Location: Ukraine

Financing Ukraine’s Victory: Why and How #Ukraine

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Ukraine’s war effort faces a growing risk due to insufficient international financial support. Without strong funding from external donors, Ukraine may rely too heavily on monetary financing. This approach could trigger high inflation and a potential currency crisis. As a result, the war effort could weaken just when the military situation is starting to improve in Ukraine’s favor.

In a new CEPR Policy Insight, leading economists explain why international donors must continue supporting Ukraine next year. They also describe the most effective ways to deliver this aid. Moreover, their analysis highlights the urgent need for coordinated fiscal action to protect both Ukraine’s economy and its defense capacity.

Authors

Read the full CEPR Policy Insight to explore detailed recommendations on how the global community can help secure Ukraine’s economic and military resilience

Disclaimer: Opinions expressed in policy briefs and reports, during events and conferences, are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Foreign Aid to Ukraine: Lessons from the Literature on Strategic Foreign Aid

Image of the map of Ukraine representing Foreign Aid to Ukraine

Ukraine is currently receiving substantial inflows of foreign aid from western donors to help the country withstand the Russian aggression. The foreign aid flows partly reflect altruistic motives from the donor side, but also donor’s domestic strategic foreign policy objectives as the war is seen as part of a battle over the future world order. In this brief, I discuss the academic literature that has analysed the existence and consequences of strategic motivations behind aid flows more generally, and draw some preliminary insights for the case of Ukraine.

One of many consequences of the Russian war on Ukraine is that western countries have responded by providing substantial bilateral financial support to Ukraine. This support has taken the form of humanitarian, financial and military aid. As of August 3rd 2022, the US has provided the most support in absolute terms (44,5 billion euro), followed by EU institutions (16,2 billion euro) and the United Kingdom (6,5 billion euro). Relative to GDP, countries in Eastern Europe have however been the most generous, led by Estonia and Latvia (0,9 percent of GDP) and Poland (0,6 percent of GDP) (Antezza et al., 2022). Meanwhile, a discussion on the reconstruction of Ukraine has started, following the massive destruction of physical capital from the Russian aggression. The immense costs of this destruction increase every day, and the reconstruction effort for a future “Ukraine 2.0” will likely require thousands of billions of $US, mainly in the form of foreign aid (Becker at al., 2022).

Against this background, it is important to consider the academic and policy-oriented literature on aid effectiveness, i.e., to what extent aid impacts economic development and social welfare. Aid effectiveness involves many different dimensions such as issues of donor coordination, responsibility for reforms and investment choices of government and people (ownership), how to avoid corruption and so-called “white elephants” (expensive and useless investments), and how to effectively implement evaluation and evidence-based policy choices (e.g. OECD, 2008). In this brief, I will focus my attention on one such dimension, the underlying donor purpose of aid giving, and its implications for the contribution of aid inflows to human welfare in partner countries. More specifically I will discuss strategic aid, aid given primarily for the purpose of donor’s own broader foreign policy agendas. I will discuss what the literature has to say about the existence of such strategic aid, and what it has to say about its implications for aid flows and aid effectiveness. This will be done on basis of the existing literature, including a few of my own contributions. It is important to note that this literature focuses on development aid, defined by the OECD as “Official Development Assistance” (ODA). ODA does not include for instance military aid but is rather defined as official flows that explicitly target economic development and social welfare in the partner country. This literature is thus most relevant when talking about the reconstruction of Ukraine and to some extent the current financial and humanitarian aid given to the country.

Identifying the Existence of Strategic Aid

In the quantitative literature, there are primarily two approaches to measuring the strategic incentives behind aid disbursements. The first approach looks at the distribution of foreign aid across partner countries with different levels of needs, institutional capacity to absorb aid inflows, commercial potential, historical ties to donors, and strategic importance. If aid was based only on altruistic motives we would expect aid allocation to strongly favour partner countries with low human development (measured by, e.g., GDP per capita levels, poverty headcount ratios and child mortality) and the capacity to turn aid inflows into social welfare (measured by e.g., indices of macroeconomic policies, democracy scores and corruption indicators). While the empirical literature suggests this is partly true, although more so for some donors than others, it is far from the whole picture. Many donors tend to favour former colonies or countries of commercial interest, observed by flows of trade and foreign direct investments (e.g., Neumayer, 2003; Berthelemy and Tichit, 2004). The same is true for strategic interests, although their importance varies substantially across donors (more so for the US and less for the Scandinavian countries, for instance). This is also true across a broad set of proxies for strategic relevance, all trying to capture foreign policy alliances or foreign policy importance, such as arms imports (Hess, 1989; Maizels, and Nissanke, 1984), arms expenditures (Schraeder et al., 1998), the correlation of voting records in the UN General Assembly (Alesina and Dollar, 2000), and dummies for Israel and Egypt (capturing the significance of the Israel-Palestine peace process).

In Frot, Olofsgård and Perrotta Berlin (2014), we take a closer look at the Central and Eastern Europe (CEEC) countries and the Commonwealth of Independent States (CIS) in the early years of their transition towards market economies. As these countries opened up a substantial amount of western aid became available, but the allocation of aid across countries varied substantially, as did needs, commercial potential and strategic significance to major donors. We argue that these motivations may have also played a different role at different times. In particular, there is a strategic advantage of early market access if aid flows are driven by commercial interests, suggesting that trade and investment relationships may play a more prominent role for aid allocation early on and less so as private partnerships have been [increasingly] established. Similarly, some strategic considerations were particularly salient early on, such as supporting nuclear disarmament and building a bulwark in Eastern Europe against the perceived remaining military threat of Russia. When disaggregating the data over time, we do indeed find that commercial interests played a much more prominent role in the first half of the 1990’s than in later years. Similarly, we find that countries with nuclear arms and countries located geographically closer to Brussels benefit particularly during these early years. As time went by, commercial interests became less important, needs variables gained more traction, and aid seems to rather have been used to reward countries undergoing deeper democratic reforms (Frot, Olofsgård and Perrotta Berlin, 2014).

