Location: EU
How polarised is support for Ukraine across Europe?
Russia’s invasion of Ukraine in February 2022 triggered broad public support across Western democracies. Since then, support in the United States has declined and become sharply partisan. In this policy brief, we use Eurobarometer data from 2022 to 2024 to show that while overall support for Ukraine remains high in the European Union, it has declined over time and become more politically polarised. We introduce a polarisation index to compare trends across countries and over time. There is substantial heterogeneity: while support remains close to universal in some countries, such as Sweden, others have seen marked increases in polarisation, with support weakening particularly on the far right. We find that higher inflation is associated with greater polarisation for costly policies, such as sanctions against Russia, but not for humanitarian aid. Finally, we present suggestive evidence that polarisation in support for sanctions may reflect domestic political debate.
From consensus to polarisation?
Russia’s invasion of Ukraine in February 2022 prompted widespread public support for Ukraine on both sides of the Atlantic. According to a PEW survey less than one month after the invasion, only 7% of Americans (9% of Republicans and 5% of Democrats) said the US is providing too much support to Ukraine (PEW, 2022). Two years later, overall support dropped significantly and support for Ukraine became politically polarised: with 47% of Republicans but only 13% of Democrats saying that the US is providing too much support (PEW, 2024).
In this brief, we use microdata from Eurobarometer covering over 185,000 respondents to evaluate whether the same trends are present in the EU. We show that support for Ukraine remained relatively high and stable across Europe from 2022 to 2024. This finding is consistent with other surveys that report resilient support among Europeans despite pessimism about the war’s likely outcome (Krastev and Leonard 2024) and personal costs in terms of inflation (Demertzis et al. 2023). Our brief focuses specifically on political cleavages within countries. We show that policies supporting Ukraine have become increasingly polarising in some countries and evaluate potential drivers of that polarisation.
Support for Ukraine across the political spectrum
Figure 1 shows support for economic sanctions against Russia (Panel A) and humanitarian aid for Ukraine (Panel B) in the EU, by respondents’ self-reported left–right political placement in the Eurobarometer (for details on this measure, see also Lehne and Zhuang, 2023b). Support for Ukraine was high across the political spectrum in the immediate aftermath of the invasion, but declined in the latest Eurobarometer data from October 2024. The sharpest declines occur on the far right, especially for economic sanctions against Russia.
Figure 1A. Support for economic sanctions against Russia
Figure 1B. Support for humanitarian aid to Ukraine
Source: Eurobarometer and authors’ calculations.
This chart shows the mean support for each measure in April 2022 (in blue) and October 2024 (in red) in the EU. Based on binary transformations of Eurobarometer questions on support for each measure; dots show means and bars indicate 95% confidence intervals.
A similar pattern holds for military aid to Ukraine, though the average level of support is lower (not shown). Support for humanitarian aid is uniformly higher and less politically polarising; even among respondents on the very far right, more than three-quarters are in favour.
This overall pattern masks large heterogeneity across countries. Figure 2 shows support for sanctions against Russia in four European countries: Sweden, Poland, Greece and France. In Sweden, support for sanctions is close to universal, broadly uniform across the political spectrum, and has changed little in the two years since the start of the war. Similarly, in Poland, support remains very high but declines in 2024 among respondents on the centre-right. Support varies more with political leaning in countries such as France and Greece. While support for sanctions was relatively high in France in 2022, especially in the centre, it has declined markedly on the right. This pattern is repeated across many other European countries, including Austria, Germany, the Netherlands, and Italy. By contrast, in Greece, support for sanctions was comparatively lower to begin with and declined further over time. In Greece, as in Bulgaria, Cyprus, Czech Republic, Latvia and Slovakia, support is particularly weak on the left.
Figure 2. Political Polarisation in Support for Sanctions across four European countries
2a. Sweden
2b. Poland
2c. France
2d. Greece
Source: Eurobarometer and authors’ calculations.
This chart shows mean support for sanctions against Russia in April 2022 (in blue) and October 2024 (in red) in (a) Sweden, (b) Poland, (c) France and (d) Greece. Based on binary transformations of Eurobarometer questions on support for each measure; dots show means and bars indicate standard deviations.
A Political Polarisation Index
In order to compare how politicised support for Ukraine is across countries and over time, we develop a polarisation index (see technical note for details). This measures the extent to which each self-reported ideology group’s support for a policy differs from the country-wide average (in other words, how far the dots in Figure 1 lie from a horizontal line). The index ranges from 0 (all groups share the same position on sanctions) to 1 (groups hold opposing positions that are perfectly predicted by political ideology). Comparing the same country over time, there are two factors that change the index: (i) within an ideology group, average support for a policy may change, and (ii) the size of ideology groups (and their weight in the index) may change as the distribution of political views in the country evolves.
Comparing across countries, the index does not depend on the left-right gradient of support. While France and Greece show opposite patterns in Figure 2, they score similarly on the sanctions polarisation index in October 2024 (0.16 and 0.15, respectively). For Sweden, Figure 2 shows much greater consensus across the political spectrum, which translates into a significantly lower polarisation score: 0.05.
We find that some policies are associated with greater polarisation than others. There is widespread support in the EU for providing humanitarian aid and welcoming refugees from Ukraine, and polarisation scores are lower for these measures than for financial aid, military aid, sanctions on Russia or Ukraine becoming an EU candidate country. At the same time, looking at the EU as a whole, there has been an upwards trend in polarisation across all measures (Figure 3).
Figure 3. Political Polarisation Indices for different policies supporting Ukraine
Source: Eurobarometer and authors’ calculations.
This chart shows the EU-average political polarisation index for six different policies supporting Ukraine. The EU average is constructed using population weights. Survey waves are unevenly spaced across time. Some policies are not asked about in some waves.
Figure 4 shows which countries are driving the increase in polarisation. It plots the polarisation score for sanctions in April 2022 (shortly after the full-scale invasion) against the corresponding score in October 2024 (the latest wave for which data are available). Austria, the Czech Republic, and Slovakia show the greatest increase in polarisation over this period. Views on sanctions are also increasingly aligned with political cleavages in France, Germany, and Hungary. By contrast, Latvia shows a significant decline in polarisation while in Finland, Ireland, Poland, Portugal, and Sweden polarisation remained at very low levels more than two years into the war.
Figure 4. Political Polarisation Index for Sanctions against Russia 2022 vs 2024
Source: Eurobarometer and authors’ calculations.
This chart shows the political polarisation index for support for sanctions against Russia from the Eurobarometer data in October 2024 on the y-axis against the polarisation index in April 2022 on the x-axis. Includes all EU27 countries.
Drivers of Political Polarisation
In the next section, we show how political polarisation in support for Ukraine is related to the economy and domestic politics.
Polarisation and Price Increases
Figure 5 shows how political polarisation and inflation are related across countries in the EU. Political polarisation in support for sanctions against Russia at the end of 2024 tended to be higher in countries where prices increased faster between 2022 and 2024. As the cost of living increased, the issue of Russian sanctions became a point of contention between voters of different political leanings. Some political parties also started to capitalise on this issue to gain support. In contrast, there has been widespread agreement on the need for humanitarian aid to Ukraine and this was unaffected by the state of the economy.
Figure 5. Political Polarisation and Inflation
Source: Eurobarometer, Eurostat and authors’ calculations.
This chart shows the polarisation index for support for sanctions against Russia (in blue) and humanitarian aid for Ukraine (in red) from the Eurobarometer data in October 2024 against the average annual HICP inflation rate between 2022 and 2024 in percentage points. Includes all EU27 countries.
Polarisation and Elections
In Figure 6, we show how the polarisation index for support for sanctions against Russia (blue) and humanitarian aid for Ukraine (red) evolves around elections. Political polarisation for sanctions increases slightly around election periods, suggesting heightened debate on this issue. In contrast, polarisation in support for humanitarian aid shows little change over the election cycle.
Figure 6. Political Polarisation and Elections
Source: Eurobarometer, PPEG, Manifesto Project and authors’ calculations.
This chart shows the polarisation index for support for sanctions against Russia (blue) and humanitarian aid for Ukraine (red) in the two years before and after national parliamentary elections. Dots show means and bars indicate 95% confidence intervals. This is based on an unbalanced sample of EU countries with a lower house election between April 2022 and October 2024. For each country, only the closest election is used.
A Tale of Three Countries
Political parties play an important role in shaping the political discourse around Russia’s war on Ukraine. They are likely to both influence and be influenced by their voters’ attitudes towards supporting Ukraine.
In this section, we present a case study of three European countries that had elections between 2022 and 2024 and where parties have mentioned Russia in their manifestos according to data from the Manifesto project (see also Lehne and Zhuang, 2023a).
In Sweden, support for Ukraine in the face of Russian aggression has been consistently high along all dimensions and among voters across the political spectrum. In the Swedish elections in September 2022, six out of eight parties (including all three major parties) mentioned Russia in their party manifestos, and all supported sanctions against Russia.
Russia was also mentioned in the party manifestos of many of the parties contesting the French election in June 2022. But in France, the far-right Rassemblement Nationale broke with the other political parties and struck a more conciliatory tone towards Russia. For instance, they stated that they “… will be seeking an alliance with Russia on certain fundamental issues: European security, which cannot exist without Russia; the fight against terrorism, which Russia has fought more consistently than any other power; and convergence in the handling of major regional issues impacting France …” (Manifesto Project). This divergence is mirrored in voter attitudes. Support for sanctions against Russia has declined over time in France, especially amongst voters on the far right of the political spectrum.
In Greece, political support for sanctions against Russia is lower than in many other European countries has been declining over time. Political polarisation in support for Ukraine increased, especially around the elections in May and June 2023. Few of the political parties mentioned Russia directly in their manifestos, and then mostly in conjunction with rising prices and effects on the Greek economy.
Figure 7. Political Polarisation in Support for Ukraine
7a. Sanctions against Russia
7b. Humanitarian Aid for Ukraine
Source: Eurobarometer, Manifesto Project and authors’ calculations.
These charts show political polarisation in support for sanctions against Russia (Panel A) and humanitarian aid for Ukraine (Panel B) in France, Greece and Sweden. Vertical dashed lines show the timing of national parliamentary elections.
Conclusion
Public support for Ukraine remains high in the EU, but there are worrying signs of fragmentation. While some countries continue to exhibit broad consensus in supporting Ukraine across multiple policies, other countries have seen declining support as the debate has become aligned with domestic political cleavages. Sanctions against Russia and military aid to Ukraine have become increasingly contentious, while there is broader agreement on the need for humanitarian aid. In many countries, it is particularly voters on the far-right of the political spectrum who have become less supportive of policies supporting Ukraine.
