targeted return schemes can channel international expertise into the public sector.

Figure 3. Perceptions of how Ukraine’s potential EU accession would affect opportunities for young people

Source: Primary survey data collected for this policy brief.

Student Mobility in Moldova

Background. Moldova faces an acute challenge of emigration, which results in a shrinking labour force, demographic imbalance, and growing pressure on the country’s social and economic systems. Emigration also affects the education sector, as universities operate with shrinking student cohorts and a shortage of qualified staff. While over 60,000 students are enrolled in 16 higher education institutions in the Republic of Moldova, approximately 14,000 Moldovan students pursue their education in the EU, and four out of five of them are in Romania (Munteanu, 2024; Moldpres, 2025). Economic challenges drive the emigration of young people, who leave in search of more stable career prospects and higher wages (Całus, 2025).

Moldova undertakes a variety of education reforms aimed at reducing incentives for students to leave in search of better-quality studies. Recent measures include simplifying the recognition of foreign degrees, increasing scholarships, expanding dual-education programmes, and launching a national online admissions platform (Eurydice, 2025). EU support reinforces these efforts by modernising university governance, improving labour-market relevance, expanding international cooperation, and strengthening research and innovation (Council of Europe, 2025).

Over the past decade, Moldova has also expanded its engagement with the diaspora, particularly in higher education, to promote knowledge exchange and professional networks (Baltag, Bostan & Plamadeala, 2023). Initiatives include short-term skills-transfer schemes that bring diaspora professionals into Moldovan universities for teaching, mentoring, or consultancy (Bureau for Relations with Diaspora, 2022). These efforts acknowledge that full return migration is unlikely in the near future, but circular mobility and diaspora engagement offer alternatives.

Survey responses. Moldovan students said they chose to study at home because of affordability, accessibility, and the relevance of local programmes. They valued learning in a familiar language and culture, and many hoped to build their futures in Moldova because of family ties and a desire to contribute to the country’s development. However, their educational decisions are shaped by political stability and economic prospects. Those who stay or return form a highly engaged group, actively involved in volunteer work, community projects, and local NGOs. By contrast, students open to leaving cited a weak job market, low wages, and limited opportunities, seeing study or work abroad as offering better prospects.

Students with experience in both systems emphasised the need for more practical learning, internships, company partnerships, real-world projects, and a wider range of electives, as well as stronger career guidance and mobility opportunities. Moldovan students studying abroad said they would be more attracted to domestic universities if curricula were modernised, programmes diversified, and links to the labour market strengthened. Many students abroad remain unsure about returning or plan to stay abroad due to low salaries, limited career prospects, weak institutions, and broader political and economic uncertainty in Moldova (Figure 4).

Figure 4. Long-term return intentions of Moldovan students studying abroad

Source: Primary survey data collected for this policy brief.

Similarly to Ukraine, the young population views the prospect of Moldova’s EU accession as a sign of economic growth, political stability, and improved business and career opportunities, which may motivate them to return and confidently build their future in Moldova. The majority of respondents agree that Moldova’s EU membership will improve opportunities for young people in the country (Figure 5). One of the interviewees shared, “Over time, if we reach that standard of living, I wouldn’t need to look for it elsewhere, because I would have it at home.” EU membership could help reverse the “brain drain,” depending on the pace of domestic economic transformation and the government’s ability to leverage integration to grow high-value industries that retain talent and boost economic growth (Gherasim, 2024).

Figure 5. Perceptions of how Moldova’s potential EU accession would affect opportunities for young people

Source: Primary survey data collected for this policy brief.

Conclusion and Policy Recommendations

In Ukraine, young people make their educational choices amid war and uncertainty. In Moldova, their decisions whether to study domestically or abroad are shaped by structural conditions. But in both countries, youth demonstrate a strong sense of identity, civic commitment, and desire to contribute to their countries’ future. Therefore, supporting these students requires a dual strategy: strengthening domestic higher education systems while maintaining close ties with those who pursue opportunities abroad.

For students who choose to remain in Ukraine or Moldova, the priority is ensuring that higher education institutions provide quality and relevance. At the same time, students abroad should be viewed as a community whose expertise, networks, and global experiences can play an important role in national development. Diaspora-engagement programmes implemented in Moldova are increasingly relevant to Ukraine to help maintain meaningful connections with human capital abroad.

The survey and interview data presented above suggest the following policy recommendations, relevant for both countries and reflecting the needs and expectations of young people.

Key recommendations:

  1. Keep strengthening the quality and relevance of higher education at home:
    1. Modernise curricula and enhance teaching quality by shifting toward methods that prioritise critical thinking and applied skills.
    2. Strengthen institutional capacity through international partnerships and expand the variety of courses and programmes to better match labour-market needs, including the development of joint courses that enhance relevance and quality.
    3. Promote career services through university-employer partnerships, internship programmes, company-based thesis projects and mentorship schemes that help students transition into the labour market.
  2. Maintain meaningful connections with students and young professionals abroad:
    1. Develop diaspora networks connecting students abroad with universities and employers at home.
    2. Promote public sector and private sector programmes that integrate internationally trained young professionals.
    3. Expand short-term exchanges: visiting fellowships, research collaborations, consultancy roles.

Mobilising the potential of young people in Ukraine and Moldova is essential for long-term resilience, EU integration, and economic growth. In turn, investing in education quality, labour market development, and diaspora engagement is a strategic investment in national development and human capital. Ultimately, retaining and reconnecting talent depends on broader security, political, and economic developments, especially progress on EU integration and successful reforms.

Acknowledgement

The author thanks Tatiana Cantarji and Cristina Varzari, students at the State University of Moldova, for their valuable assistance in distributing the online questionnaire among Moldovan students and conducting interviews. The author is also grateful to all survey participants and interviewees for sharing their time and insights.