The second approach is to focus on how aid flows are generally affected by changes to the strategic importance of a partner country, or partner countries, over time. In Boschini and Olofsgård (2007) we estimate the role of the intensity of the Cold War on aggregate levels of foreign aid from western donors. It is commonly argued that foreign aid was (partially) used as an instrument to gain political loyalty from leaders in the developing world during the Cold War and that the substantial drop in aggregate aid levels witnessed in the 1990’s can be explained by the disappearance of an important strategic motive behind foreign aid altogether (e.g. Lancaster, 2008). This had however not been tested in quantitative terms, and thus we collected data on military spending in the Eastern bloc to serve as a proxy for the intensity of the Cold War. We found that there was a positive correlation between military expenditures in the east and western development assistance during the period 1970-1990. After the Cold War, military expenditures in the east have no correlation with western development assistance. This suggests that development assistance was used as a complement to recipient’s domestic military spending in producing strategic security within donor countries. Once the Cold War ended though, the immediate need for such investments in security and loyalty abroad largely disappeared, ending the connection between military spending in the east and western development assistance and causing overall aid levels to drop. Kilby and Fleck (2010) find a similar but reverse effect of the war on terror following the 9/11 attack on the US in 2001. Overall aid flows increased, and the allocation across countries became biased in favour of countries of greater importance to the US in the War on Terror.

Another strand of literature has focused on what happens to aid inflows when a country becomes a temporary member of the UN Security Council (UNSC). This literature looks primarily at the impact on aid from multilateral aid agencies such as the World Bank and the International Monetary Fund (IMF). The rationale for the analysis is the notion that (western) permanent members on the UNSC have strategic interest in showcasing broad majority support for their resolutions at the council. This gives them an incentive to “buy support” from temporary members through influence over multilateral aid agencies.

Accordingly, Dreher et al. (2009a) find that partner countries receive a greater number of aid projects from the World Bank during years of UNSC membership than during the years before and after membership. Similarly, Dreher et al. (2009b) find that participation in IMF programs increases during membership years, and that agreements have fewer policy conditions.

In a recent paper (Berlin Perrotta, Desai and Olofsgård, 2022) we look at temporary UNSC membership and World Bank aid. Following the previous literature, we analyse whether temporary UNSC members receive more aid projects, but with a larger data set. Providing originality, we also test whether partner country governments are given more leeway to allocate aid projects regionally for political purposes during the years of UNSC membership. The argument is that donors can give partner country governments benefits not only in terms of the amount of aid, but also the extent to which they are free to spend resources based on political interests rather than needs. More specifically, we test whether birth region of political leaders, and regions dominated by co-ethnics of the political leader in question, receive a particular boost to aid inflows during membership years. We select these indicators of domestic political importance based on an existing literature which suggests governments at times favour such regions for public spending (e.g., Bommer et al., 2022; Briggs, 2014).

Consistent with earlier findings, we confirm that temporary members of the UNSC receive a greater number of World Bank projects during membership years than what they would otherwise receive.  We also find partial support for the hypothesis that partner country governments have greater leeway to redirect projects to politically favoured regions. More specifically, co-ethnic regions get a boost in the number of projects and total aid inflows during membership years, whereas we find no similar impact in the leader’s home regions. More detailed analysis reveals that our results are driven by countries that persistently vote in line with the US in the committee, further supporting the interpretation that this reflects a trade of favours (Berlin Perrotta, Desai and Olofsgård, 2022).

The Consequences of Strategic Aid

But does the underlying motive behind foreign aid matter? Development aid can of course benefit social and economic welfare in a partner country if invested in activities with positive social rates of return (e.g., schools, health care and infrastructure), irrespective of any underlying motivation. A strategic motivation can even be beneficial if it means that partner countries receive more aid than they would do in its absence. Consider the drop in total western aid budgets after the end of the Cold War, and the increase after the start of the War on Terror, as previously mentioned. Similarly, often referred to as the first example of foreign aid, the Marshall Plan to help rebuild Europe after the 2nd World War, was not only motivated by altruistic reasons. It was explicitly motivated by the need to maintain US national security and safeguard US access to European markets. Yet, the plan is hailed as a success, vital to the reconstruction of Europe after the war. It is also evident that popular support for aid to Ukraine in western donor countries partly depend on the conception of a threat to Europe and the free world, facilitating/enabling governments to be generous in their support.

There are however also examples of where strategic considerations have motivated aid with very limited or even negative impact on economic development and social welfare in partner countries. In particular during the Cold War, in order to gain loyalty in the ideological battle between the superpowers, western aid often went to highly corrupt regimes with low absorptive capacity (e.g., Easterly, 2006). A frequently mentioned example is the case of the Democratic Republic of Congo (DRC) during the regime of Mobutu Sese Seko. The US provided the country with more than a billion $US in development aid between 1962 and 1991, under a kleptocratic regime that impoverished the country (see here). This without doubt helped the regime stay in power, and the aid was thus not just a waste of resources but directly counterproductive.

Another argument at the global level is that there always exists an opportunity cost in the sense that strategic objectives reallocate limited aid resources from where the need is the greatest, to countries more politically salient. Burnside and Dollar (2000) run a simulation based on their empirical findings, changing the actual (partially donor interest based) allocation of aid across partner countries to an allocation based on need and absorptive capacity (which they associate with macroeconomic policies). Within their sample, they estimate such a reallocation to increase per capita growth by 0,2 to 0,3 percentage points, from a mean growth rate of 1,1 percent. Such calculations are of course rough estimates, yet they give a ballpark figure.