Our analysis highlights two areas of fragility in the consensus around support for sanctions against Russia. We see some indication that the domestic political debate can drive polarisation in opinions on sanctions against Russia, with the salience of these issues increasing around elections, particularly when parties competing in the elections have different policy platforms.
Another source of fragility is the economic cost of sanctions. Countries that experienced larger increases in prices since 2022 exhibit greater political disagreement over sanctions, suggesting that economic costs can shape the political sustainability of support for Ukraine. Recent increases in energy prices, linked to the war in Iran, may further amplify political polarisation around sanctions against Russia.
Despite these pressures, clear majorities across most EU countries continue to support Ukraine, especially when it comes to humanitarian aid and welcoming refugees. European solidarity has so far proven resilient in the face of growing external pressures.
Technical note:
References
- Demertzis, Maria, Camille Grand, and Luca Léry Moffat., 2023 “European public opinion remains supportive of Ukraine.” Bruegel, June 5
- Eurobarometer (multiple waves: 2022-2024), European Commission. Brussels
- Krastev, Ivan, and Mark Leonard, 2024 “Wars and elections: How European leaders can maintain public support for Ukraine” ECFR
- Krause, Werner; Döring, Raphael; Stoppe, Julia; WZB Berlin, 2025, “PPEG – Political Parties, Presidents, Elections and Governments, Version 2025v1”, https://doi.org/10.7910/DVN/5OAH7P, Harvard Dataverse, V1.
- Manifesto Project Database, 2025. “Manifesto Project Database”, Wissenschaftszentrum Berlin für Sozialforschung (WZB).
- Lehne, Jonathan; and Maiting Zhuang, 2023a. “European Democracy Through the Lens of Party Manifestos”, Free Policy Briefs, May 1.
- Lehne, Jonathan; and Maiting Zhuang, 2023b. “Democracy in the Eye of the Beholder?”, Free Policy Briefs, May 29.
- Pew Research Center, 2022. “Public expresses mixed views of U.S. response to Russia’s invasion of Ukraine”, Pew Research Center, March 15.
- Pew Research Center, 2024. “Views of Ukraine and U.S. involvement with the Russia-Ukraine war”, Pew Research Center, May 8.
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.
Post-2020 Belarusian Permanent Migration to the EU and Beyond: An Empirical Assessment
Following the 2020 presidential election, Belarus experienced a sharp increase in outward migration, primarily to the European Union, with Poland and Lithuania becoming the main destination countries. However, the official migration statistics suffer from limitations and inconsistencies. The brief provides an empirical assessment of the scale of Belarusian migration after 2020. The results indicate that 400–418 thousand Belarusians live and/or work in the EU, Russia, and Georgia. The migration significantly affects host countries’ labour markets and social systems, particularly in Poland. In turn, for Belarus, it represents substantial forgone economic potential, with estimated output losses exceeding 3.4% of GDP.
Introduction
After the 2020 presidential election in Belarus, outward migration increased significantly. Belarusian citizens left the country for both political and economic reasons, with the European Union, particularly Poland and Lithuania, becoming one of the main destinations. Belarusian migrants have become a significant source of labour supply in Poland and Lithuania, helping alleviate labour shortages in economies experiencing demographic decline. At the same time, a sizable outward migration is likely to affect both Belarus’ demographic dynamics and the economic outcomes. In this sense, estimating the number of Belarusians residing abroad is important for both host countries and Belarus itself. However, precise data on the number of Belarusians moving abroad after 2020 remains limited.
Existing international estimates provide only a partial picture. The World Migration Report includes both recent migrants and migrants who left Belarus decades ago and later acquired citizenship in other countries (WMR, 2024). It also relies on migration statistics that are not fully comparable across countries and are often available only with a time lag. As a result, these estimates do not capture the most recent migration wave that occurred after 2020.
Belarusian national statistics also underestimate migration flows, as they mainly record individuals who officially leave the country to work abroad under formal employment contracts (MIARB, 2025) .
This policy brief aims to address this gap by providing estimates of migration from Belarus between 2020 and 2024, based on data on residence permits issued in recipient countries, national migration statistics, information on citizenship acquisition, and open-source data. It accesses the number of Belarusian migrants in the main emigration destinations, namely the European Union, Russia, and Georgia, and discusses the implications for the host countries and Belarus.
Assessing Belarusian Migration to the EU
One of the most commonly used sources for analysing migration flows to the European Union is Eurostat data on the number of first permits. These permits indicate that a foreign national has received authorisation for a long-term stay in an EU country for the first time, typically for more than three months. They include various categories such as work permits, study permits, and other forms, including long-term visas. In many cases, the number of first permits corresponds broadly to the number of migrants entering and residing in a country. However, in some countries, there are significant differences between the number of first permits issued and the actual number of migrants. For example, this concerns Poland’s issuance of Poland Business Harbor Visas to Belarusians. The visa allowed Belarusians to live and work in Poland. However, not all visa recipients moved to the country. Many used it for short-term tourism and did not subsequently obtain temporary residence permits.
According to European statistics, more than 90 percent of first permits issued to Belarusian citizens in recent years were granted by Poland and Lithuania. For this reason, estimating the number of Belarusians residing in these two countries is central to assessing the scale of Belarusian migration to the EU.
Lithuania
Assessing the number of Belarusians residing in Lithuania is relevant in light of the ongoing demographic decline and its implications for labour supply. Fertility in Lithuania remains well below replacement level—around 1.1 children per woman in 2024—while population ageing continues to reduce the size of the workforce (Statistics Lithuania; IMF, 2024). The current labour market situation is relatively tight, with unemployment around 7% in 2024. Migration helps mitigate some labour market pressures without constituting a major source of labour supply (European Commission, 2025).
In this context, Belarusians have become the second-largest migrant group in Lithuania. Their numbers increased markedly after 2020, rising from fewer than 18 thousand at the end of 2019 (Migracijos metraštis, 2020) to 57.5 thousand by the end of 2024 (Imigrantai Lietuvoje, 2026).
Estimating the number of Belarusian residents in Lithuania is relatively straightforward because the Migration Department of the Ministry of Interior Affairs publishes detailed statistics on foreigners residing in the country. These data show a close relationship between the number of first permits issued and the growth in the Belarusian population in Lithuania. Between 2020 and 2023, the number of Belarusians living in Lithuania increased slightly less than the number of first permits issued, partly because some individuals work in Lithuania on a rotational basis while continuing to reside in Belarus. An exception occurred in 2022, when the Belarusian population in Lithuania increased more rapidly than the number of first permits issued to Belarusians following Russia’s invasion of Ukraine and the expansion of humanitarian migration channels. Since 2024, the number of Belarusians residing in Lithuania has declined, partly due to the tightening of migration policy (EMT, 2025).
Poland
Compared with Lithuania, Poland has stronger labour demand and even tighter labour market conditions, with significant dependence on migration. Despite a similarly low fertility rate (1.099 in 2024), unemployment remains low at 5.6% (November 2025), even with over one million foreign workers already present (Statistics Poland, 2025, 2026). Combined with population ageing and mounting pressures on social security and healthcare systems, this results in a structurally higher demand for migrant labour than in Lithuania. Against this backdrop, Belarusians—now the second-largest group of foreign workers after Ukrainians—play an important role. Only among social security contributors, their number has more than tripled in recent years – from 42.8 thousand in 2020 to 134.8 thousand in 2024 (ZUS).
However, accurately assessing the scale of Belarusian migration is challenging. Official statistics do not provide a direct measure of Belarusian residents. First residence permits significantly overestimate migration: between 2020 and 2024, Poland issued more than 874 thousand permits to Belarusian citizens, but many were used for short-term mobility rather than permanent relocation. Figure 1 illustrates the gap between the number of first permits issued and the number of residence permits held. At the same time, residence permit data underestimate the true population. Approximately 125 thousand Belarusians held valid residence permits at the end of 2024, increasing to 141.2 thousand at the beginning of 2026; however, these figures exclude individuals awaiting decisions, whose applications may take months or years to process while they remain in the country (USC, 2026).
Importantly, statistics based on social security contributions also underestimate the total number of Belarusians permanently residing in Poland, as they exclude non-working spouses, children, students, pensioners, and other inactive groups. At the same time, combining different administrative datasets would lead to double-counting, as the same individuals may appear in multiple categories—for example, as residence permit holders, applicants awaiting decisions, and recipients of social benefits—meaning that simple aggregation would inflate the total. As a result, neither the number of permits issued nor administrative records alone provide an accurate estimate of the Belarusian population in Poland.
Approaches to Determining the Number of Belarusians in Poland
Luzgina (2025a) suggests two approaches to estimate the number of Belarusians residing in Poland.
The first approach—the gender-statistical approach—is based on estimating the number of Belarusians permanently residing in Poland by taking into account the gender structure of Belarusian citizens holding documents for permanent stay in Poland, as well as estimating the number of young Belarusians under 18, using statistical data on recipients of the 800+ child benefit, which until 2026 was paid to all children under 18. The estimate based on this approach suggests that as of the end of 2024, between 172.8 and 181.1 thousand Belarusians permanently resided in Poland.
Figure 1. Dynamics of issuing first permits and residence permits by Poland to Belarusian citizens: thousands of people.
Source: Urząd do spraw cudzoziemców; Eurostat. Note: First permits are permits issued for initial entry, including long-term visas. Resident permits include temporary residence permits, permanent residence permits, blue cards, and residence cards—that is, permits foreigners obtain for residence in the country after they’ve already entered. Due to the fact that many Belarusians received Poland Business Harbor visas (first permits), but did not use them to obtain a residence permit in Poland, the number of residence permits issued is lower than the number of first permits.
The second approach—the socio-demographic approach—is used to verify the accuracy of these estimates. This approach is based on the analysis of statistics on social security contributions, the age structure of Belarusians in Poland, and their employment status. Key components include data on the number of taxpayers, children under 18, and Belarusians aged 18 and older who are not employed in the Polish labour market. According to this second approach, the number of Belarusians residing in Poland at the end of 2024 ranged from 175.6 to 188.5 thousand individuals.
Thus, based on both approaches, between 172.8 and 188.5 thousand Belarusian citizens entitled to permanent stay were permanently residing in Poland at the end of 2024.
The Total Number of Belarusians in the EU
Based on the above assessment of the total number of Belarusians residing in Poland, the known number residing in Lithuania, and the number who obtained first permits in other countries, it is possible to estimate the number of Belarusian citizens residing in the European Union. If EU statistics are considered, it can be noted that over the period 2016–2024, the share of first residence permits issued by EU countries excluding Lithuania and Poland averaged 7%. We can assume that the number of Belarusians residing in EU countries outside Poland and Lithuania approximately corresponds to this proportion.