 

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Entrepreneurial Dynamism, Resilience, and Institutional Constraints in Belarus

Posted on December 15, 2025 | Policy Brief

Belarus entrepreneurial resilience shown through a busy street food market with food trucks and people socializing in an urban industrial setting

Entrepreneurial activity in Belarus has shown notable resilience amid economic and institutional challenges. Drawing on Global Entrepreneurship Monitor (GEM) data from 2019, 2021, and 2024, this policy brief traces key shifts in entrepreneurial attitudes, motivations, and behavior. The findings reveal a transition from necessity-driven to opportunity- and purpose-oriented entrepreneurship, alongside persistent institutional constraints and rising regulatory uncertainty. The brief outlines policy directions to support entrepreneurship as a driver of economic resilience and individual autonomy in Belarus.

Dynamics of Key Indicators

Recent years in Belarus have been marked by institutional fragility and increasing state involvement in the economy. Against this backdrop, the evolution of entrepreneurship – a key attribute of the market economy approach, and one of the drivers of the Belarusian economic performance in 2010-2020 (Beroc, 2024), is of significant interest. Closely connected, and no less interesting, is the question of the dynamics in societal attitudes towards entrepreneurship.

A valuable lens for understanding these changes is offered by the Global Entrepreneurship Monitor (GEM), a research project that provides annual survey data on entrepreneurial activity across countries. This brief uses GEM survey data of Belarusian residents aged 18–64 (n = 2,000), representative by sex, age, and region, to examine the dynamics of entrepreneurial attitudes, motivations, and behavior in recent years.

Table 1 overviews the evolution of entrepreneurial intentions, perceived opportunities, and self-confidence. It compares the results from 2019, 2021, and 2024, with particular attention to developments between 2021 and 2024, revealing how Belarusian entrepreneurs continue to adapt to shifting economic and regulatory conditions.  During this period, perceived opportunities to start a business rose by 21.9 pp, and the perceived ease of starting a business increased by 13.6 pp, signaling an improved entry environment. In line with these shifts, entrepreneurial intentions expanded by 8.6 pp.

The composition of activity also evolved. Within Total Early-stage Entrepreneurial Activity (TEA), the export-oriented share declined by 5.4 pp, potentially reflecting reorientation toward domestic markets and/or heightened external constraints, while the share of ventures employing 6–19 workers increased by 5.1 pp, indicating an expansion of small teams.

Motivational profiles shifted toward purpose- and legacy-driven entrepreneurship: the share citing a desire to “make the world a better place” rose by 10.6 pp and “continue a family tradition” by 5.8 pp, whereas “provide an income source” fell by 18.2 pp. Taken together, these movements suggest a more confident, mission-oriented, and domestically focused entrepreneurial landscape.

Table 1. Key performance indicators

Source: GEM-Belarus, 2019, 2021, and 2024. All values are percentages; changes denote percentage points (pp).

Societal Attitudes Toward Entrepreneurship

GEM assesses societal attitudes among working-age adults across several dimensions:

  • (i) entrepreneurship as a desirable career choice;
  • (ii) perceived social status of successful entrepreneurs; and
  • (iii) perceptions of how public media portray entrepreneurship.

Figure 1 compares individuals involved in entrepreneurial activity and those not involved in 2019, 2021, and 2024.

Among the involved, perceptions have generally trended upward across all three indicators. Views of entrepreneurship as a good career and the social status of successful entrepreneurs both show steady improvement over the past five years, while attitudes toward media portrayal follow a more fluctuating pattern—declining during the pandemic period and recovering substantially by 2024. Among those who were not involved, the pattern is similar but at lower levels.

Overall, attitudes are consistently favorable and trending upward across both groups, with especially notable post-2021 improvements in perceived social status and media portrayal.

Figure 1. Perceptions of entrepreneurship by involvement in entrepreneurship (% of adults aged 18–64)

Source: GEM-Belarus, 2019, 2021, and 2024.

Entrepreneurial Self-Perception Characteristics

The level of entrepreneurial self-perception helps explain why some individuals decide to start a business while others do not. Tracking its evolution over time allows us to assess the dynamics of societal perceptions of hardships associated with an entrepreneurial career, which reflects both subjective attitudes and actual barriers.

Figure 2 presents the indicators assessing the perceived favorability of conditions for starting a business, the perception of having the knowledge, skills, and experience necessary to launch a new venture, and the fear of failure.

Figure 2. Characteristics of entrepreneurial self-perception (% of adults aged 18–64)

Source: GEM-Belarus, 2019, 2021, and 2024.

Perceptions of favorable conditions in Belarus improved markedly from 2019/2021. Among non-entrepreneurs, 44% expect good opportunities in the next six months (24–29% in 2019–2021). Among entrepreneurs, 55% view conditions as favorable (31–39% previously). Still, the share of all adults rating external conditions as favorable remains below half, at 47%.

As expected, perceived capability is higher among entrepreneurs: in 2024, 85% of entrepreneurs and 41% of non-entrepreneurs report sufficient knowledge and skills. Fear of failure is more common among non-entrepreneurs (55%, unchanged from 2021); among entrepreneurs, it fell by 7 pp to 48% in 2024.

Perceptions of Entrepreneurship Across Countries

To better understand the dynamics above, we conduct a comparative analysis of Belarus and its neighboring countries, Ukraine, Latvia, Lithuania, and Poland. It allows us to situate Belarus within a broader regional context and assess whether its entrepreneurial attitudes differ meaningfully from those of neighboring countries.

The comparative analysis of entrepreneurial self-perception demonstrates similar characteristics across these countries (Figure 3): roughly half of their population report having the knowledge, skills, and experience necessary to start a business. At the same time, about half of respondents cite fear of failure as a barrier to starting a business, with the lowest share recorded in Latvia (45%) and the highest in Poland (55%).

Regarding the perceived favorability of conditions for starting a business (perception of opportunities), responses vary across countries: only 36% of the population in Ukraine sees good opportunities for business creation, while in Poland this share reaches 74%. In Belarus, Lithuania, and Latvia, perceptions are similar, with 40–50% of respondents rating the external environment as favorable for business start-up.