In the case of Ukraine however, the first of these arguments carry little weight. Aid is not sustaining a dysfunctional government with little interest in its own population, rather the opposite is true. On the other hand, the argument of allocative efficiency may carry some weight at a global scale. The needs and the human suffering in Ukraine are immense but unfortunately there are other places in the world with such extensive suffering (Ethiopia, Yemen, and Somalia to mention a few examples). There is thus concern within the donor community that the attention to Ukraine will negatively affect resources and attention to other places in need of support, in particular since the war has externalities in the form of increased food and energy prices in low-income countries. Such argument however relies on the assumption of crowding out resources from a budget of given size. While hard to prove, it is probably safe to say that the strategic interest in Ukraine has in fact increased the total budget available. As for now, it is therefore not entirely clear to what extent resources to other nations in need will be crowded out. Yet, the UN’s appeal for Ukraine is more than 80 percent funded for this year, whereas the UN’s response plan for Afghanistan is around 38 percent funded, Yemen’s is around 27 percent funded and Sudan’s is around 20 percent funded (see here).

A third lesson from the literature concern the (lack off) strings attached when aid is strategic. Continuous aid to the corrupt and violent regime of Mobutu Sese Seke in DRC is an extreme example of this phenomenon. But, as previously discussed, it’s also been shown that temporary UNSC membership comes with fewer conditions in IMF agreements (Dreher et al., 2009b) and with more leeway to partner governments to allocate inflows for domestic political purposes (Berlin Perrotta, Desai and Olofsgård, 2022), which has been shown to have efficiency consequences. Dreher et al. (2018) use a typical panel growth regression setting to compare the contribution of aid to economic growth during the period around UNSC membership to that same contribution in other time periods and for comparable countries that have never been temporary UNSC members. They find that aid is less effective during UNSC membership years, which they allude to the strategic use of aid under these special circumstances. The point is that donor oversight and monitoring may be weaker when aid is strategically motivated. Alignment of the partner country government to the goals of economic development and social welfare, therefore, becomes even more important. At a time of massive aid inflows in a setting with less than perfect institutional control and a history of corruption, as is the case of Ukraine, this may have a detrimental impact on aid effectiveness unless proper safeguards are in place.

Conclusion

Foreign aid from western donors to Ukraine is partly motivated on altruistic grounds but it also reflects wider foreign policy objectives of the donors. The Russian aggression is perceived not only as an attack on Ukraine but as an attack on the existing rules-based world order and as part of a broader conflict between liberal democracy and authoritarianism. More donor-oriented motives behind foreign aid are referred to as strategic in the academic literature, and in this brief, I have given a short and selective introduction to that literature. In terms of foreign aid to Ukraine, the good news is that the combination of altruistic and strategic motives can generate greater aid flows and that, irrespective of the underlying motivation, such inflows can be effective if the priorities of donors and partner country government align around initiatives spurring economic development and social welfare. A potential concern is that the literature suggests that donors are more accepting of abuse of such funds, so the need to evade corruption and mismanagement may become particularly acute. On a global scale, there is also a concern about crowding out of aid resources away from other places in need when attention is focused on Ukraine. The severity of such crowding out will be a function of the extent of additionality of support to Ukraine, to the existing total aid budgets. It is thus important that governments in donor countries manage to maintain support for Ukraine, without forgetting about the needs elsewhere. With tough economic times ahead in Europe, this may unfortunately become a challenge.

References

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

Fleeing the War Zone: When Return Is Not yet Possible

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The Russian invasion of Ukraine on 24 February 2022 has resulted in a tragic loss of life, destruction of cities and villages and forced millions to flee their homes. The UNHCR estimates the total number of those forced to flee Ukraine has reached 6.8 million by the end of May 2022. 

Webinar

Three months into the war we return to the discussion of the fate of war refugees – those within and those outside Ukraine. What many hoped would be a short episode followed by a return back home, turns into an extended predicament with challenges at many levels. These challenges and related possible policy reactions will be discussed in a webinar “Fleeing the war zone: When the return is not yet possible” on 8 June 2022 by a panel of experts.

Registration

The webinar will be available to join via the Zoom platform. However, registration is required. Please register via Zoom (click here). After registration, you will receive a confirmation email which includes the Zoom link and passcode.

Related Events

On March 14, 2022 experts from Ukraine, Sweden and Poland discussed the consequences of the invasion for the Ukrainian population.

Disclaimer: Opinions expressed during events and conferences are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

OECD DevTalks: The Transformation and Reconstruction of Ukraine

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The war in Ukraine, caused by Russia’s invasion, remains a profound humanitarian crisis with far-reaching economic and social consequences worldwide. In response, the Organisation for Economic Co-operation and Development (OECD) has strongly condemned Russia’s actions. Moreover, it is now advancing a new strategy to strengthen Ukraine’s recovery and reconstruction efforts.

The OECD’s work builds on a Memorandum of Understanding first signed with Ukraine in 2014 and renewed in 2021. Since then, the organisation has deepened its collaboration with Ukrainian partners to rebuild the nation’s economy and institutions. In addition, the OECD Development Centre plays a crucial role by providing policy expertise and data-driven analysis. It supports multiple sectors, including governance, innovation, and sustainable growth. As a result, these coordinated efforts aim to help Ukraine achieve long-term stability and resilience.

Webinar on Ukraine’s Economic and Social Transformation

On Tuesday, 17 May 2022, the OECD DevTalks series hosted a high-level webinar focusing on Ukraine’s economic and social transformation, both before and after the full-scale invasion. The event gathered leading economists, policymakers, and development experts to discuss:

  • The state of Ukraine’s economy prior to 2022
  • The impact of the war on social and economic structures
  • Priorities for reconstruction and recovery
  • The role of international support and cooperation

This discussion contributed to shaping a shared vision for Ukraine’s future, highlighting the resilience of its people and institutions amid ongoing challenges.