In this regard, the total number of Belarusians residing in the EU at the end of 2024 was calculated assuming that approximately 93% of Belarusian citizens migrated to Lithuania and Poland. This results in an estimate of 247.6 thousand to 264.5 thousand individuals.
Based on available data on Polish citizenship obtained by Belarusians in 2020–2024, the total number of Belarusian citizens who do not yet hold citizenship or who obtained it relatively recently but permanently reside in the EU is between 265 thousand and 282 thousand individuals. Moreover, the majority of these individuals relocated to the EU in 2020–2024, a period marked by a significant increase in the number of first residence permits issued to Belarusians, primarily by Poland and Lithuania.
Migration Outside of the EU
Belarusians actively migrate not only to EU countries but also to other states such as Russia and Georgia. It is not possible to calculate how many Belarusian citizens currently live and work in Russia due to the absence of customs and border barriers and the lack of additional labour market legalisation requirements for citizens of the Union State. Nevertheless, there are general figures on the employment of Belarusians in the Russian labour market. As of 2023, approximately 124 thousand Belarusians were employed in Russia. An additional more than 12,000 resided in Georgia (Luzgina, 2025b). Taking these data into account, together with data for EU countries, between 400 and 418 thousand Belarusian citizens lived and worked outside Belarus. This amounts to approximately 4.5% of the country’s total population.
Implications of Belarusian Migration for Belarus
Together with data for EU countries, between 400 and 418 thousand Belarusian citizens lived and worked outside Belarus. This amounts to approximately 4.5% of the country’s total population. Estimating the share of Belarusians of working age (16–60 years) living and working in the countries under study based on the gender-age structure of Belarusians in Poland yields approximately 355 thousand individuals. This corresponds to more than 6% of the country’s total working-age population.
The forgone economic opportunities resulting from the emigration of working-age individuals can be assessed using the Solow growth accounting framework. The potential economic impact of the emigration of working-age Belarusians can be approximated as a static output loss, assuming that capital and total factor productivity remain unchanged. Based on the share of labour compensation in GDP at current national prices for Belarus in 2023 (0.57), and the estimated 6% reduction in the working-age population residing abroad, the immediate reduction in GDP may reach up to 3.42% (PWT 11.0).
Conclusion
Belarusians constitute the second-largest group of foreign nationals in Poland and Lithuania after Ukrainians. Belarusians also make a positive contribution to the labour markets of other EU countries, as well as to those of Russia and Georgia. Consequently, their residence in the host countries has a tangible impact not only on the labour market but also on social security systems, budget, and other sectors of the economy. Accurate data on the number of migrants, their age structure, and their participation in economic activity enable more effective forecasting of pressures on social systems and facilitate better planning of migrant integration into the host country’s economy.
In Belarus itself, the long-term emigration of working-age citizens and their families remains insufficiently accounted for, which distorts assessments of the country’s internal demographic situation and associated economic losses. Large-scale migration, including flows to Russia and Georgia, indicates that up to 6% of the working-age population currently resides outside the country, which, all else being equal, may reduce potential GDP growth by more than 3.42%.
References
- European Commission (2025). Country Report Lithuania.
- Europos Migracijos Tinklas (EMT) (2025) How many foreigners in Lithuania?
- Eurostat (2025) First permits by reason, age, sex and citizenship.
- International Monetary Fund (IMF) (2024). Lithuania: Selected Issues.
- Imigrantai Lietuvoje (2026) Migracija. LT.
- Luzgina A. (2025 a) An Empirical Assessment of the Number of Belarusian Citizens Permanently Residing in the European Union, Policy Paper Series # 125
- Luzgina, A. (2025 b) The Economy of Missed Opportunities: How Much Is Belarus Paying for Mass Emigration, mimeo.
- Migracijos Departmentas prie Lietuvos Respublikos Vidaus Reikalu Ministerijos (2020). Migracijos Metraštis 2019.
- PWT 11.0 (n.d.) Share of Labour Compensation at GDP at Current National Prices for Belarus
- Statistics Lithuania (2025). Demographic indicators (fertility, births).
- Statistics Poland (2025) Poland in Figures 2025. Warsaw, 2025.
- Statistics Poland (2026) Unemployment rate 1995-2025.
- Statistics Poland (GUS) (2025). Fertility rate and labour market statistics.
- Urząd do spraw cudzoziemców (USC) (2025).
- Zakład Ubezpieczeń Społecznyych (ZUS). Cudzoziemcy.
- World Migration Report (WMR) (2024) International Organization for Migration.
- Министерство иностранных дел Республики Беларусь (МВД РБ) (2025). Увеличилось число въехавших в Беларусь трудовых мигрантов (Eng. – Ministry of Internal Affairs of the Republic of Belarus (MIARB) The number of labor migrants entering Belarus has increased).
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.
Torbjörn Becker: EU Loan Counterbalance Rising Russian Oil Revenues
Despite continuing revenue from oil sales bolstering Russia’s war economy, the European Union’s recently approved financial support for Ukraine could help balance economic power, Torbjörn Becker told Corren. The analysis highlights how a €90 billion EU loan package may offset the advantage Vladimir Putin gains from high oil prices and sales abroad.
The article in Corren explains that EU member states agreed to unblock a major financial aid package for Kyiv after political deadlock over pipeline deliveries and vetoes from Hungary and Slovakia. Two-thirds of the €90 billion support is earmarked for military equipment and defense needs, while the remaining funds are meant to stabilize Ukraine’s state budget. Torbjörn Becker, Director of the Stockholm Institute of Transition Economics (SITE), described the loan as “completely necessary” for Ukraine to both manage fiscal pressures and sustain its defense capacity.
Becker highlighted that without such backing, Russia’s surging oil income, which has nearly doubled due to higher global prices, would leave Ukraine at a stark economic and strategic disadvantage. He noted that while Ukraine’s dependence on U.S. support has lessened, continued fiscal and military backing from the EU is critical, especially as Kyiv must use much of the loan funds to procure equipment, primarily from U.S. suppliers.
In context, the EU’s decision to proceed with the €90 billion loan package came after long negotiations over whether to leverage frozen Russian central bank assets. Ultimately, EU leaders opted to finance the support by tapping joint borrowing capacity rather than directly using immobilized Russian funds, a compromise that ensured timely deliveries and circumvented political hurdles.
To read the full article featuring Torbjörn Becker’s perspective on how the EU’s financial strategy may counterbalance Russian oil revenue gains, visit Corren’s original report.
Further Reading: In-Depth Analysis of Russia Sanctions and the Ukraine War Economy
For deeper context on the Ukraine war economy and sanctions impacts, explore our Sanctions on Russia & Russian Economic Retaliation portal:
- Sanctions timeline: chronological overview of major sanction packages and Russian countermeasures
- Evidence base: latest publications and research reports
- Media highlights: expert commentary on current developments
This hub gathers insights, data, and expert analysis on how sanctions shape the conflict’s economic dynamics.
Further Reading: Inside Russia’s Wartime Economy
For deeper insight into Russia’s economic outlook and the impact of sanctions, explore SITE’s report, “Financing the Russian War Economy.” This report examines Russia’s fiscal pressures, wartime financing strategies, and long-term growth risks under sustained sanctions.
The report expands on the themes highlighted by Torbjörn Becker and provides data-driven insight into the sustainability of Russia’s wartime economy, offering essential context for policymakers, researchers, and journalists.
Breaking Free of Russia’s Energy Grip: How Much Will It Cost Belarus?
The competitiveness of the Belarusian economy is largely determined by its access to cheap Russian energy resources. The country’s total dependence on Russia for oil and natural gas supplies poses a major vulnerability for the Belarusian economy should its citizens strategically choose to integrate with the EU. A severe energy shock – a sharp increase in gas and oil prices – is highly likely to follow if political relations between Belarus and Russia worsen. This study assesses the sectoral and macroeconomic consequences of such a shock for Belarus using a computable general equilibrium model.
The simulation results show that primary raw material processing industries, as well as manufacturing sectors heavily dependent on cheap energy resources, could face significant output losses. In turn, export-oriented, higher-value-added sectors (mechanical engineering, communications, pharmaceuticals, and light industry) have the potential to increase production and exports through the inflow of labor and capital. Should the EU choose to provide carefully designed support – focused on targeted energy subsidies, support for Belarusian firm integration into European production chains, and productivity-oriented financial assistance – the negative short-term consequences of an energy shock could be largely mitigated.
The Need for Strategic Choice
For Belarus, one of the most important strategic choices concerns its future orientation between continued reliance on Russia and deeper integration with the European Union (EU).
At present, the Belarusian economy is strongly integrated with Russia (Kruk, 2024). More than 60% of foreign trade is linked to the Russian market; the country benefits from heavily subsidized energy imports. About 4–5% of general budget revenues come from Russia as transfers; furthermore, Belarus has the possibility to refinance its public debt due to political agreements. Structural dependence makes Belarus highly sensitive to political and institutional changes in relations with Russia, limits opportunities for productivity gains, and undermines household welfare through lower income growth relative to EU countries.
Closer integration with the EU offers a different path. It has opportunities and risks: opportunities in terms of access to larger markets, advanced technologies, and investment, and risks in terms of adjustment costs for sectors reliant on cheap Russian energy resources, and social challenges.
One of the main challenges for Belarus if the country moves toward EU integration will be an energy shock caused by dependence on Russia. Russia is currently Belarus’s sole supplier of natural gas and oil. Prices for these supplies are preferential and politically determined.
Since 2018, Belarus has been importing natural gas from Russia at a contractual price close to $130 per thousand cubic meters. For comparison, according to the World Bank, the average price of natural gas in Europe was more than $400 per thousand cubic meters in 2024–2025 (about $290 in 2010–2019).
Belarus also imports oil from Russia at a price based on Urals crude. Due to the widening discount of Urals relative to the Brent benchmark since 2022, Belarus has received an additional benefit estimated at about $5.5 bn for 2022–2025.
Low energy prices support the competitiveness of entire sectors of the Belarusian economy, at the same time making them extremely vulnerable to sustained energy price hikes. As a result, Belarus’s shift away from Russia and toward the EU could lead to significant (even if transitory) losses in output and household welfare. This study aims to estimate these losses.
CGE Model for Belarus
To assess the consequences of the energy shock, a computable general equilibrium model (CGE) was developed (BELECONOMY, 2025). CGE offers a consistent framework that links sectoral interactions, resource allocation, and household welfare in a general equilibrium setting.