Notable cross-country differences also appear in perceptions of successful business stories in the media and in the attractiveness of entrepreneurship as a career choice. Interestingly, the most negative assessments on these two indicators in 2024 were recorded in Poland.

Figure 3. Attitudes toward entrepreneurship in Belarus compared with reference countries

Source: Global GEM report 2024–2025.

Conversely, Belarus shows the highest share of adults who consider entrepreneurship a good career choice (79%), while Lithuania leads in positive assessments of media coverage of entrepreneurship (75%). In all countries, respondents generally agree that entrepreneurs enjoy a high social status and respect. The lowest share of agreement is observed in Lithuania (59%), and the highest in Belarus (78%).

Discussion and Policy Recommеndations

GEM-2024 findings confirm notable resilience of the Belarusian private sector: early-stage entrepreneurship and the pool of potential founders are expanding, and motivations are shifting from necessity toward opportunity and purpose. Entrepreneurs increasingly view business creation as a vehicle for autonomy and social contribution, even under growing institutional and regulatory constraints.

This resilience is by all means a positive development – a strong private sector is vital not only for growth but for long-term sovereignty and democratic progress (Audretsch and Moog, 2022) Entrepreneurship in Belarus functions as a sphere of independent self-realization; supporting it means supporting the most autonomous and productive part of society (Marozau, 2023; Daneyko, Panasevich and Marozau, 2023).

Yet, this dynamism unfolds within a fragile environment where excessive regulation, political risk, and legal uncertainty remain major barriers. The tension between societal resilience and institutional fragility is the defining feature of Belarusian entrepreneurship today, and it may threaten the positive momentum in entrepreneurship tomorrow.

Against this background, practical steps to strengthen resilience can be pursued by different stakeholder groups:

Domestic stakeholders (entrepreneurs and associations)

  • Build and strengthen professional and peer networks—at home and within the diaspora—for mentoring, collaboration, and mutual support.
  • Amplify diverse success stories (including non-tech and small-scale ventures) to normalize entrepreneurial risk-taking and inspire new entrants.

External stakeholders (international organizations, donor agencies, and diaspora networks)

  • Expand access to grants, concessional finance, and investment for Belarusian-led and EU-oriented enterprises.
  • Provide tailored mentoring and training on international markets, sustainable business practices, and ESG standards.
  • Support transnational business education and exchange programs—such as MBA tracks and mobility initiatives—to preserve skills and networks.

In a more enabling institutional context, the state could also play a constructive role in fostering entrepreneurship. Under different political conditions, supportive public policies could help unlock the sector’s potential—for instance, by reducing bureaucratic burdens, ensuring predictable taxation, guaranteeing property rights, and recognizing the private sector as a source of innovation and employment. While such measures remain aspirational in the current environment, articulating them highlights what would be required for entrepreneurship to become a pillar of inclusive and sustainable development.

Without an enabling, predictable environment, Belarus risks losing its entrepreneurial potential. In turn, strengthening and safeguarding the entrepreneurial momentum would lay the groundwork for a future trajectory of greater openness, stability, and self-determination.

References

  • Audretsch, D. B., & Moog, P. (2022). Democracy and entrepreneurship. Entrepreneurship Theory and Practice, 46(2), 368-392.
  • Daneyko, P., Panasevich, V. & Marozau, R. (2023). Evolution of economic values in Belarus (in Russian). BEROC Policy Paper Series, PP no. 118.
  • GEM (2024). Global Entrepreneurship Monitor 2024/2025 Global Report: Entrepreneurship Reality Check. London: GEM.
  • GEM Belarus (2020). Global Entrepreneurship Monitor Report GEM Belarus 2019-2020.
  • GEM Belarus (2022). Global Entrepreneurship Monitor Report GEM Belarus 2021-2022.
  • Marozau, R. (2023). Belarusian business in turbulent times. FREE Policy Brief

Acknowledgements

The study underlying this policy brief was made possible by the generous support of the American people through the United States Agency for International Development (USAID). BEROC acknowledges support by Pyxera Global, whose financial and technical assistance for INNOVATE is part of a USAID-funded activity to support the innovation-based economy and private sector growth in Belarus.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

U.S. Sanctions on Rosneft and Lukoil: Pressure on Moscow, Strains on Europe

Posted on December 8, 2025 | Policy Brief

The U.S. sanctions on two Russian oil giants, Rosneft and Lukoil, came into effect on Nov 21, 2025. These sanctions affect not only companies per se but also their counterparties worldwide under the secondary sanctions clause. For the EU, these sanctions highlight a central trade-off: how to exert real pressure on Russia without fracturing political alignment among EU Member States. This brief discusses the consequences of the sanctions, including their immediate impact on the firms and Russia’s budget, the new tensions exposed in Europe’s energy policy, and the broader lessons for the next generation of EU sanctions tools.

The Threat of Secondary Sanctions

On 22 October 2025, the United States imposed sanctions on Russia’s two largest oil companies, Rosneft and Lukoil. At the time, the measures appeared symbolically significant: they were the first sanctions package introduced by the new Trump administration and were coordinated with the EU’s 19th sanctions package, giving the impression of renewed transatlantic alignment after a long period of fragmentation and uncertainty. The announcement reportedly caught Mr Putin off guard. This reaction highlights how unexpected the measures were, given President Trump’s rhetoric and the geopolitical positioning many observers had anticipated he would adopt.

Although, in retrospect, that initial sense of alignment appears more fragile, given other political developments during November, the sanctions that formally came into effect once the wind-down period ended on 21 November are likely to be consequential, both for the target companies and for the Russian federal budget. To understand this impact, it is essential to look at how U.S. sanctions operate in practice, especially the leverage created by secondary sanctions.