Distinguished Speakers

  • Mathias Cormann, Secretary-General, OECD
  • Vadym Omelchenko, Extraordinary and Plenipotentiary Ambassador of Ukraine to France
  • Yuriy Gorodnichenko, Quantedge Presidential Professor of Economics, University of California, Berkeley
  • Nataliia Shapoval, Head of KSE Institute & Vice President for Policy Research, Kyiv School of Economics
  • Tymofii Brik, Acting Wartime Vice-President of International Affairs & Head of Sociological Research, Kyiv School of Economics
  • Torbjörn Becker, Director, Stockholm Institute of Transition Economics (SITE), Stockholm School of Economics
  • William Tompson, Head of Eurasia, Global Relations and Co-operation, OECD
  • Ragnheidur Elín Árnadóttir, Director, OECD Development Centre

About OECD DevTalks

OECD DevTalks is a continuing series of expert panel discussions and blogs organized by the OECD Development Centre. Each session brings together global thought leaders to exchange ideas on sustainable development, inclusive growth, and policy innovation.  For more #DevTalks – a series of online panel discussions, along with Development Matters blogs, follow the OECD #DevTalk page.

Disclaimer: Opinions expressed during events and conferences are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Understanding the Economic and Social Context of Gender-based and Domestic Violence in Central and Eastern Europe – Preliminary Survey Evidence

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This brief presents preliminary findings from a cross-country survey on perceptions and prevalence of domestic and gender-based violence conducted in September 2021 in eight countries: Armenia, Belarus, Georgia, Latvia, Poland, Russia, Sweden and Ukraine. We discuss the design and content of the study and present initial information on selected topics that were covered in the survey. The collected data has been used in three studies presented at the FROGEE Conference on “Economic and Social Context of Domestic Violence” and offers a unique resource to study gender-based violence in the region.

While the COVID-19 pandemic has amplified the academic and policy interest in the causes and consequences of domestic violence, the Russian invasion of Ukraine has tragically reminded us about the gender dimension of war. There is no doubt that a gender lens is a necessary perspective to understand and appreciate the full consequences of these two ongoing crises.

The tragic reason behind the increased attention given to domestic violence during the COVID-19 lockdowns is the substantial evidence that gender-based violence has intensified to such an extent that the United Nations raised the alarm about a “shadow pandemic” of violence against women and girls (UN Women on-line link). Already before the pandemic, one in three women worldwide had experienced physical or sexual violence, usually at the hands of an intimate partner, and this number has only been increasing. The tragic reports from the military invasion of Ukraine concerning violence against women and children, as well as information on the heightened risks faced by war refugees from Ukraine, most of whom are women, should only intensify our efforts to better understand the background behind these processes and study the potential policy solutions to limit them to a minimum in the current and future crises.

The most direct consequences of gender-based and domestic violence – to the physical and mental health of the victims – are clearly of the highest concern and are the leading arguments in favour of interventions aimed at limiting the scale of violence. One should remember though, that the consequences and the related social costs of gender-based and domestic violence are far broader, and need not be caused by direct acts of physical violence. Gender-based and domestic violence can take the form of psychological pressure, limits on individual freedoms, or access to financial resources within households. As research in recent decades demonstrates, such forms of abuse also have significant consequences for the psychological well-being, social status, and professional development of its victims. All these outcomes are associated with not only high individual costs, but also with substantial social and economic costs to our societies.

This policy brief presents an outline of a survey conducted in eight countries aimed at better understanding the socio-economic context of gender-based violence. The survey, developed by the FREE Network of independent research institutes, has a regional focus on Central and Eastern Europe, with Sweden being an interesting benchmark country. The data was collected in September 2021 in Armenia, Belarus, Georgia, Latvia, Poland, Russia, Sweden and Ukraine. The socio-economic situation of all these countries irrevocably changed with the Russian invasion of Ukraine on 24 February 2022, the ongoing war, and its dramatic consequences. The world’s attention focused on the unspeakable violence committed by the Russian forces in Ukraine, the persecution in Belarus and Russia of their own citizens who were protesting against the invasion, and the challenges other neighbouring countries have faced as a result of an unprecedented wave of Ukrainian refugees. This change, on the one hand, calls for a certain distance with which we should judge the survey data and the derived results. On the other hand, the data may serve as a unique resource to support the analysis of the pre-war conditions in these countries with the aim to understand the background driving forces behind this dramatic crisis. In as much as the gender lens is necessary to comprehend the full scale of the consequences of both the COVID-19 pandemic and the war in Ukraine, it will be equally indispensable in the process of post-war development and reconciliation once peace is again restored.

Survey Design, Countries, and Samples

The survey was conducted in eight countries in September 2021 through as a telephone (CATI) survey using the list assisted random digit dialling (LA-RDD) method covering both cell phones and land-lines, and the sampling was carried out in such a way as to make the final sample representative of the respective populations by gender and three age group (18-39; 40-54; 55+). The collected samples varied from 925 to 1000 individuals. The same questionnaire initially prepared as a generic English version was fielded in all eight countries (in the respective national languages). The only deviations from the generic version were related to the education categories and to a set of final questions implemented in Latvia, Russia and Ukraine with a focus on the evaluation of national IPV legislation.

Table 1 presents some basic sample statistics, while Figure 1 shows the unweighted age and gender compositions in each country. The proportion of women in the sample varies between 49.4% in Sweden and 55.0% in Belarus, Russia and Ukraine. The average sample age is between 43 (Armenia) and 51 (Sweden), while the proportion of individuals with higher education is between 29.3% in Belarus and 55.4% in Georgia. The highest proportion of respondents living in rural areas could be found in Armenia at 62.9%, while the lowest was in Georgia at 24.1%. Figure 1 illustrates good coverage across age groups for both men and women.

Table 1. FROGEE Survey: samples and basic demographics

Source: FROGEE Survey on Domestic and Gender-Based Violence.

Figure 1. FROGEE Survey: gender and age distributions

Source: FROGEE Survey on Domestic and Gender-Based Violence.