A CGE includes exogenous and endogenous variables, as well as market-clearing constraints. All the equations in the model are solved simultaneously to find an economy-wide equilibrium in which, at a set of prices, the quantities supplied and demanded are equalized in every market (Burfisher, 2021). To conduct an experiment, one or more exogenous model parameters are changed, and the model is then solved to determine the new values for the endogenous variables. Such a simulation shows how the economy’s sectoral structure changes and what the new steady state looks like after an economic shock.
The Belarusian case is a clear example where such modeling is highly useful. The economy’s dependence on Russia creates vulnerabilities that cannot be understood through partial-equilibrium or sectoral analysis alone. A sharp and sustainable increase in energy prices affects not only the directly exposed sectors but also wider economy through changes in costs, relative prices, and resource allocation. A CGE framework is therefore indispensable for capturing these linkages and providing a comprehensive view of outcomes.
The model for the Belarusian economy is based on the basic postulates of the CGE modeling. The factor market supplies factors of production (such as labor and capital) to activities. Activities produce goods and services and are introduced by sectors. The commodities market distributes goods and services produced by sectors. Domestic output enters the commodities market, a part of which is exported, and the imported goods, together with the domestic output consumed domestically, create domestic demand. Commodities are purchased as intermediate consumption by activities, as final consumption by households and government, and for capital formation.
The Belarusian CGE model is implemented in two specifications. Baseline specification includes 17 production sectors, and the external sector is introduced by 4 counterparties – trade partners: Russia, the EU, China, and the rest of the world. In the alternative specification, the activities are disaggregated to 22 production sectors. and the external sector is assumed to be a single counterparty, without explicitly modeling different regions.
The key input used in the model is the 2019 Input–Output table data published by the Belarusian National Statistical Committee. The base year of 2019 is chosen since that year was the last one with compete data and without significant external shocks.
Simulation Design
The developed CGE model has been used to simulate a sharp increase in the prices of natural gas and oil imported by Belarus.
Specifically, if Belarus moves closer to the EU and exits the EAEU, the country’s gas import price is highly likely to approach the European level, regardless of the source of supply. This would mean a powerful shock, roughly equivalent to a threefold increase in the import price of gas.
Regarding oil import prices, the scenario assumes a 10% increase. This roughly corresponds to a long-run effective discount of Urals to Brent that Belarus enjoyed prior to the current sanctions. Accounting for the volumes of oil and natural gas imports, the overall price increase for the product group “oil & gas, petroleum products” will amount to 60%. A shock of this size is incorporated into the simulation scenario.
The scenario also assumes the elimination of inter-budgetary transfers between Belarus and Russia. These transfers are largely linked to obligations within the EAEU, as well as to inflows into the Belarusian budget from reverse excise taxes on oil products from the Russian budget. These transfers are likely to be eliminated if Belarus moves closer to the EU.
Simulation Results
If prices for imported energy resources increase by an average of 60%, domestic production of petroleum products practically ceases. The country’s fuel demand is met exclusively through imports (Figure 1). The near-elimination of domestic petroleum product production under such a severe price shock confirms that the viability of this sector in Belarus was primarily sustained by the redistribution of oil rents from Russia to Belarus through subsidized prices.
A significant increase in energy prices will have a strongly negative impact on industries related to the primary processing of raw materials. The chemical industry, the production of plastics and rubber products, metallurgy, the manufacture of other non-metallic products (primarily construction materials), as well as electricity generation and water supply (utilities), will experience losses in output and exports. Due to intersectoral effects from the oil refining industry, output in wholesale trade, transportation, and other services will also decline. The decrease in construction materials output is also linked to a downturn in construction (Figure 1).
Productive resources from the “losing” industries will be reallocated to sectors with higher export potential (Figure 2). Output and exports will increase in mechanical engineering (electronic, electrical, and optical devices, machinery and equipment), transportation vehicles, light industry, and woodworking, as well as in communication and computer services (ICT).
Figure 1. Exports, imports, and domestic production: results of scenario simulation
Source: Author’s calculations based on CGE.
Figure 2. Factors of production: results of scenario simulation
Source: Author’s calculations based on CGE.
As a result, under a severe energy shock, two groups of industries can be distinguished. The industries that generally produce low- or medium-technology products will suffer substantial losses in value added (Figure 3). In turn, technologically advanced sectors, such as mechanical engineering and information and communications, have the potential to increase value added thanks to their export potential, lower dependence on oil and gas, and the reallocation of labor and capital. (Figure 3).
Figure 3. Sectoral value added: results of scenario simulation
Source: Author’s calculations based on CGE.
The macroeconomic effects of implementing the energy shock scenario will manifest as declines in both public and private consumption, as well as in investment. The resulting GDP losses are estimated at 3.5% of the initial period’s real volume (Figure 4).
Figure 4. GDP and components: models’ comparison of scenario simulation
Source: Author’s calculations based on CGE.
The macroeconomic and sectoral consequences of simulating the energy shock scenario using the alternative model (22 sectors, without separate trading partners) are generally close to those of the baseline model (Figure 4). The greater sectoral disaggregation of the alternative model makes it possible to identify two more industries with potential for output growth: the production of fabricated metal products and pharmaceuticals. This result highlights that, with a significant increase in energy costs, labor and capital resources shift toward more sophisticated sectors with higher value added.
EU Financial Support: Potential Effects
The above economic effects apply over the long term as the economy adapts to new conditions. In the short term, costs will be much higher, and a collapse of energy-intensive sectors cannot be ruled out.
The impact of such a transition on the Belarusian economy can be mitigated with external help. We conducted additional simulations, assuming the use of the EU’s currently frozen financial support package for the five areas outlined by the EU Commission in 2021, at the amount specified for these five areas – €870 million (EU Commission, 2021).
The results of simulating the energy shock scenario with EU financial support show that €870 million in EU assistance can offset about 1.2 p.p. of Belarus’s GDP decline (Figure 5). This is achieved mainly due to a smaller reduction in household consumption and investment.
If we include the entire declared potential volume of EU financial support for Belarus (€3 bn) in the simulation, then GDP losses may be avoided. Household consumption would remain below the initial level, but the gap would be significantly smaller than in the baseline scenario (Figure 5).
Figure 5. Macroeconomic effects of EU financial support
Source: Author’s calculations based on CGE.
It should be noted that the simulated effects of EU financial support depend on its composition and timing. Therefore, the results of these simulations are largely illustrative and should be seen as an assessment of the scale of assistance needed to mitigate the economic losses from the energy shock in Belarus.
Conclusion
The simulations demonstrate that a powerful energy shock would have a large-scale negative impact on output and consumption. At the same time, it would not cause a full collapse of the Belarusian economy. Without EU support, long-term GDP losses are estimated at 3–4%. The most significant losses would be concentrated in industries linked to the primary processing of raw materials – oil refining, metallurgy, production of building materials, chemical industry, and electric power supply. Nevertheless, other sectors, such as mechanical engineering, light industry, pharmaceuticals, and ICT, may benefit from the reallocation of production resources. This suggests that the economy possesses a degree of structural resilience, with certain sectors able to absorb resources and adapt to changed conditions. In the long term, this reallocation may partially mitigate the overall economic losses, although the transition period would be socially and politically challenging.
The simulation results also shed light on how EU engagement could shape adjustment outcomes, should it choose to act.
First, targeted energy subsidies from the European Union or preferential financing for energy imports during the initial adjustment period could play a crucial role in cushioning the immediate impact of higher oil and gas prices. Such subsidies would prevent an abrupt collapse of energy-intensive industries and allow time for structural adjustment.
Second, efforts to remove barriers to the participation of Belarusian firms in European value chains could significantly ease the negative short-term consequences of deteriorating trade relations with Russia. By facilitating access to new markets, technologies, and standards, integration into European supply chains could not only soften the transition but also enhance long-term competitiveness.
Third, direct financial support from the EU would have the potential to offset a substantial part of GDP and welfare losses. However, to achieve lasting results, such support would need to be targeted toward raising factor productivity through investments in human capital, digitalization, and modern infrastructure.
Fourth, social safeguards are essential. The significant energy shock will unavoidably bring sectoral declines and job displacements. EU support could therefore extend to retraining programs, measures that promote labor mobility, and social protection systems, ensuring that the short-term adjustment costs do not lead to lasting social and political instability.
Acknowledgments
This brief is based on research funded by the EU.
References
- BELECONOMY. (2025). “Computable general equilibrium model for Belarus: theoretical aspects and practical applications“. Working Paper Series. No. 90.
- EU Commission. (2021). “Economic support to democratic Belarus. Factsheet.”
- Kruk, D. (2024). “Belarus’s progressing economic dependence on Russia and its implications”. FREE Policy Brief Series.
- Lofgren, H., Harris, R. L., Robinson, S. (2001). “A standard computable general equilibrium (CGE) model in GAMS“. TMD Discussion Paper. No 75.
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.
The Hormuz Shock: EU’s Gas Security and Decarbonization Fragility
The February 2026 conflict in the Persian Gulf and the partial closure of the Strait of Hormuz sent European gas prices sharply higher, reviving questions about Europe’s energy vulnerability. While the EU successfully reduced its reliance on Russian gas after 2022, it has traded one dependency for another: globally traded LNG exposed to fragile shipping routes. We argue that dependence is not only a concern for energy security; it also creates decarbonization fragility — the risk that reliance on imported fossil fuels undermines the clean energy transition itself. Price spikes push producers toward coal, raise emissions, and give politicians reasons to delay climate action. The solution to both problems is the same: faster deployment of domestic clean energy, better electricity grids, and a coordinated EU industrial strategy. Reducing fossil-fuel demand at home is not only a climate goal — it is the most durable foundation for Europe’s energy security.
On 28 February 2026, US–Israeli strikes on Iran triggered a direct military conflict across the Persian Gulf. Iran moved to shut the Strait of Hormuz, a chokepoint for roughly one-fifth of global oil and gas trade (US EIA, 2025), while attacks on Qatar’s Ras Laffan complex resulted in force majeure, removing approximately one-sixth of global LNG supply from the market. Energy markets reacted immediately. European gas prices rose sharply: the TTF benchmark jumped from around €32/MWh in late February to above €50/MWh by mid-March, while Brent crude approached $100 per barrel.
While most attention has focused on the impact on the oil market (see, e.g., Gars, Spiro, and Wachtmeister, 2026), the shock has also revived another crucial question in European energy policy: dependence on imported fossil gas. This brief examines what the Hormuz shock means for Europe’s gas market, focusing on its implications for supply security and the political momentum of the green transition.