When the U.S. Treasury’s Office of Foreign Assets Control (OFAC) designates an entity for sanctions, it warns that any financial institution dealing with that entity may itself become exposed to penalties. In particular, OFAC notes that foreign banks engaging in significant transactions for a sanctioned person risk the imposition of so-called secondary sanctions. In practical terms, OFAC can bar such a bank from accessing the U.S. financial system if it knowingly carries out, or helps carry out, a transaction for someone under U.S. sanctions. Losing this access means losing the ability to use U.S. dollar accounts and payment channels.

This is precisely why OFAC’s sanctions are so widely feared: almost every dollar transaction in the world ultimately passes through a U.S. correspondent bank. Even two foreign banks trading dollars in Asia or Africa must clear their payments through the United States. If OFAC cuts a bank off from that system, it is effectively locked out of the dollar economy, and in the global economy, losing access to dollars is like losing access to oxygen.

The power of secondary sanctions becomes visible in how different actors react to the risk. Swiss trader Gunvor abruptly withdrew, and later publicly denied, its bid to acquire Lukoil’s international business once the sanctions exposure became apparent. In Bulgaria, the government moved to take control of Lukoil’s Burgas refinery because, once sanctions took effect, counterparties were likely to refuse payments to a sanctioned entity, forcing the refinery to shut down. This temporary state takeover has been tacitly tolerated so far, as it was deemed necessary to maintain Bulgaria’s fuel security. The same logic drove Viktor Orbán to rush to Washington to secure guarantees for Hungary’s fuel supplies, resulting in a one-year exemption from U.S. measures. In short, the threat of secondary sanctions is real and shapes major commercial and political decisions alike.

Economic Implications for the Targets

Given the far-reaching implications of OFAC sanctions, the economic impacts are potentially significant. Following the announcement in October, financial markets reacted immediately. Lukoil’s share price fell by around 9.4 percent, while Rosneft’s declined by approximately 7 percent. This asymmetry reflects the companies’ different exposure profiles. Lukoil, as a more private and internationally exposed firm, is significantly more vulnerable than Rosneft, whose operations are more domestically anchored and politically protected.

The sanctions raise the prospect of forced divestments of Lukoil’s foreign assets, likely at significantly reduced valuations due to the limited pool of potential buyers willing to engage with sanctioned entities. Even when divestment is not formally mandated, the measures can make it effectively impossible for the companies to repatriate dividends from their overseas holdings, as financial intermediaries are unlikely to process payments involving sanctioned actors. This constitutes an immediate loss of income, besides the longer-term loss of strategic presence in Europe.

Figure 1. Map of Lukoil’s foreign assets

Source: Bloomberg. The map includes the headquarters of the international marketing and trading arm, LITASCO SA, based in Geneva.

Operationally, both firms face higher costs and greater frictions. Sanctions increase the risk for suppliers, banks, insurers, and logistics partners, who now must factor in secondary sanctions exposure when doing business with Lukoil or Rosneft. This narrows the pool of potential counterparties and scares away buyers.

These dynamics are already visible in the adjustment patterns of major international buyers of Russian oil, notably India and China. There, the adjustment is expected to be sharper for India than for China. This is because India is more dependent on the dollar, given the rupee’s status, while trade with Russia is not as diversified to allow for barter-like arrangements (as Russia reportedly resorted to with China). Several major Indian refiners reportedly began planning to halt or scale back purchases of Russian crude. However, the grace period allowed India to stock up: according to tracking firm Kpler, India’s Russian oil imports reached 1.855 million barrels per day (bpd) in November, a five-month high, reflecting a rush to secure barrels ahead of the sanctions deadline. But for December, the same sources project a drop to 600,000–650,000 bpd, a three-year low in Russian oil shipments to India.

About 40-45 percent of China’s oil imports from Russia are also affected by these sanctions, and Chinese buyers, especially the smaller independent refiners but even some state-owned ones, are being more careful.

By and large, though, export volumes are unlikely to decline significantly in the near term, given the extensive circumvention networks and practices already in place. Nevertheless, financial effects are increasingly visible, not least due to another effect of the sanctions – buyers being able to extract deeper discounts, further compressing Russia’s earnings. There are already multiple reports of Urals trading at its steepest discount in a year, sometimes several dollars per barrel below Brent. The discount widened from USD11–12/bbl (before Oct 22 sanctions) to USD19–20/bbl by early November, and reportedly as wide as USD20–23.5/bbl by mid-November.

Figure 2. Urals–Brent discount, widening after sanctions.

Source: TradingEconomics.com.

 

According to CREA’s fossil fuel tracker for October 2025, “Russia’s monthly fossil fuel export revenues saw a 4 percent month-on-month decline to EUR 524 million (mn) per day — the lowest they have been since the full-scale invasion of Ukraine.” This corresponds to a 15 percent year-on-year drop in fossil fuel export revenues and resulted in a 26 percent year-on-year drop in tax revenues from oil and gas exports.

Over the medium to long term, these commercial pressures may accumulate and become consequential. Higher operating costs and lower revenues mean that both companies will have less capital available for investment. Because Russia’s upstream sector is both capital-intensive and dominated by Rosneft and Lukoil, with limited scope for independent or foreign producers to expand under current political and sanctions constraints, any sustained under-investment by these two companies is unlikely to be compensated by market reorganization. This raises the risk of faster production declines and a longer-term weakening of the entire industry.

Implications for the Russian State Budget

Lukoil and Rosneft are the two largest taxpayers in Russia, contributing through a broad range of fiscal streams and payments associated with state-owned infrastructure. In Rosneft’s case, where the state holds a majority stake, dividends are also a source of federal revenue. Any reduction in company profitability, therefore, translates directly into lower tax payments and smaller dividends.

Sanctions-driven increases in shipping, insurance, and compliance costs will further compress margins and reduce the tax base. The loss of foreign assets, or their sale at distressed prices, diminishes both current profit tax liabilities and future dividend streams.