Socio-economic Conditions and Other Background Characteristics

To be able to examine the relationship between different aspects of domestic and gender-based violence to the socio-economic characteristics of the respondents, an extensive set of questions concerning the demographic composition of their household and their material conditions were asked at the beginning of the interview. These questions included information about partnership history and family structure, the size of the household and living conditions, education and labour market status (of the respondent and his/her partner) and general questions concerning material wellbeing. In Figure 2 we show a summary of two of the latter set of questions – the proportion of men and women who find it difficult or very difficult to make ends meet (Figure 2A) and the proportion who declared that the financial situation of their household deteriorated in the last two years, i.e. since September 2019, which can be used as an indicator of the material consequences of the COVID-19 pandemic. We can see that the difficulties in making ends meet are by far lowest in Sweden, and slightly lower in the other EU countries (Latvia and Poland). The differences are less pronounced with regard to the implication of the pandemic, but also in this case respondents in Sweden seem to have been least affected.

 Figure 2. Making ends meet and the consequences of COVID-19

a. Difficulties in making ends meet


b. Material conditions deteriorated since 2019

Source: FROGEE Survey on Domestic and Gender-Based Violence.

Perceptions and Incidence of Domestic and Gender-Based Violence and Abuse

Frequency of differential treatment and abuse

The set of questions concerning domestic and gender-based violence started with an initial module related to the different treatment of men and women, with respondents asked to identify how often they witnessed certain behaviours aimed toward women. The questions covered aspects such as women being treated “with less courtesy than men”, being “called names or insulted for being a woman” and women being “the target of jokes of sexual nature” or receiving “unwanted sexual advances from a man she doesn’t know”, and the respondents were to evaluate if in the last year they have witnessed such behaviours on a scale from never, through rarely, sometimes, often, to very often. We present the proportion of respondents answering “often” or “very often” to two of these questions in Figure 3A (“People have acted as if they think women are not smart”) and 3B (“A woman has been the target of jokes of a sexual nature”). We find significant variation across these two dimensions of differential treatment, and we generally find that women are more sensitive to perceiving such treatment. It is interesting to note that the proportion of women who declared witnessing differential treatment in Sweden is very high in comparison to for example Latvia or Belarus, which, as we shall see below, does not correspond to the proportion of women (and men) witnessing more violent types of behaviour against women.

Figure 3. Frequency of differential treatment (often or very often)

a. People have acted as if they think women are not smart


b. A woman has been the target of jokes of a sexual nature

Source: FROGEE Survey on Domestic and Gender-Based Violence.

Questions on the frequency of witnessing physical abuse were also asked in relation to the scale of witnessed behaviour. Here respondents were once again asked to say how often “in their day-to-day life” they have witnessed specific behaviours. These included such types of abuse as: a woman being “threatened by a man”, “slapped, hit or punched by a man”, or “sexually abused or assaulted by a man”. The proportion of respondents who say that they have witnessed such behaviour with respect to two of the questions from this section are presented in Figure 4. In Figure 4A we show the proportion of men and women who have witnessed a woman being “slapped, hit or punched” (sometimes, often or very often), while in Figure 4B being “touched inappropriately without her consent”. Relative to the perceptions of differential treatment the incidence of a woman being hit or punched (4A) declared by the respondents seems more intuitive when considered against the overall international statistics of gender equality. The proportions are lowest in Sweden and Poland, and highest in Armenia and Ukraine. However, the perception of inappropriate touching by men with respect to women (Figure 4B) shows a similar extent of such actions across all analysed countries.

Figure 4. Frequency of abuse (sometimes, often or very often)

a. A woman has been slapped, hit or punched by a man


b. A woman has been touched inappropriately, without her consent, by a man

Source: FROGEE Survey on Domestic and Gender-Based Violence.

Perceptions of abuse

The questions concerning the scale of witnessed behaviours were complemented by a module related to the evaluation of certain behaviours from the perspective of their classification as abuse and the degree to which certain types of gender-specific behaviours are acceptable. Thus, for example respondents were asked if they consider “beating (one’s partner) causing severe physical harm” to be an example of abuse within a couple (Figure 5A) or if “prohibition to dress as one likes” represents abuse (Figure 5B). This module included an extensive list of behaviours, such as “forced abortion”, “constant humiliation, criticism”, “restriction of access to financial resources”, etc. As we can see in Figure 6, with respect to the clearest types of abuse – such as physical violence – respondents in all countries were pretty much unanimous in declaring such behaviour to represent abuse. With respect to other behaviours the variation in their evaluation across countries is much greater – for example, while nearly all men and women in Sweden consider prohibiting a partner to dress as he/she likes to be abusive (Figure 5B), only about 57% of women and 36% of men in Armenia share this view.

The questionnaire also included questions specifically focused on the perception of intimate partner violence. These asked respondents if they knew about women who in the last three months were “beaten, slapped or threatened physically by their intimate partner”, and the evaluation of how often intimate partners act physically violent towards their wives.

Figure 5. Perceptions of abuse: are these examples of abuse within a couple?

a. Beating causing severe physical harm


b. Prohibition to dress as one likes

Source: FROGEE Survey on Domestic and Gender-Based Violence.

A further evaluation of attitudes towards violent behaviour was done with respect to the relationship between a husband and wife and his right to hit or beat the wife in reaction to certain behaviours. In Figure 6 we show the distribution of responses regarding the justification for beating one’s wife in reaction to her neglect of the children (6A) or burning food (6B). The questions also covered such behaviour as arguing with her husband, going out without telling him, or refusing to have sex. As we can see in Figure 6, once again we find substantial country variation in the proportion of the samples – both men and women – who justify such violent behaviour within couples. This was particularly the case when respondents were asked about justification of violent behaviour in the case of a woman neglecting the children. In Armenia as many as 30% of men and 22% of women agree that physical beating is justified in those cases. These proportions are manyfold greater than what can be observed in countries such as Latvia, where 3% of men and women agreed that abuse was justifiable under these circumstances, or Sweden, where only 1% of men and women agreed.

Figure 6. Perceptions of abuse: is a husband justified in hitting or beating his wife

a. If she neglects the children


b. If she burns the food

Source: FROGEE Survey on Domestic and Gender-Based Violence.