How the 2022 Crisis Redefined EU Gas Security
Natural gas has long been central to Europe’s energy system, heating around 30% of EU households, supporting energy-intensive industries, and providing the flexible generation needed to balance renewables. But this economic importance also came with strategic risk – EU gas imports were dominated by a single supplier, Russia, which by 2021 accounted for around 45% of EU gas imports (IEA, 2022). After the invasion of Ukraine, that dependence turned into a major vulnerability. Russian pipeline gas flows to Europe fell by more than half in 2022, while the TTF gas price rose above €300/MWh in August 2022. The shock forced governments to spend over €680 bln to protect households and firms, and exposed the weakness of Europe’s industrial model.
Yet the crisis triggered a rapid policy shift. The EU responded with storage obligations, demand reduction, supply diversification, and REPowerEU, reframing clean energy and efficiency as tools of security as well as climate policy; the 2030 renewable target rose from 32% to (at least) 42.5% (EC, 2023).
The results were significant: storage reached 99% in the fall of 2023, demand fell by 18% by 2024, Russian gas imports dropped from 150 bcm in 2021 to about 40 bcm in 2025, with a full ban due in 2027 (Bruegel 2022 a, b), and EU gas imports became more diversified (see Figure 1). Between 2022 and 2025, Europe added around 250 GW of renewables (IEA, 2026), raising their share in electricity generation from 37% to 44%. The 2022 crisis had, paradoxically, done more to accelerate Europe’s green transition than a decade of climate negotiations.
The Hormuz Shock: Familiar Pattern, New Vulnerabilities
Given the lessons the EU learned from 2022, should we expect a similar “greening” in response to the Hormuz disruption?
There are clear parallels between the current shock and the 2022 crisis. In both cases, a sudden geopolitical disruption removed a major source of gas supply, pushed European buyers onto the spot LNG market, and drove TTF prices sharply higher. In both cases, uncoordinated competition among member states for scarce supply risked amplifying the price spike.
Figure 1: Composition of EU natural gas imports in 2019-2025.
Source: Own graph based on data from Bruegel Dataset (2022a).
The differences, however, are equally important. In 2022, oil prices remained relatively contained, allowing some industrial sectors to switch away from gas. Today, with Brent above $100 per barrel, that option offers little relief. In 2022, weak Asian LNG demand, particularly from China, gave Europe room to attract cargoes at a premium. Today, Asian buyers are facing the same supply shock and competing for the same LNG volumes. Europe has also lost the limited buffer that Russian pipeline gas still provided in 2022: that supply has now largely disappeared and will soon be fully banned.
At the same time, the EU is better prepared than it was four years ago. Gas demand is already around 17% lower, regasification capacity has expanded over 50 bcm, reverse-flow interconnections have improved access across the bloc, and the institutional crisis-response framework has already been tested.
Most importantly, the supply directly at risk is much smaller than in 2022. Qatari LNG exposed to the current disruption accounts for no more than 6% of EU gas imports, far below the scale of the 2022 shock (EC, 2025a and ACER, 2024).
The global LNG market has also changed significantly since 2022. Then, Europe’s additional LNG needs hit an already tight global market: EU LNG imports rose by 64 bcm in 2022, while global incremental LNG supply was only 25 bcm. Regasification bottlenecks in Europe compounded the problem. Today, by contrast, the market is entering a major new wave of liquefaction capacity, while the EU has expanded regasification capacity by at least 50 bcm/year since mid-2022, easing the infrastructure constraints seen during the crisis. Any disruption to Qatari LNG would therefore likely create a more manageable, though still important, market squeeze than in 2022 (ACER (2024) and IEA (2025)
That said, the main vulnerability has not vanished; it has changed form. Roughly one-fifth of global trade passes annually through the Strait of Hormuz. A disruption there tightens the LNG market globally, especially in Asia, and because cargoes are traded internationally, price pressure is rapidly transmitted to Europe. That is, in replacing Russian pipeline gas with globally traded LNG, the EU reduced dependence on a single supplier but increased its exposure to geopolitical shocks affecting maritime trade. Europe is therefore more diversified than in 2022, but also more vulnerable to disruptions in strategic chokepoints far beyond its borders.
The Hormuz crisis thus reveals a deeper structural vulnerability in Europe’s post-2022 energy system — what we refer to as decarbonization fragility. The more the EU relies on LNG to secure its energy transition, the more its climate pathway becomes exposed to geopolitical shocks in global fossil-fuel supply routes.
The Environmental and Political Risks of Decarbonization Fragility
The Hormuz shock highlights that Europe’s new gas security model also carries environmental risks. As energy security increasingly depends on globally traded LNG moving through fragile maritime routes, disruptions can drive not only higher prices but also higher emissions.
First, the shock is likely to increase the carbon intensity of the EU gas supply. Facing a gas shortage, the EU may respond by replacing lost gas volumes with new, more emissions-intensive gas sources. In 2022, Russian pipeline gas was partly substituted with more emissions-intensive LNG (Campa, Paltseva and Vlessing, 2023). In the current context, the marginal supplier is likely to be the United States, whose LNG has a significantly higher lifecycle carbon footprint than Qatari LNG (Rystad 2026). (This shift may also raise renewed concerns about the concentration of supply, given that US LNG already accounted for 55% of EU LNG imports in the first half of 2025, EU (2025b)).
Second, higher gas prices can trigger substitution toward more polluting fuels. In 2022, this mainly involved switching from gas to oil products. Today, with Brent above $100 per barrel, oil is less competitive, increasing the likelihood of gas-to-coal switching in sectors unable to reduce demand quickly enough. Given that coal is significantly more carbon-intensive than natural gas, such a substitution would result in a substantial increase in emissions.
While these effects may in principle be temporary, the Hormuz shock occurs in a European political and economic context that makes them harder to reverse. Climate policy momentum in Europe was already weakening, with growing corporate caution and increasingly more firms scaling back or withdrawing net-zero commitments (Guardian, 2025).
By intensifying energy price pressures and supply uncertainty, the shock risks tilting policy priorities away from the energy transition. In a more unstable geopolitical environment, industrial competitiveness is increasingly treated as a component of Europe’s defense strategy, essential for economic resilience and strategic autonomy. At the same time, rising defense spending is placing additional strain on public finances. Together, these pressures shift political focus toward securing affordable energy for industry and maintaining economic strength, potentially at the expense of long-term decarbonisation.
This is the political dimension of decarbonization fragility. When industrial policy prioritizes energy affordability and security, external shocks are more likely to reinforce fossil-fuel dependence than to accelerate the move away from it.
The Green Transition IS Energy Security
The central lesson of both the 2022 energy crisis and the Hormuz shock is clear: energy (in)security and decarbonization fragility are closely intertwined. As long as the transition still relies on imported fossil fuels, external shocks affect more than energy supply and prices. They may also weaken the political and economic conditions on which decarbonization depends by undermining industrial competitiveness, increasing fiscal pressure, and shifting policy attention toward short-term crisis management. Fossil-fuel dependence therefore undermines not only Europe’s energy system, but also its transition pathway.
The answer is therefore not to slow the transition, but to accelerate and broaden it. A rapid transition to solar and wind alone is, of course, unrealistic, given their intermittency and the scale of investment required. Therefore, the transition must become broader in scope. The EU is already giving greater prominence to other net-zero technologies linked to security of supply and industrial resilience, including nuclear and small modular reactors. However, the expansion of domestic low-carbon capacity remains slowed by permitting bottlenecks, grid constraints, and insufficient investment in system flexibility. Moreover, as Figure 2 illustrates, it is largely uneven across the EU, which, per se, may undermine collective action and negatively affect EU energy security (Le Coq and Paltseva, 2022). Further, progress on reducing supply chain dependencies has been limited. The EU continues to rely heavily on imports for critical raw materials, clean-tech components, and key segments of manufacturing value chains, exposing the transition to new geopolitical risks. Reducing structural exposure to external shocks will require not only faster deployment but a more coordinated industrial strategy.
Figure 2. Battery, electric vehicle and solar manufacturing investments by status since 2019
Source: Bruegel Clean Tech Tracker.
Lasting resilience will not come from shifting between external dependencies, but from reducing them. Expanding domestic low-carbon capacity simultaneously lowers emissions and limits exposure to external shocks. Cutting fossil-fuel demand is therefore not only a climate objective, but the most durable form of energy security.
References:
- ACER (2024) Analysis of the European LNG market developments, Monitoring Report.
- Bruegel Dataset (2022a) ‘European natural gas imports’, version of 6 February 2026
- Bruegel Dataset (2022b) ‘European natural gas demand tracker’, version of 26 January 2026
- Campa, P., E. Paltseva och Z. Vlessing (2023). ”Exploring the Impact from the Russian Gas Squeeze on the EU’s Greenhouse Gas Reduction Efforts”, FREE Policy Brief.
- European Commission (2023) .“Renewable energy targets”.
- European Commission (2025a), Quarterly report on European gas markets.
- European Commission (2025b), EU-US trade deal explained – energy aspects.
- Gars, J, D. Spiro and H. Wachtmeister (2026), The Hormuz Blockade: Winners, Losers, and Vulnerabilities, FREE Policy Brief.
- Guardian (2025), “Was 2025 the year that business retreated from net zero?”. Dec 20.
- International Energy Agency (2022), “How Europe can cut natural gas imports from Russia significantly within a year,” 3 March.
- International Energy Agency (2025), Gas Market Lessons from the 2022–2023 Energy Crisis, “Anatomy of a natural gas crisis.”
- Le Coq, C. and E. Paltseva (2022), “What does the Gas Crisis Reveal About European Energy Security?” FREE Policy Brief.
- U.S. Energy Information Administration (2025). Amid regional conflict, the Strait of Hormuz remains critical oil chokepoint”.
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.
Antagonistic Information Threats: Lessons from Ukraine
Russia’s full-scale invasion of Ukraine highlights how modern conflict increasingly relies on antagonistic information threats alongside military force. This policy brief examines how such threats operate and what lessons they offer for European resilience. First, it outlines a framework through which hostile actors gradually weaken societies’ capacity to interpret events and trust institutions. Second, the brief analyzes Ukrainian cyber operations, highlighting that sustained defensive investment can reduce destructive impact even as attack activity intensifies. The brief further examines the economic implications, showing that antagonistic threats create continuous fiscal pressure as monitoring, detection, and incident response become permanent public expenditures rather than temporary crisis measures. Finally, the brief draws policy implications for Europe, stressing the need to treat cyber and information resilience as macro-critical infrastructure and to strengthen coordination across policy domains.