Some taxes, such as the mineral extraction tax (MET), are based on production volumes rather than profitability, which reduces the immediate fiscal impact. But as profitability declines, and especially if the sector’s investment levels fall, the medium-term fiscal losses become more substantial as reduced investment ultimately erodes production volumes.

All in all, Rosneft and Lukoil together produce between 40 and 50 percent of the national oil output. Although the share of oil and gas revenues in the federal budget has decreased from the historical 35–40 percent to 25-30 percent, the potential fiscal impact remains substantial. According to Reuters, projected oil revenues for the current month are roughly 35 percent lower than in the same month of 2024, marking the weakest level in two and a half years.

Uneven Burden-sharing in the EU

These sanctions also carry costs for the EU itself. Their impact is felt unevenly across Member States, largely reflecting differences in pre-war dependence on Russian oil and gas. This is why EU sanctions on Russian energy have consistently included exceptions for highly dependent Member States in Central Europe, notably Hungary and Slovakia (and, before, Czechia). The Council explicitly acknowledged these exemptions were justified on the grounds of security of supply and fairness, recognizing that certain countries faced structural reliance on Russian oil and lacked immediate alternatives (Council Decision (EU) 2022/879 and the EU’s 6th package). At the same time, the financial significance of these exemptions for the EU’s pressure on Russia is very limited. According to CREA’s data for October 2025, Hungary purchased EUR 258 million of Russian fossil fuels that month and Slovakia EUR 210 million. This constitutes less than 4% of Russia’s global fossil-fuel export revenues for that month.

However, these exemptions produced asymmetric outcomes within the EU, complicating EU unity. Countries that retained access to Russian crude, typically priced below global benchmarks and substantially cheaper than LNG-based alternatives, effectively enjoyed a cost advantage over Member States that had already diversified or lost access to Russian supplies. They have avoided abrupt supply disruptions but also benefited from lower-cost inputs, while others absorbed higher market prices and the capital expenditure needed to secure alternative supply chains (including LNG terminals, new interconnectors, or upgrades to refineries).

The sanctions on Rosneft, Lukoil, and their EU subsidiaries offer a good example of how uneven the impact of energy measures can be across Member States. Rosneft holds significant shares in three German refineries, together accounting for around 12 percent of Germany’s refining capacity, but these assets have been under German state trusteeship since 2022 — meaning that Rosneft is still the legal owner, yet it no longer controls day-to-day operations. Lukoil, by contrast, directly owns major refineries in Bulgaria (Neftochim Burgas) and Romania (Petrotel Ploiești), and has a large stake in a Dutch refinery. For years, the countries hosting these assets benefited from cheaper Russian crude and gasoline, slower pressure to diversify, and more lenient implementation of EU sanctions.

As sanctions tighten and divestment of Russian-owned assets in Europe becomes unavoidable, these states now face higher prices and costly adjustments. In this sense, the current phase can be seen as a rebalancing act: the advantages these countries once enjoyed are gradually diminishing as their energy prices converge with those of other member states. At the same time, their exposure to supply disruptions may even be increasing, given the lack of earlier investment in diversifying their energy import sources.

But the politics remain contentious. Hungary’s push for renewed derogations and Slovakia’s threat in March 2025 to block EU support for Ukraine unless gas transit via Ukraine is reopened to Slovakia and Western Europe show how differing energy profiles still shape national positions on sanctions.

In the long term, however, solidarity cannot mean accepting the structurally uneven burden-sharing of sanctions costs. EU solidarity principles (reflected in the Treaties, the Clean Energy Package, and crisis-response mechanisms such as the 2022 gas solidarity regulation) imply that Member States should support one another to withstand shocks, not that some should bear permanent disadvantages. As highlighted in the energy-security literature, especially in the work of Le Coq and Paltseva (2009, 2012, 2022, or 2025), solidarity can be viewed as a mutual insurance mechanism that is most effective when tied to interconnection and diversification, enabling states with asymmetric exposure to external energy suppliers to cope with disruptions without undermining collective action.

Following this logic, solidarity should be understood as doing as much as possible to ensure that the Member States most exposed to Russian oil and gas are sufficiently integrated into the EU system—through stronger interconnections, diversified supply routes, and access to alternative sources—so that they can sustain tougher sanctions without requiring permanent derogations. The EU’s challenge, therefore, is to ensure a more even sharing of the sanctions’ burden, preventing any Member State from systematically free-riding by shifting the costs of sanctioning Russia (or other common policies) onto others, while preserving political cohesion.

Conclusion

The analysis of this episode carries important implications for EU policy.

First, it underscores both the strategic potential and the political limits of secondary sanctions as a policy tool. Legally, the EU’s treaties constrain extraterritorial action and anchor the Union in a territorial understanding of jurisdiction; furthermore, this take is consistent with the EU’s long-standing identity as a regulatory—rather than coercive—power. Practically, the Union lacks the federal-level enforcement structures needed to police foreign actors across jurisdictions. Politically, the use of secondary sanctions remains divisive: they raise concerns about infringing third countries’ sovereignty, provoking retaliation against EU trade, constraining diplomatic flexibility, and straining relations with key partners in the Global South. Member States’ exposure to international trade and to specific partners such as China, India, Türkiye, and the Gulf varies widely, making consensus difficult. At the same time, EU firms are deeply embedded in global supply chains, and the euro lacks the dollar’s reach, increasing the risk that aggressive measures, such as secondary sanctions, could accelerate de-euroization.

Within these constraints, the EU has opted for more limited, quasi-extraterritorial tools—most notably the “no-Russia clause”, which requires that EU exporters include a contractual ban on re-exporting their goods to Russia —to approximate the effects of secondary sanctions without formally adopting them. This calibrated approach has so far allowed the Union to signal resolve while limiting geopolitical and economic risks. But as U.S. secondary sanctions increasingly shape global trade patterns in ways that affect the EU, the question of whether this strategy remains sufficient is becoming harder to avoid.