Seeking help and the legal framework

The final part of the questionnaire focused on the evaluation of different reactions to incidents of domestic and gender-based violence. Respondents were first asked if a woman should seek help from various people and institutions if she is beaten by her partner – respondents were asked if she should seek help from the police, relatives or friends, a psychologist, a legal service or if, in such situations, she does not need help. In Figure 7 we show the proportion of people who agreed with the last statement, i.e. claimed that it is only the couple’s business. The proportions of respondents who declare such an attitude is higher among men than women within each country, and is highest among men in Armenia (48%) and Georgia (25%). Again, these proportions are in stark contrast to men in Sweden, or even Poland, where only 4% and 8% of men agreed, respectively. Nevertheless, looking at the total survey sample, a vast majority believe that a woman who is a victim of domestic violence should seek help outside of her home, indicating that at least some forms of institutionalised support for women are popular measures with most people.

Figure 7. Proportions agreeing that domestic violence is only the couple’s business

Source: FROGEE Survey on Domestic and Gender-Based Violence.

The interview also included questions on the need for specific legislation aimed at punishing intimate partner violence and on the existence of such legislation in the respondents’ countries. The latter questions were extended in three countries – Latvia, Russia and Ukraine – to evaluate the specific sets of regulations implemented recently in these countries and to facilitate an analysis of the role IPV legislation can play in reducing violence within households. Legislation on domestic violence is relatively recent. During the last four decades, though, changes accelerated in this respect around the world. Legislative measures have been introduced in many countries, covering different aspects of preventing, protecting against and prosecuting various forms of violence and abuse that might happen within the marriage or the family. Research strives to offer evaluations on what legal provisions are most effective, in a setting in which statistics and information are still far from perfect, and as a consequence of the dearth of strong evidence the public debate on the matter is often lively. For legislation to have an effect on behaviour through shaping the cost of committing a crime, on the one hand, and the benefit of reporting it or seeking help, on the other, or more indirectly through changing norms in society, information and awareness are key. For how can deterrence be achieved if people do not know what the sanctions are? And how can reporting be encouraged if victims do not know their rights? The evidence on legislation awareness is unfortunately quite scarce. A survey of the criminology field (Nagin, 2013) concludes that this is a major knowledge gap.

Figure 8 shows the proportions of answers to questions concerning the need for and existence of legislation specifically targeted towards intimate partner violence. We can see that while support for such legislation is quite high (Figure 8A), it is generally lower among men (in particular in Armenia, Russia and Belarus). Awareness of existence of such laws, on the other hand, is much lower, and it is particularly low among women. It should be pointed out that all countries have in fact implemented provisions against domestic violence in their criminal code, but only around half of the population, sometimes much fewer, are aware of that.

Figure 8. Need for and awareness of IPV legislation

a. State should have specific legislation aimed at punishing IPV


b. Country has specific legislation aimed at punishing intimate partner violence

Source: FROGEE Survey on Domestic and Gender-Based Violence.

Recent reforms of DV legislation that were implemented in Russia in 2017, in Ukraine in 2019 and in Latvia just a few months ago (at the time of the survey, the changes were at the stage of a proposal) were the subject of the final survey questions in these countries. We find that awareness of these recent reforms is very low in all three countries, and knowledge about the reform content (gauged with the help of a multiple-choice question with three alternative statements) is even lower. Our analysis suggests that gender and family situation are the two factors that most robustly predict support for legislation, while education and age are associated with awareness and knowledge of the reforms. Minority Russian speakers are less aware of the reforms in both Ukraine and Latvia, in Ukraine are also less likely to answer correctly about the content of the reform, and in Latvia are less supportive of DV legislation in general.

Analyses of this type are useful for policy design, to better understand which groups lack relevant knowledge and should be targeted by, for example, information campaigns to combat DV, such as those many governments around the world implemented during the covid-19 pandemic.

Future Work Based on the Survey

The above is just a small sample of the rich source of information that has resulted from conducting the survey. Already from this simple overview we can see some interesting results. There are, for example, clear differences between men and women in perceptions of how common certain types of abusive behaviour are. However, for many questions differences between countries are larger than those between men and women within a country. Interestingly such differences are also different depending on the severity of the abuse or violence. In Sweden the perception of women being victims of less violent abuse is higher than in some other countries where instead some more violent types of abuse are reported as being more common. This could, of course, be due to actual differences in actual events but it is also possible that there are differences in what types of behaviour are considered to represent harassment and abuse in different societies. More careful data work is needed to try to answer questions like this and many others. Currently there are a number of ongoing research projects based on the survey results, three of which will be presented at the FREE-network conference on “Economic and Social Context of Domestic Violence” in Stockholm on May 11, 2022. Our hope is that this work will help in taking actions to prevent gender-based abuse and domestic violence based on a better understanding of underlying cross-country differences in social norms and attitudes and their relation to socio-economic factors.

About FROGEE Policy Briefs

FROGEE Policy Briefs is a special series aimed at providing overviews and the popularization of economic research related to gender equality issues. Debates around policies related to gender equality are often highly politicized. We believe that using arguments derived from the most up to date research-based knowledge would help us build a more fruitful discussion of policy proposals and in the end achieve better outcomes.

The aim of the briefs is to improve the understanding of research-based arguments and their implications, by covering the key theories and the most important findings in areas of special interest to the current debate. The briefs start with short general overviews of a given theme, which are followed by a presentation of country-specific contexts, specific policy challenges, implemented reforms and a discussion of other policy options.

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.

Financial Aid to Ukrainian Reconstruction: Loans Versus Grants

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This brief provides an overview of the discussion on the relative merits of grants and loans in the literature on foreign aid, including a short section on debt relief initiatives. These claims are then tested against the context of Ukrainian post-war reconstruction, and it is argued that the case for providing grants is very strong. This argument is based on the magnitude of the investments needed, the need to create a long-run sustainable economy, the road towards a future EU membership, and the global value of a democratic and prosperous Ukraine as a bulwark against autocratic forces.