Introduction
Ukraine’s experience since the full-scale invasion of 2022 illustrates how antagonistic threats operate in contemporary conflict. The war demonstrates that modern confrontation extends far beyond conventional military force. Instead, it functions as a hybrid system in which military, informational, economic, and political instruments are combined into a coordinated architecture of pressure. While this dynamic is most visible in active war, its underlying mechanisms are not confined to the battlefield. Similar forms of antagonistic pressure are increasingly directed at European societies despite the absence of open military confrontation.
Within this broader system, information threats have become particularly significant, largely due to technological change and the digitalization of communication. Networked information environments allow hostile actors to combine cyber operations, disinformation campaigns, and other forms of manipulation at low cost and large scale, amplifying the effects of other forms of pressure. Information operations can shape how events are interpreted, undermine institutional trust, and influence political behavior, often reinforcing technical disruption or economic coercion.
This brief focuses on antagonistic information threats — hostile activities that include disinformation campaigns, cyber operations, and other forms of manipulation targeting the information environment. We first outline a structural framework for understanding the targets and effects of such threats. We then examine how cyber operations have been used in Ukraine and assess their associated costs. The brief concludes with policy lessons relevant for strengthening resilience in European societies.
Layers of Antagonistic Information Influence
Understanding antagonistic information threats requires moving beyond viewing disinformation or cyber incidents as isolated events. Instead, these activities form a structured and multi-layered architecture of pressure aimed at gradually degrading democratic governance. Rather than aiming for immediate institutional breakdown, these operations gradually weaken a society’s capacity to interpret events, trust institutions, and act collectively across four interconnected layers: cognitive, institutional, informational, and behavioral. This four-layer framing synthesizes Ukraine’s wartime practice with established research on cognitive warfare and decision-making manipulation, hybrid warfare, and institutional effectiveness (NATO STO, n.d.; Havlík & Horáček, 2026; Tsybulska, 2023; World Bank, 2017).
At the cognitive layer, hostile actors target how individuals interpret reality, shaping threat perception, responsibility attribution, and identity boundaries. This dynamic is well documented in research on cognitive warfare and reflexive control, which demonstrates that perception manipulation can redirect strategic decision-making without direct confrontation (Havlík & Horáček, 2026; Thomas, 2004). By exploiting uncertainty, fear, and emotional triggers, adversaries influence how citizens understand crises before institutional responses even occur. Cognitive distortion thus lays the foundation for broader destabilization.
At the institutional layer, hostile actors target trust in government, elections, and public authority. Evidence from hybrid warfare analysis demonstrates that weakening institutional legitimacy degrades both crisis response and democratic resilience (OECD, 2022; World Bank, 2017). As Tsybulska (2023) argues, delegitimization, rather than outright destruction, is often the central objective of a hybrid strategy. When public trust erodes, policy implementation fragments, and crisis communication loses authority.
The informational layer addresses narrative dominance and agenda-setting. Hostile actors use saturation, repetition, and cross-platform amplification to ensure that adversarial frames define the terms of public debate (McCombs & Shaw, 1972; Paul & Matthews, 2016). The goal is not simply to spread falsehoods but to normalize certain interpretations over time, embedding them into how societies process political reality (Tsybulska, 2024).
Finally, the behavioral layer translates perception and narrative control into observable outcomes, from voting behavior and protest mobilization to compliance with policy measures and support for defense decisions. Research on misinformation and political behavior demonstrates that even marginal shifts in turnout, polarization, or policy support can generate significant strategic consequences (Allcott & Gentzkow, 2017). Behavioral influence does not require majority conversion; small distortions at scale can reshape political outcomes.
Ukraine’s post-2022 experience shows that antagonistic information threats function as a long-term governance pressure system, designed for erosion. This is why recognizing the layered architecture of these threats is essential for building durable resilience.
Threats at the Operational Level: Lessons from Ukraine
Ukraine’s wartime experience illustrates how antagonistic information threats operate in practice, particularly through cyber operations. Unlike kinetic warfare, cyber operations continue even during ceasefires: they are relatively low-cost, scalable, and persistent, generating both technical disruption and information that can later be exploited in influence campaigns.
The Computer Emergency Response Team of Ukraine (CERT-UA) recorded 4,315 cyber incidents in 2024, nearly a 70% increase over 2023 and more than triple the 2021 level (SSSCIP/CERT-UA, 2025c). In the first half of 2025 alone, incidents increased by a further 17% (SSSCIP/CERT-UA, 2025b). These figures reflect strategic structural pressure, as shown in Table 1.
Table 1. Registered cyber incidents in Ukraine, 2021–2024
Source: CERT-UA / State Service of Special Communications and Information Protection of Ukraine (SSSCIP), Russian Cyber Operations: Analytics for the Second Half of 2024.At the same time, a parallel trend deserves attention: while overall incident volume rose sharply, critical and high-severity incidents declined by 94% between 2022 and 2024 (SSSCIP/CERT-UA, 2025a). Ukrainian authorities attribute this to strengthened monitoring networks, early detection mechanisms, and international cooperation. The policy conclusion is clear: sustained defensive investment reduces destructive impact even as attack frequency increases.
The operational model has also evolved. Rather than prioritizing spectacular disruption, campaigns increasingly emphasize persistent access, credential theft, and selective data exfiltration, so-called ‘steal and go’ tactics (SSSCIP/CERT-UA, 2025b). The objective is chronic degradation rather than dramatic collapse. Data theft supports later narrative exploitation; minor disruption normalizes instability; repeated low-grade incidents strain administrative capacity.
This shift aligns with the broader strategic goal identified in Ukrainian cybersecurity reporting: producing distrust, paralysis, delayed response, societal fatigue, and long-term strategic advantage. The sectoral and methodological breakdown confirms this pattern (Table 2).
Table 2. Target sectors and attack methods in Ukraine in 2024
Source: CERT-UA/SSSCIP, Russian Cyber Operations: Analytics for the Second Half of 2024. Sector figures are incident counts; method figures reflect malware-specific incidents.
Artificial intelligence (AI) further accelerates this dynamic. Large-scale content saturation campaigns, such as the Pravda/Portal Kombat network, have been documented flooding digital ecosystems and targeting AI retrieval environments (American Sunlight Project, 2025; Sadeghi & Blachez, 2025). While academic debate continues over the scale of LLM manipulation (Alyukov et al., 2025), the strategic investment in content flooding is well documented.
Generative AI reduces the marginal cost of producing multilingual disinformation. CERT-UA has also identified indications of AI-assisted scripting in phishing and malware deployment (SSSCIP/CERT-UA, 2025b). As Havlík and Horáček (2026) warn, AI increasingly enables the precision targeting of cognitive vulnerabilities, thereby compressing defenders’ response time.
These dynamics illustrate how cyber operations generate effects across the four layers of antagonistic information influence identified earlier. Repeated incidents and data leaks shape the informational environment; narrative exploitation of stolen or manipulated data affects how events are cognitively interpreted; persistent disruptions undermine institutional credibility and crisis response; and accumulated uncertainty ultimately influences political and societal behavior.
Crucially, antagonistic information threats do not operate alone. They are part of a synchronized system of persistent pressure. Cyber operations, Foreign Information Manipulation and Interference, economic coercion, electronic warfare, and kinetic activity are integrated into a unified strategy. Ukrainian authorities report temporal synchronization between cyber intrusions, energy-sector targeting, and missile strikes (SSSCIP/CERT-UA, 2025a). Narrative campaigns frame events before and after disruption; cyber operations generate exploitable material; economic pressure increases uncertainty; kinetic or electronic actions amplify fear. The compound effect exceeds what any single domain could achieve on its own.
Ukrainian experience highlights vulnerabilities relevant for Europe more broadly. Hybrid pressure operates as a synchronized, multi-domain system in which military, informational, economic, and political instruments reinforce one another. European governance, however, addresses these domains through separate institutional channels. Energy security, cyber defence, strategic communications, and democratic resilience are managed in distinct policy silos with different authorities and threat perceptions. This fragmentation creates exploitable gaps: an adversary operating through tightly coordinated cross-domain pressure can exploit exactly the delays and blind spots that institutional separation produces.
The lesson from Ukraine is therefore not limited to wartime resilience. Even without open conflict, antagonistic actors can pursue gradual systemic pressure by targeting infrastructure, information, economic vulnerabilities, and institutional trust simultaneously. Effective resilience, therefore, requires moving beyond sectoral responses toward integrated governance capable of anticipating and responding to coordinated cross-domain pressure.
Economic Costs of Antagonistic Information Threats
Antagonistic information threats are persistent and structurally embedded, which means their economic implications extend beyond isolated incidents. Ukraine’s experience provides a rare empirical case showing how these costs accumulate and how sustained investment can mitigate them. Hybrid pressure does not produce only one-off destruction; it generates continuous fiscal demand. Monitoring, detection, and incident response systems have therefore become permanent budget items rather than crisis expenditures.
In 2024 alone, national monitoring systems processed hundreds of billions of telemetry events, identified around 3 million security events, and confirmed 1,042 cyber incidents requiring formal response (SSSCIP, 2024). These figures illustrate that antagonistic threats impose a constant administrative and financial burden, underscoring the fiscal consequences of inaction.
Ukraine’s cybersecurity market reached approximately 138 million USD in 2024, having quadrupled over eight years (SSSCIP, 2024). This growth reflects systemic adaptation under sustained pressure rather than discretionary digital modernization. The statistics in Table 1 show that investment did not eliminate the threat, but it fundamentally reduced its destructive impact. The burden falls disproportionately on public administration. With 76% of recorded incidents targeting government, local authorities, and the defense-industrial sector, the fiscal weight of cybersecurity concentrates where the budgets are most constrained. In this way, the institutions most essential to democratic governance bear the highest cost of defence.
Beyond direct-response spending, antagonistic threats impose systemic economic costs. Insurance premiums rise while cyber coverage narrows; compliance costs increase under frameworks such as NIS2, and procurement and crisis coordination become slower and more complex. As public administration becomes a primary target, trust and institutional credibility weaken, raising coordination costs across markets and public systems. As a result, governance efficiency itself becomes economically vulnerable.
At the same time, the costs of inaction are substantial. At the European level, ENISA estimates total cyber-related losses over five years at approximately €300 billion, with Germany alone reporting €205.9 billion in losses in 2023 (Nagy, 2023). While these figures do not isolate state-linked hybrid operations, they indicate the fiscal environment in which antagonistic threats operate and suggest a scale of what unmitigated exposure would cost.
The EU’s persistent security workforce deficit of 260,000 to 500,000 specialists (ENISA, 2024) further constrains the capacity for the type of sustained defensive investment that Ukraine’s experience shows to be effective.