Second, the episode highlights the need to make burden-sharing within common EU policies, including sanctions, more transparent and more equitable. Derogations for highly exposed Member States were justified in the short run on security-of-supply grounds, but their continuation produced persistent asymmetries in costs and benefits across the Union. These disparities have shaped national positions on sanctions, complicated collective decision-making, and, in some cases, been leveraged as political bargaining tools. As sanctions become a more permanent feature of the EU’s external action, clearer mechanisms will be needed to ensure that no Member State can systematically shift the economic or political costs of common measures onto others. This may involve revisiting the design of derogations, considering compensatory financial instruments, or more closely integrating sanctions policy with energy, industrial, and fiscal planning.

Ultimately, the credibility of the EU’s sanctions strategy will depend on its ability to align legal constraints, geopolitical ambition, and fair burden-sharing into a single, coherent framework.

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Humanitarian Demining and Ukraine’s Recovery: Lessons Yet to Learn

Posted on December 1, 2025 | Policy Brief

This policy brief examines how land mine action underpins Ukraine’s reconstruction and economic renewal. It outlines the current scale of contamination and the national humanitarian demining strategy. The brief also reviews international experience from countries around the world, discussing the economic recovery driven by demining and the economic efficiency of mine action. It documents significant variation in direct mine action costs across countries and contexts, complicating the assessment of these costs in the case of Ukraine. The brief also discusses the indirect costs arising from systemic inefficiencies in Ukraine’s demining effort, including fragmented governance, shortages of qualified personnel, outdated standards, and security constraints. It concludes that Ukraine’s success in transforming demining into a catalyst for recovery depends on effective coordination, data-driven planning, gender inclusion, and the adoption of best international practices.

Understanding the Scale and Current Need for Humanitarian Demining in Ukraine

As of mid-2025, approximately 137,000 km² of Ukrainian land remains potentially contaminated by mines and unexploded ordnance (UXO). While this is a reduction from 174,000 km² at the end of 2022, Ukraine remains one of the most mine-contaminated countries in the world (Ministry of Economy of Ukraine, 2023; UDA, 2025).

The problem of demining is multidimensional, encompassing both humanitarian and economic consequences. More than six million people currently live in at-risk areas, and the number of mine incidents has already exceeded one thousand. Without addressing the problem, the number of victims could rise to more than 9,000 by 2030 (Ministry of Economy of Ukraine, 2023). Contamination affects some of the world’s most fertile agricultural regions, as well as energy, transport, and residential zones.

The funding needs are substantial. According to UNDP (2024), Ukraine’s total demining bill could reach USD 34–35 billion, requiring tens of thousands of trained specialists. As of early 2025, Ukraine has more than 4,500 sappers and deminers, but this number remains far below national needs. Experts emphasize that the workforce must increase significantly to ensure the timely clearance of contaminated territories. At present, approximately 87 mine-action operators are active in Ukraine, encompassing government bodies, private companies, humanitarian organizations, and international partners (UN Women Ukraine, 2025).

At the same time, the potential economic benefits of demining are immense. According to the TBI (2024) estimates, Ukraine loses about USD 11.2 billion each year (compared to 2021) due to mine contamination. Frontline regions such as Kharkiv, Mykolaiv, Sumy, and Chernihiv are particularly exposed, experiencing a reduction in exports of USD 8.9 billion and a loss of regional tax revenues of USD 1.1 billion annually.

In addressing the problem, the government has recently adopted a National Mine Action Strategy until 2033, which aims to clear about 80% of the de-occupied territories within 10 years (Ministry of Economy of Ukraine, 2024). However, this ambitious plan faces serious systemic challenges, including the dispersion of power among government agencies, insufficient and inconsistent funding, and delays in public procurement and tender processes (UDA, 2025). Thus, humanitarian demining stands at the crossroads of Ukraine’s security and economic recovery, affecting how quickly the country can restore farmland, rebuild infrastructure, and attract investment. Its success depends on efficient resource use, data-driven planning, and the adoption of proven international practices. The following sections examine global experience and economic efficiency in mine action, as well as the key challenges Ukraine must address to achieve tangible and sustainable recovery.

Evidence and Lessons from Global Experience

The problem of humanitarian demining is widespread globally, affecting dozens of post-conflict states across Africa, Asia, the Middle East, and Europe. Many of these countries, such as Afghanistan, Mozambique, Eritrea, Sudan, Sri Lanka, Bosnia and Herzegovina, and Croatia, have already undergone large-scale clearance operations and provide tangible evidence of how demining drives economic recovery and social stabilization.

In Afghanistan, humanitarian demining produced wide-ranging socio-economic benefits. It vastly improved mobility and access to resources and markets, served as a prerequisite for broader development initiatives, restored agricultural productivity and employment, and positively influenced mental health and community relations by reducing fear, enabling return, and rebuilding trust within affected populations (UNMAS, 2021).

In Mozambique, large-scale railway clearance reopened a key regional trade corridor, creating more than 400 jobs. The operation restored transport connectivity, enabled the renewal of coal exports, and stimulated agricultural and industrial recovery in the surrounding areas (Lundberg, 2006). In Eritrea, humanitarian demining enabled the return of more than 20,000 refugees within a year, which allowed about 29 villages to resume crop cultivation and schooling; casualty rates for both residents and livestock fell to zero, restoring local food security and rural incomes (Lundberg, 2006).

Sudan offers a contrasting case, where political and logistical barriers pushed costs to nearly USD 45 per m² (Bolton, 2008). Despite high costs, the reopened transport corridors and access to markets demonstrated substantial humanitarian and trade benefits, underscoring that elevated expenditure in complex terrains can still deliver strong socio-economic returns.