Introduction

One topic in the discussion on the post-war reconstruction of Ukraine is to what extent foreign support should come as loans or grants. The case at hand regards reconstruction in the aftermath of a military invasion by an aggressive neighbor. Therefore, Ukrainian reconstruction is sometimes compared to the Marshall Plan, the US package to help rebuild Europe after World War II. But this choice is also part of the more general discussion on foreign aid, comparing concessional loans (loans with lower interest rates than the market rate) with grants (financial transfers with no expectation of repayment), not least since many aid receiving countries have been highly indebted. What are then the arguments in favor of one or the other in the foreign aid literature? And how should we think about this in the context of the Ukraine crisis?

The Case for Loans

From a donor perspective, loans could be preferred from a purely financial viewpoint, as long as they are repaid. This must be put into the perspective of the purpose of foreign aid, though. If the purpose is to increase the welfare of the poor, and if loans cause macroeconomic imbalances that eventually lead to a debt crisis, using loans for aid will defeat its purpose. It is thus important, even from a donor perspective, to differentiate between the pure financial costs and the effectiveness and efficiency of foreign aid in relation to the stated goals. Yet, the paradigm on which development banks such as the World Bank motivate their strategy is that, even from an effectiveness perspective, loans may outperform grants. In their model, the bank has a broad portfolio of investments across multiple countries prioritized in order of the social rate of return. By lending out money, the bank can invest the returns from the most prioritized project into the second-most prioritized project, most likely in a different country. If the money instead had been given as a grant, the best possible outcome is that the receiving country can now invest the returns in the next best project within that country. This argument thus relies on the assumption that development banks can continually identify the most promising recipients among their wide portfolio of alternatives.

It has also been argued that grants may reduce incentives to raise tax revenues, and encourage government consumption over investments, as there is no need to generate net revenues to repay the debt (e.g., Clements et al. 2004; Djankov et al. 2004). From a donor perspective, it can also be argued that the monitoring of grants may be weaker because donors have no direct financial interest in the success of a project if it is financed by a grant. The disciplining effect of loans, though, relies on the absence of moral hazard problems. If receiving governments expect debt to be forgiven anyway when it is perceived as unsustainable and counterproductive to the country’s development, loans may be no better.

Based on arguments such as those above, part of the literature suggests that concessional loans are more likely than grants to promote growth in recipient countries, at least in good institutional environments. Cordella and Ulku (2007) look into this in detail and develop a model linking the degree of concessionality, for a given level of foreign aid (i.e. the extent to which finances are on preferential terms compared to market rates), to the receiving country’s economic growth rate, in a world where default is possible. Concessionality varies from 100 percent grants to 100 percent loans on market terms. The model suggests that a country with better policies and stronger institutions has a higher absorptive capacity for investments, meaning it can handle a lower level of concessionality (i.e., more loans, fewer grants) without going into default. They also argue that the immediate incentives for default on a loan are higher for a poorer and more indebted country as the cost of servicing the loan is higher. This would motivate relatively more grants and fewer loans to countries that are poor and highly indebted. Taking this to the data, they find in consistence with their theory that for any given level of total assistance, the impact on growth is increasing with the degree of concessionality for poor countries with weak policy and institutional environments, whereas this matters less for richer countries with better policies and stronger institutions. Looking at the level of indebtedness, the results are inconclusive.

The Case for Grants

The arguments above generally favor loans over grants, but it is of course crucial to also consider the risks and consequences of excessive debt burdens and sovereign default. Perhaps the most dramatic example of the potential consequences of shouldering a country with an excessive debt burden comes from Germany after the end of World War I. The economic struggles and sense of humiliation that followed have been argued to have contributed to German grievances leading up to World War II. Less dramatic but still with significant implications is the “lost decade” affecting Latin American middle-income countries in the 1980s. The combination of cheap credit from oil-exporting countries and the sudden dramatic increase of international interest rates following US policies in the early 1980s resulted in unsustainable levels of commercial loans. This crisis led to a US initiative, the Brady Plan, by which bank loans were consolidated and partially backed by the US government.

Excessive lending is often the result of distorted incentives. Within development banks, there are widely recognized internal incentives to get projects “through the door” (e.g., Briggs 2021). This “aid pushing” happens for both grants and loans, but the consequences can be more detrimental for loans if this leads to unsustainable debt levels. Similarly, there is evidence of defensive lending, where countries receive loans simply to be able to repay previous loans. Birdsall et al. (2003) find that donors lent more to African countries with bad policies if they had a large existing debt. On the other side, recipient country governments with short-term horizons and in environments with weak institutional checks and balances do not necessarily internalize the full costs of excessive lending. Due to these incentives on both sides, loans too often reach unsustainable levels, with debt to GDP ratios and debt to net export revenues becoming increasingly alarming.

With increased recognition of the costs of development of unsustainable levels of official lending, debt negotiations targeting highly indebted low-income countries have become common. These negotiations have often taken place through the Paris Club (a group of 22 high or upper-middle income creditor nations, including Russia) or through the HIPC (Highly Indebted Poor Countries) initiative (e.g. Birdsall et al. 2002). These debt reduction agreements have been continuously renegotiated, offering more and more generous conditions including debt forgiveness, rescheduling of existing loan terms, and more focus on grants in the portfolios of official financing.

Of particular relevance for this note, though, are the discussions around these initiatives that illustrate the different arguments made in favor of, or against, debt relief. As brought up in Birdsall et al. (2002), critique against the HIPC initiatives came from both sides. On the one hand, some argued that debt forgiveness was just more aid “down the rathole”, encouraging irresponsible policies by receiving governments (e.g. Easterly 2001), and fuelled by commercially motivated bilateral donors and multilateral institutions with misguided bureaucratic incentives. In order for aid to be effective, much more stringent conditionality was needed, and if that didn’t work, stricter selectivity in terms of which governments to partner with. On the other hand, others argued that the initiatives did not go far enough (e.g. Sachs, 2002). The economic arguments largely relied on concepts of a poverty trap, impossible to escape under conditions of a heavy debt burden requiring scarce foreign exchange to be used for debt service and discouraging investments. These countries were perceived as particularly vulnerable to adverse economic shocks, and as such, in need of insurance mechanisms that wouldn’t burden them with claims hampering their ability to prosper looking forward. But there was also a moral dimension, with blame focused on the creditor side, arguing that citizens of poor nations could not be burdened by debt issued for political reasons by creditors looking the other way when receiving rulers used proceeds for personal purposes.