Table 3 highlights a central policy lesson. In Ukraine, both the number of detected threats and the capacity to identify them increased sharply, while the share of destructive incidents declined significantly. This demonstrates that rising incident volume does not necessarily translate into rising damage. It thus indicates that the economic trade-off is not between security spending and fiscal savings, but between investing in preventive resilience and absorbing escalating systemic costs.
Table 3. The Returns on Sustained Investment, Ukraine
Sources: CERT-UA/SSSCIP (2025a, 2025b, 2025c); SSSCIP (2024); ENISA (2024); Howden (2025).
In economic terms, resilience reduces the probability of high-impact shocks, whereas delayed investment merely defers their costs. For European policymakers, cyber and information resilience must be treated as macro-critical infrastructure, with financial consequences extending well beyond IT systems into fiscal stability, labour markets, and long-term growth.
Conclusions
Ukraine’s experience since 2022 demonstrates that antagonistic information threats must be treated as a systemic governance challenge, not just a communication problem. Operating simultaneously across cognitive, institutional, informational, and behavioral layers, these threats aim to erode decision-making capacity rather than trigger immediate collapse. The strategic objective is gradual fragmentation of perception, trust, narrative coherence, and ultimately political action. For policymakers, the implication is straightforward: resilience must be built across all four layers.
Moreover, Ukraine’s operational data demonstrates that antagonistic information threats are persistent, adaptive, AI-accelerated, and strategically synchronized. Resilience must therefore be systemic, coordinated, and anticipatory, not reactive and sector-bound.
Ukrainian experience shows that sustained investment did not eliminate cyber pressure, but it dramatically reduced high-severity impact while expanding detection capacity. At the same time, the burden of defense falls disproportionately on public administration. Treating resilience spending as macro-critical infrastructure investment could be part of the solution.
References
- Allcott, H., & Gentzkow, M. (2017). Social media and fake news in the 2016 election. Journal of Economic Perspectives, 31(2), 211–236.
- Alyukov, M., Makhortykh, M., Voronovici, A., & Sydorova, M. (2025). LLMs grooming or data voids? Harvard Kennedy School Misinformation Review, 6(5).
- American Sunlight Project. (2025, February 26). Russian propaganda may be flooding AI models: The Pravda network and risks to AI information integrity.
- European Union Agency for Cybersecurity (ENISA). (2024). 2024 report on the state of cybersecurity in the Union.
- Havlík, M., & Horáček, J. (2026). War is a mind game: Countering weaponized information. NATO Defense College.
- Howden (2025). Rebooting growth. Howden’s 2025 cyber insurance report.
- McCombs, M., & Shaw, D. (1972). The agenda-setting function of mass media. Public Opinion Quarterly, 36(2), 176–187.
- Nagy, C. (2023, December 11). 2024 cybersecurity predictions and emerging threats in Germany. SecurityBridge.
- NATO Science and Technology Organization (NATO STO). (n.d.). Cognitive warfare: NATO chief scientist research report.
- OECD. (2022). Building Trust to Reinforce Democracy: Main Findings from the 2021 OECD Survey on Drivers of Trust in Public Institutions, Building Trust in Public Institutions. OECD Publishing.
- Paul, C., & Matthews, M. (2016). The Russian “firehose of falsehood” propaganda model. RAND Corporation.
- Sadeghi, M., & Blachez, I. (2025, March 6). A well-funded Moscow-based global ‘news’ network has infected Western artificial intelligence tools worldwide with Russian propaganda. NewsGuard.
- State Service of Special Communications and Information Protection of Ukraine (SSSCIP) / CERT-UA. (2025a). Russian Cyber Operations: Analytics for H2 2024.
- State Service of Special Communications and Information Protection of Ukraine (SSSCIP) / CERT-UA. (2025b). Russian Cyber Operations: Analytics for H1 2025.
- State Service of Special Communications and Information Protection of Ukraine (SSSCIP) / CERT-UA. (2025c). CERT-UA recorded 4,315 cyber incidents in 2024.
- Thomas, T. (2004). Russia’s reflexive control theory and the military. Journal of Slavic Military Studies, 17(2), 237–256.
- Tsybulska, L. (2023). Hybrid warfare in Ukraine. Carnegie Council for Ethics in International Affairs.
- Tsybulska, L. (2024). Russian culture is a shining Trojan horse with tanks, bombs, and missiles inside. Detector Media.
- World Bank. (2017). World development report 2017: Governance and the law.
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
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
- Audretsch, D. B., & Moog, P. (2022). Democracy and entrepreneurship. Entrepreneurship Theory and Practice, 46(2).
- BEROC (2023). Belarus Economy Monitor. Small and medium enterprises. (in Russian). October
- Bornukova, K. & Friedrich, D. (2021). Private sector in Belarus and political crisis. Policy Brief.
- Daneyko, P., Chubryk, А., Hayduk, К., Bornukova, К., & Kruk, D. (2020). Transformation of the state-owned commercial enterprises in Belarus (in Russian). IPM Research Center, Discussion paper PDP/20/07; BEROC, Policy Paper no. 100.
- Daneyko, P., Panasevich, V. & Marozau, R. (2023). Evolution of economic values in Belarus (in Russian). BEROC Policy Paper Series, PP no. 118.
- Greenwood, J. (2002). “Inside the EU business associations. Basingstoke: Palgrave
- Krasko, N. & Daneyko, P. (2022). Belarusian business abroad: Needs, challenges, and collaboration potential inside the national business communities. (in Russian) BEROC Working Paper Series, WP no. 80.
- Lvovskiy L., Marozau R. & Panasevich V. (2025). Human capital loss among Belarusian and Ukrainian migrants to the EU. FREE Policy Brief
- Marozau, R. (2023). Belarusian business in turbulent times. FREE Policy Brief
- Marozau, R. & Danilchuk, D. (2024). Belarusian Business in Poland and Lithuania: Trends of 2024. BEROC Policy Paper Series.
- Marozau, R., Apanasovich, N. & Guerrero, M. (2021). Evolution of Technology Transfer in Belarus: Two Parallel Dimensions in a Post-Soviet Country. In Technology Transfer and Entrepreneurial Innovations: Policies Across Continents (pp. 269-290). Cham: Springer International Publishing.
- Marozau, R. & Apanasovich, N. (2026). Actors of transformation: An analysis of Belarusian business integration and alignment with the EU business environment.
- Vissak, T., & Zhang, X. (2016). A born global’s radical, gradual and nonlinear internationalization: A case from Belarus. Journal of East European Management Studies, 209-230.
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
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
- Partnerships for New Economy (2025). “Barometrul antreprenorilor” (“Entrepreneurs’ Barometer”), retrieved Dec 18, 2025.
- Vaskovska Anhelina (2025). “Strengthening Human Capital: How Ukraine and Moldova Can Retain and Reconnect Their Students“, FREE Policy Brief Series, December 2025.
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.
U.S. Sanctions on Rosneft and Lukoil: Pressure on Moscow, Strains on Europe
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
- Le Coq, Chloé; and Elena Paltseva, 2009. “Measuring the Security of External Energy Supply in the European Union,” Energy Policy, 37(11), 4474–4481.
- Le Coq, Chloé; and Elena Paltseva, 2012. “Assessing Gas Transit Risks: Russia vs. the EU,” Energy Policy, 42, 642–650.
- Le Coq, Chloé; and Elena Paltseva, 2022. “What Does the Gas Crisis Reveal About European Energy Security?” FREE Policy Brief Series, January 2022.
- Le Coq, Chloé, 2025.
“Breaking the Link: Costs and Benefits of Shutting Down Europe’s Last Gas Pipeline from Russia,” FREE Policy Brief Series, January 2025.
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.
The Case for a Transport Ban on Russian Oil
In this policy brief we discuss the effects that would arise if the EU imposed a full transport ban on Russian oil. The transport ban would imply that any oil tanker transporting Russian oil would be prohibited from any oil trade involving the EU and from entering EU ports. We argue that such a transport ban would achieve the intended objectives of the EU’s oil sanctions: to reduce Russia’s oil income without risking surging oil prices.
Background
In its ambition to protect Ukraine and itself from Russia, the EU has two toolboxes at its disposal: military defense and economic warfare. The purpose of economic warfare is to “reduce the economic strength, hence the war potential, of the enemy relative to [one’s] own“ (Wu, 1952, p.1). It essentially boils down to the dual goal of harming your opponent without harming yourself too much (Snidal, 1991; Spiro, 2023).
Following the full-scale invasion in 2022, the EU and other countries significantly ramped up the oil sanctions against Russia as part of this economic warfare. Among them, the import embargo on Russian oil has been the most consequential; the G7 price cap on Russian oil, while being more politically salient, quickly lost much of its initial efficacy (Kilian et al., 2024; Spiro et al., 2025). Sanctions are like a cat-and-mouse game where Russia has now managed to circumvent the price cap to a high degree. The question for the EU, therefore, is how to revise the price cap sanction or what to replace it with. This policy brief analyzes one option: a full transport ban on Russian oil. To understand why and how such a sanction would work, it is, however, important to understand why the price cap does not.
The Price Cap: In Theory and Practice
Theoretically, the price cap sets a maximum price for Russian oil exports. Initially, the G7 cap was set at $60/bbl, while the EU later lowered it to $47.60/bbl. The practical implementation of the price cap was through the tanker and insurance markets. Any tanker transporting Russian oil at a price above the cap would not be able to get access to Western insurance or services. Since a very large part of the tanker fleet was, at the time of implementation, insured in the UK, this was consequential. Eventually, an additional constraint was added: tankers not following the price cap would not be allowed to access European ports.
The rationale for the price cap, at the time of its implementation, was that the G7 wanted to achieve the dual goal of economic warfare: it wanted to harm Russia by limiting its oil income while minimizing the harm to the global economy by ensuring Russia would not reduce oil exports. It was believed that a price cap set at 60 $/bbl would achieve that dual goal. With a world oil price at $80-100/bbl, the cap would severely reduce Russia’s oil profits; but since Russia’s cost of production is $5-15/bbl, it would have economic incentives to continue exporting oil (Gars et al., 2025; Johnson et al., 2023; Wachtmeister et al., 2022).
The price cap initially worked as intended: combined with the EU import embargo, it drove significant discounts on Russian oil while export volumes remained steady (Babina et al., 2023; Spiro et al., 2025; Turner & Sappington, 2024). Over time, however, the price cap’s efficacy eroded (Cardoso et al., 2024; Kilian et al., 2024; Spiro et al., 2025). This was for two main reasons: 1) the expansion of the “shadow fleet” of tankers willing to transport Russian oil without Western insurance or services; 2) fraudulent paperwork, allowing some tankers to appear compliant while actually transporting Russian oil at a price above the cap (Hilgenstock et al., 2023).