Post-war European experiences reinforce these findings. In Bosnia and Herzegovina, humanitarian demining has served as a foundation for sustainable socio-economic recovery, enabling the rebuilding of housing and infrastructure, reducing flood risks, restoring agricultural and forest productivity, improving access to water, and ensuring safe mobility essential for trade and community development (GICHD & UNDP, 2022). Similarly, mine clearance in Croatia has been pivotal to national recovery, restoring access to agricultural and forest land, enabling infrastructure and EU-funded development projects, and supporting tourism and investment in previously contaminated regions (Mine Action Review, 2021).

Collectively, these cases demonstrate that the economic dividends of demining are consistent across contexts. Clearing mines enables agricultural revival, facilitates transport and trade, lowers accident-related health costs, and strengthens confidence in governance. However, incomplete data and fragmented decision-making might delay land release and inflate costs.

For Ukraine, where contamination covers more than 137,000 km² of high-value farmland and industrial zones, these global lessons confirm that mine action must be integrated as a central pillar of the reconstruction process.

Measuring the Economic Efficiency of Humanitarian Demining: Indicators and Limitations

The Geneva International Centre for Humanitarian Demining, in its recent report, defines efficiency in demining as “a measure of how economically resources or inputs are converted to results” (GICHD, 2023, p. 6). In humanitarian demining, this means achieving the maximum area of land safely released or the largest number of explosive items cleared using the least possible resources, without compromising safety. Efficiency, however, differs from effectiveness which is defined in the report as “the extent to which the intervention’s objectives were achieved, or are expected to be achieved, taking into account their relative importance” (GICHD, 2023, p.6).

Yet, the quantitative framework developed by GICHD primarily focuses on efficiency indicators, particularly cost-based metrics such as cost per square meter of land released, cost per square meter of land fully cleared, and cost per explosive item found. This narrow focus allows for financial comparison but risks overlooking effectiveness dimensions such as the humanitarian, developmental, and social outcomes of mine clearance.

To operationalize this concept, the GICHD study developed a framework of Key Performance Indicators (KPIs) to measure economic efficiency across 17 mine-affected countries between 2015 and 2019 (GICHD, 2023, pp.14-17). Three indicators are identified as central for assessing the financial efficiency of mine action operations:

  1. Cost per square metre of land released – measuring the overall cost of returning territory to productive use, encompassing land cleared, reduced, and cancelled. A lower value indicates greater cost efficiency in land release and better-targeted survey and clearance operations.
  2. Cost per square metre of land cleared – reflecting the technical cost of full clearance, which is higher due to intensive labour, equipment, and safety requirements.
  3. Cost per explosive item found – linking financial inputs to tangible outputs, i.e., the average expenditure needed to locate and neutralize one explosive ordnance.

These metrics allow analysts and policymakers to assess how funds are transformed into measurable clearance outcomes. However, as GICHD (2023) stresses, they should be used for internal evaluation and planning, not for direct comparison between countries. Differences in contamination types, topography, labour costs, access, and national data systems make cross-country benchmarking misleading. The report explicitly cautions that “no country should be considered as having a ‘good’ or ‘bad’ performance in terms of operational efficiency purely on the basis of the KPI values” (GICHD, 2023, p.21). Even similar indicators can yield different implications depending on whether operations are clearance-driven (activity-based) or survey-driven (decision-based). To illustrate the scale and variation in demining costs globally, Table 1 presents key indicators of humanitarian demining costs as of 30 November 2022.

As shown in Table 1, costs per square meter of released territory range from USD 0.02/m² (Thailand) to USD 5.87/m² (Lebanon), i.e., a 293-fold difference. Similarly, the cost per explosive item ranged from USD 274 (Sri Lanka) to USD 13,450 (Croatia) (Rohozian, 2024). Such disparities illustrate that comparing “price per m²” without context or establishing the “benchmark” in the field is quite problematic.

Table 1. Key indicators of the cost of demining across countries, as of 30 Nov. 2022

State  Cost per square meter of territory released from the local socio-economic system, USD Cost per square meter of territory that has been cleared in the local socio-economic system, USD Cost of a single found explosive item in the local socio-economic system, USD
Angola 0,32 7,88 9042
Afghanistan 0,79 1,48 911
Bosnia and Herzegovina 0,36 19,06 6059
Vietnam 0,28 0,65 500
Western Sahara 0,41 0,51 2183
Zimbabwe 1,89 4,49 289
Iraq 0,81 1,32 4437
Cambodia 0,22 0,37 678
Laos 0,99 0,99 356
Lebanon 5,87 10,65 2204
South Sudan 0,49 4,07 5667
Serbia 1,07 1,96 9757
Sudan 2,89 5,78 457
Tajikistan 1,29 1,98 1721
Thailand 0,02 2,25 281
Croatia 1,03 1,23 13450
Sri Lanka 2,26 3,65 274

Source: Rohozian, 2024.

Moreover, the study acknowledges limitations in data standardisation and completeness. Variations in how organisations record and report costs affect comparability. Aggregated national averages can obscure contextual factors such as contamination density or security conditions. For these reasons, GICHD recommends interpreting efficiency metrics in conjunction with qualitative information, including terrain, contamination type, and labour structure, and always balancing cost-efficiency with safety and effectiveness.

However, drawing on global patterns and Ukraine’s official USD 34–35 billion cost estimate, we can expect Ukraine to fall within the middle range of international demining costs. It will likely be more expensive than low-cost cases in Asian contexts but substantially below the extreme-cost cases, such as Lebanon, due to its terrain, institutional capacity, and ability to scale mechanized clearance.

Challenges in Ukraine’s Humanitarian Demining

In addition to the substantial direct costs of humanitarian demining, it is essential to understand the indirect costs generated by systemic inefficiencies, i.e., costs that arise not from clearance itself, but from delays, duplication, weak coordination, and different shortages.

A review of Ukraine’s current mine-action landscape allows us to identify the main structural challenges that contribute to elevated indirect costs. These include fragmented governance, incomplete and inconsistent data, security-related access constraints, and a shortage of trained personnel.

One of the most pressing challenges is the fragmentation of coordination and governance. Responsibilities remain dispersed across numerous actors, including the Ministry of Defence, the State Emergency Service, the Ministry of Internal Affairs, the Ministry of Economy, the National Mine Action Authority, and over 20 accredited NGOs and private contractors.

According to the UDA (2025), this overlap of mandates and inconsistent prioritisation frameworks frequently results in duplicated surveys and delayed task approvals, reducing efficiency and transparency. At the same time, the idea of consolidating all authority within a single centralised body would risk excessive concentration of power and reduced accountability. A more effective path forward would be to strengthen the existing Mine Action Center’s coordinating role while maintaining clear institutional separation between policymaking and operational implementation, ensuring transparency, competition, and sustained donor confidence.

A persistent shortage of qualified personnel represents one of the most critical challenges to scaling up humanitarian demining in Ukraine. According to UNDP (2025), the country currently employs around 4,500 trained deminers, while full national recovery will require at least 10,000 professionals over the next decade (TBI, 2024). The workforce is under pressure from wartime mobilization, which diverts potential recruits to defense roles, and from a shortage of experienced supervisors and explosive ordnance disposal (EOD) specialists, limiting the number of teams that can safely operate simultaneously. The National Mine Action Strategy for the Period up to 2033 (Ministry of Economy of Ukraine, 2024) further acknowledges that Ukraine’s training system is inadequate for the sector’s needs.

Current state-level training for the profession of “Sapper (demining)” follows military-oriented standards that demand extensive time and resources but offer limited relevance to humanitarian operations. Only ten educational institutions are licensed to train deminers, and only a few conduct active courses. To close this capacity gap, the Strategy calls for expanding domestic training infrastructure, establishing accredited qualification centers, recognizing informal and partial training, and developing new professional standards tailored to humanitarian demining.

Another set of pressing challenges in Ukraine’s humanitarian demining effort concerns data deficits and security limitations. Incomplete and inconsistent mapping of hazardous areas continues to undermine planning and coordination. According to the Ministry of Economy (2023), Ukraine inherited multiple legacy databases using different coordinate systems and lacking harmonized metadata, resulting in duplication and delays in verifying “released” land. The absence of a unified digital mine-action information management system constrains both operational oversight and donor transparency. As Rohozian (2024) observes, such imperfect information leads to “erroneous management decisions” that increase total costs and prolong recovery.

In addition, large areas in the east and south remain off-limits due to ongoing hostilities, unexploded ordnance, and damaged infrastructure. Fluctuating front lines, dense contamination, and logistical barriers raise insurance and hazard-pay costs, shorten fieldwork periods, and cause rapid equipment deterioration.

Thus, addressing these interconnected challenges is essential to accelerate Ukraine’s reconstruction and ensure that mine action effectively supports the safe return of communities, the revival of agricultural production, and the broader recovery of the national economy.

The Role of Women in Humanitarian Demining

The role of women in Ukraine’s humanitarian demining sector deserves special attention, as they have become an integral part of the national workforce serving as deminers, team leaders, and technical-survey dog handlers. Their growing participation reflects both professional competence and the importance of gender-inclusive recovery efforts (UN Women Ukraine, 2025).

However, until 2017, Ukrainian legislation classified demining as a “dangerous profession,” barring women from formal employment in this field (Ministry of Health of Ukraine, 2017). Following sustained advocacy by international organizations, this restriction was lifted, granting women official access to mine-action professions. Since then, the number of women in operational and leadership roles has grown steadily.

Nevertheless, persistent stereotypes suggesting that demining is unsuitable for women have been disproved by practice, as reported by UN Women Ukraine, 2025. In practice, modern safety protocols and technologies such as drones and remotely operated vehicles allow women and men to perform tasks under equal safety conditions.

Following the lifting of the employment ban in 2017, which opened demining professions to women, mine-action organizations began reconsidering how to better meet women’s practical needs in the field. Recognizing that protective gear and uniforms had long been designed for men, many operators are now adapting equipment to fit women’s bodies, enhancing both comfort and operational efficiency.

These findings further demonstrate that gender-inclusive employment contributes to a reconstruction process that benefits all citizens and fosters social recovery based on principles of equity and shared responsibility.

Conclusions

In conclusion, humanitarian demining represents a strategic prerequisite for Ukraine’s reconstruction, food security, and long-term economic recovery. International experience demonstrates that mine clearance delivers substantial socio-economic dividends by restoring access to land, enabling trade, and rebuilding local livelihoods. However, the economic efficiency of mine action cannot be measured through simple cross-country comparisons. Costs per square meter or per explosive item differ widely depending on terrain, contamination density, labor costs, and institutional frameworks. Therefore, efficiency should be evaluated in context, i.e., by how well resources are transformed into measurable recovery outcomes without compromising safety or inclusiveness.

For Ukraine, transforming demining into a genuine driver of recovery requires addressing several domestic challenges. Fragmented governance and overlapping mandates continue to reduce coordination and transparency, while limited training capacity and workforce shortages constrain operational progress. Inconsistent data systems and incomplete mapping impede strategic planning, and security conditions still restrict access to large contaminated areas in the east and south of Ukraine. Overcoming these barriers will require strengthening the coordinating role of the National Mine Action Center and expanding professional education and certification programs.

Equally important, the growing participation of women in mine action deserves special recognition. Since the 2017 reform that lifted employment restrictions, women have become active as deminers, team leaders, and survey specialists, demonstrating both competence and leadership in this traditionally male-dominated field. Promoting gender-balanced participation will strengthen Ukraine’s mine action capacity and align reconstruction with broader principles of equality and social inclusion.

Thus, ensuring that clearance efforts are efficient, transparent, data-driven, and inclusive will determine how effectively Ukraine can restore productive land, rebuild infrastructure, and regain investor confidence.

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.