By early January 2025, only 15% of crude-oil tankers departing Russia used Western insurance (CREA, 2025), with the remainder being part of the shadow fleet. After the implementation of large-scale vessel sanctions later that month by the US Treasury’s Office of Foreign Assets Control (OFAC), the share of tankers using Western insurance increased. This indicates the shadow fleet can be affected by countermeasures. Yet, despite the strengthened sanctions, by October 2025, around 65% of shipments still used the shadow fleet, even as a large portion of that fleet now consisted of sanctioned vessels. A large part of the remaining 35%, while officially compliant, likely circumvented the price cap by use of fraudulent paperwork.
Extensive additional monitoring and enforcement capacity would be required to eliminate such fraud. To restore the full intended function of the price cap, or make a lowering of the cap meaningful, the shadow fleet would also need to be substantially reduced. But given recent estimates putting the shadow fleet at around 18% of global tanker tonnage (The Maritime Executive, 2025) this seems hard to achieve.
Given the challenges involved in re-establishing this system, an alternative approach is to replace the price cap altogether. So, what could serve as an effective replacement?
A Full Transport Ban
We here consider a transport ban on Russian oil. In practice, under such a transport ban, a European coalition of countries would ban any tanker carrying Russian crude oil or refined products from entering European ports and using European services, either permanently or at least for as long as the ban is in place. Consequently, such tankers would be banned from any European oil trade, including, for instance, oil sold by OPEC countries to the EU, as well as any European maritime services in the future. This restriction would apply regardless of the sale price or whether the shipment formally complied with the G7 price cap.
Notably, in 2022, one of the sanctions planned by the EU and discussed within the G7 was a “service ban” that would be akin to the transport ban proposed here. The EU and G7 eventually decided not to implement it and to introduce the price cap instead, due to fears that such a sanction would come at a great cost to the world economy. Since Russia at the time only had access to a small tanker fleet of its own, a service ban would have resulted in an export reduction and an oil-price spike (Gars et al., 2025). This fear may have been well-founded there and then. However, as argued below, it is not a major concern today.
How a Transport Ban Would Work Today
The economic harm to Russia from a transport ban would come through the tightening of the tanker market that Russia can access. A tanker owner would essentially need to decide whether they want to transport Russian oil (around 10% of all seaborne oil trade) or have access to trade involving the EU countries (around 23% of seaborne oil trade). This, in essence, constitutes a trade-off between the short-run gains from transporting Russian oil and the longer-term consequences of the tanker being permanently sanctioned. Since the transport ban would be aimed at the tanker, it would also reduce the tanker’s value if sold. Plausibly, tanker owners would then only agree to transport Russian oil if they receive a sufficiently large premium compared to the income from transporting other oil. This would translate into higher transport costs for Russia, squeezing its profit margins (Spiro et al., 2025). How much Russian transport costs would increase is hard to say, but it should be noted that even an increase of $5 per barrel in these costs for crude implies Russian losses equal to 0.5% of GDP (Spiro et al., 2025).
Since Russian profit margins are very large, they would likely be willing to pay that premium. Furthermore, given that export reductions would inflict losses on Russia itself and on its key partners (China and India, see Gars et al., 2025), it is unlikely that Russia would reduce its exports as a sort of retaliation. The risk of a Russian supply disruption and an oil-price spike is thus low under a transport ban. In other words, a transport ban would inflict costs on Russia without risking major costs to the EU.
Other Advantages
Importantly, under the described transport ban, paper fraud would become a non-issue. The sanctioning coalition would only need to monitor whether a tanker has entered a Russian port. Any such vessel would be placed on the banned list, regardless of whether it belongs to the shadow fleet, is Western-owned, or claims compliance with the price-cap regime. Given that a large share of Russian oil exports goes through European waters and chokepoints (e.g., the Danish Straits), it should be possible for the EU to identify such tankers, in particular those transporting Russian oil through the Baltic Sea (46% of all seaborne Russian crude and products).
Furthermore, this EU-led transport ban would not depend on coordination with the United States. The effectiveness of this sanction stems from geography, where a large share of Russian oil transits EU-controlled waters, and from the EU’s position as a large oil importer (13.7 mb/d). That said, if more countries joined the sanctioning coalition, the cost of ending up on the sanctioned list would be higher. Similarly, the premium required by the tanker owners would be higher. Hence, the sanction would be more effective if other major importers, such as Japan and South Korea, or major exporters, such as Canada and Norway, joined the coalition. US participation would, of course, also add weight, but would not be essential for the core mechanism to work.
Potential Problems and Interactions with Other Sanctions
One problem that a transport ban would likely not solve and could even exacerbate is the environmental risks posed by the poor condition and risky operations of the shadow fleet. The cost of being on the sanctioned list would be the loss of future earning potential of the tanker. Tankers closer to being scrapped would more likely choose the short-run premium over the future earning potential. The fleet transporting Russian oil could therefore end up consisting of even older, less safe tankers than today. Furthermore, the value of servicing the tankers would likely decrease, possibly reducing the quality and safety of the tankers further. While it is hard to ascertain the strength of these effects, by our judgment, it is likely small compared to the current situation and condition of the shadow fleet. The transport ban would not increase the amount of Russian oil shipped through European waters. The transport ban would, furthermore, provide another reason to monitor the movements and doings of tankers in European waters (on top of the current monitoring due to environmental risks and sabotage).
The EU today has a list of shadow tankers that are banned from European trade and services (EU Council, 2025). That is a good start, but the list is only partial. It has most likely missed a large share of vessels serving Russia using fraudulent paperwork. The proposed tanker ban would make the list longer and easier to administer. Prohibiting specific tankers from entering European ports and being involved in the European oil trade should be within the EU’s capacity. If secondary sanctions could be imposed consistently, that would give even larger effects, since the costs of breaking the sanction would increase further. That is where coordination with the US would be particularly impactful, as OFAC has a much better capacity for such measures. This said, given the current geopolitical situation, there are strong reasons for the EU to build up its own capacity for secondary sanctions.
While the proposed transport ban would simplify the monitoring compared to the price cap, there could still be potential for evasion. Monitoring whether a tanker has been in a western Russian port should be feasible, but following its movements all the way to the destination may not be. Potentially, Russia could then partly evade the sanctions using ship-to-ship transfers. Here, one tanker could transport the oil from Russia out of European waters, then transfer the oil to another tanker, which would transport the oil to the final destination. If the transfer is not detected, that second tanker could transport the Russian oil part of the way without facing sanctions. We cannot rule out that some such evasion could happen. But due to the risk of detection, the second tanker would also likely demand a higher premium, and Russian transport costs would still increase, albeit by somewhat less. Importantly, the EU should be able to detect and block these ship-to-ship transfers when they occur in European waters.
The US recently implemented sanctions on the two Russian oil companies Rosneft and Lukoil, by which anyone who does business with them is subject to secondary sanctions. In a sense, these US sanctions are similar to a transport ban, as they make it more difficult for Russia to export oil. In another sense, they are more of a complement to it. The US sanctions are targeted at specific firms, opening up for evasion by changing corporate structures and selling off assets, while the transport ban would be targeted at the physical tanker. It cannot be taken for granted that the US will uphold or keep its current sanctions, not least because they are intertwined with other motives (such as a trade war). It is, furthermore, not obvious that OFAC will have the capacity (or be allowed) to sanction entities within China and India. So, while the US sanction has touch points with the transport ban discussed here, the EU may need to construct its sanctioning regime independently.
In Summary
A transport ban implemented by the EU would serve the purpose of its economic warfare and has the potential to fill a gap in the current sanctions regime that has been opened by the eroding efficiency of the price cap. A transport ban would increase Russia’s oil-transport costs with low risks of oil-supply disruptions and price spikes. The requirements of monitoring for upholding a transport ban are much lower than for the price cap. The transport ban is not entirely immune to evasion, but the problems are likely small and would only partially reduce the effect of the sanction. The main concern is the environmental risks, but the sanction is unlikely to meaningfully increase the risks already posed by the current shadow fleet built up in response to the price cap. It is also feasible to implement a transport ban by the EU on its own, although the effect will increase if the sanctioning coalition is enlarged.
References
- Babina, T., Hilgenstock, B., Itskhoki, O., Mironov, M., & Ribakova, E. (2023). Assessing the Impact of International Sanctions on Russian Oil Exports (SSRN Scholarly Paper No. 4366337).
- Cardoso, D., Daubanes, J., & Salant, S. W. (2024). The dynamics of evasion: The price cap on Russian crude exports and amassing of the shadow fleet, mimeo
- CREA. (2025). Tracking the impacts of G7 & EU’s sanctions on Russian oil. Centre for Research on Energy and Clean Air.
- EU Council. (2025). Council Regulation (EU) 2025/2033 of 23 October 2025 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine.
- Gars, J., Spiro, D., & Wachtmeister, H. (2025). Winners and losers of a Russian oil-export restriction. Public Choice.
- Hilgenstock, B., Ribakova, E., Shapoval, N., Babina, T., Itskhoki, O., & Mironov, M. (2023). Russian Oil Exports Under International Sanctions. SSRN Electronic Journal.
- Johnson, S., Rachel, L., & Wolfram, C. (2023). Design and implementation of the price cap on Russian oil exports. Journal of Comparative Economics, 51(4), 1244–1252.
- Kilian, L., Rapson, D., & Schipper, B. C. (2024). The Impact of the 2022 Oil Embargo and Price Cap on Russian Oil Prices (SSRN Scholarly Paper No. 4781029).
- Snidal, D. (1991). Relative Gains and the Pattern of International Cooperation. American Political Science Review, 85(3), 701–726.
- Spiro, D. (2023). Economic Warfare (SSRN Scholarly Paper No. 4445359).
- Spiro, D., Wachtmeister, H., & Gars, J. (2025). Assessing the impacts of oil sanctions on Russia. Energy Policy, 206, 114739.
- The Maritime Executive. (2025). Sanctions Have Not Slowed the Growth of the Shadow Fleet. The Maritime Executive.
- Turner, D. C., & Sappington, D. E. M. (2024). On the design of price caps as sanctions. International Journal of Industrial Organization, 97, 103099.
- Wachtmeister, H., Gars, J., & Spiro, D. (2022). Quantity restrictions and price discounts on Russian oil (No. arXiv:2212.00674). arXiv.
- Wu, Y. (1952). Economic Warfare. Prentice-Hall.
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.