Financing Post-war Recovery

The discussion above relates to foreign aid in general. The situation of financing post-war recovery is more specific, but past examples may give some points of reference. It should be noted, however, that every situation is unique in terms of the level of destruction, preconditions for a quick recovery, the political ramifications, and the risk of a resurgence of violence. And all these factors matter for the ability and willingness of foreign actors to step in and help.

An often-made reference in conjunction with Ukrainian recovery plans is the Marshall Plan, also known as the European Recovery Plan following World War II. Through this plan, financed by the US, initially 16 countries in Europe were getting “help to self-help” at an amount corresponding to roughly 10,5 percent of the countries’ GDP at the time (roughly about $13 billion, or $138 billion in 2019 dollars). The resources were spent differently across receiving countries, depending on the level of physical destruction. Importantly, grants accounted for as much as 90% of the total resources (Becker et al. 2022). More generally, grants usually account for a more significant share of aid flows when it comes to post-war reconstruction. This is natural, as a large share of the funding typically goes to humanitarian relief, and war-torn countries tend to be saddled with debt and a low capacity to raise domestic revenues in the short to medium term given the destruction of the war.

The common reference to the Marshall Plan in the context of Ukraine is probably partly geographically motivated: it is another war in Europe. But there are also other reasons, such as the direct unprovoked aggression by one of the world’s leading military powers, and the potential ramifications for world peace and the existing world order. The Marshall plan was motivated by the desire to avoid the mistakes from the peace agreements after WWI, and to help create a unified western Europe as a bulwark against further communist expansion from the Soviet Union. There are similar arguments to be made for the case of Russia’s war on Ukraine.

Implications for Ukraine Reconstruction

According to World Bank statistics, the total external debt stock of Ukraine in 2020 was $130 billion in current values, or 81,4 % of Gross National Income (GNI). This is already quite high, but the war has of course completely upended the situation and the IMF argued that Ukraine was facing debt sustainability issues already by the beginning of March 2022. Public finances are in the short run facing double pressure from a steep fall in revenues as economic activity drops and the ability to raise taxes is eroded, and an increase in expenditures on defence and humanitarian relief. Looking ahead, estimates of the Ukrainian costs of the war range between $440 and $1 000 billion by end of March 2022, but there is of course high uncertainty, and the bill is increasing for each day that the war goes on (Becker et al. 2022). This could be compared to the 2021 estimate of Ukraine’s GDP at around $165 billion. Even in the most optimistic scenarios, the rebuilding effort will be very costly, and will require massive amounts of foreign capital.

The sheer amount of effort needed in itself speaks to the need for grant financing. Rebuilding will require both public and private capital, and attracting new investments will necessitate an economic environment that is perceived as stable, dynamic, and conducive to long-term growth. As in the discussion on debt forgiveness for low-income countries above, such new investments are unlikely to materialize if the debt situation is deemed unsustainable. Furthermore, arguments in favor of loans over grants on grounds of fostering domestic macroeconomic responsibility and reducing moral hazard problems, fall flat when a country is invaded by an aggressive neighbor. Ukraine has had its share of bad politics, but the current situation is not caused by poor policies, lack of reform, or irresponsible lending under the assumption of future bailouts.

It should also be noted that both the Ukrainian government and representatives of the European Union (EU) have emphasized the long-term ambition that Ukraine should join the EU. This will not be possible, however, unless the country’s economy is in order, including a sustainable debt level, according to EU requirements for all joining members. Were Ukraine to shoulder excessive levels of debt at this moment it would thus jeopardize this ambition. And not least, Ukraine is fighting for its survival, but the war is also part of a wider emerging struggle between democratic and authoritarian forces over the future world order. The result of the war is of great significance for all democratic countries, though it’s the people of Ukraine that are facing the immediate horrific consequences. It is thus in our common interest to rebuild a prosperous and democratic Ukraine also as a bulwark against further authoritarian ambitions to change the existing world order. A Ukraine saddled with an unsustainable debt burden runs completely counter to the interests of the democratic world.

The Marshall Plan was successful in its goal “to permit the emergence of political and social conditions in which free institutions can exist”. This allowed for economic and political cooperation to take roots in western Europe, also contributing to political stability and prosperity. This cooperation expanded further east after 1989 with the inclusion of new member states into the European Union, largely solidifying a move towards market-based democracy in the region (despite some recent setbacks, primarily in Hungary). Let us build on these successful examples. The current situation offers an opportunity to bring an additional 44 million people into the European umbrella of peaceful cooperation in the near future. This ambition would become much more difficult, though, if Ukraine was saddled with an excessive debt burden.

References

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

Support the Future of Ukraine

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The Stockholm School of Economics (SSE) together with the Stockholm Institute of Transition Economics (SITE) and the Embassy of Ukraine in Sweden hosted a hybrid event to learn more about the impact of the war in Ukraine and to support fellow students and faculty members from the FREE Network partner school, the Kyiv School of Economics (KSE) and Ukrainian academics and students more generally.

Speakers

Speakers and participants from all over the world, including of course colleagues from the Kyiv School of Economics (KSE), joined the event. A number of highly distinguished speakers discussed the matter, among them:

During the evening, funds were raised for the newly formed Swedish nonprofit organization, the Friends of KSE, to help provide intellectual and humanitarian support to researchers and students at KSE, working within and outside Ukraine’s borders.

About “Friends of KSE

Friends of KSE is a Swedish nonprofit (“Ideell förening”) with the purpose to support academics with links to Ukraine and in particular, though not exclusively, those at the Kyiv School of Economics. This will be done through fundraising and financial as well as intellectual support. The funds raised will only be used to support Ukrainian academics and faculty, staff, and students at KSE. The administrative cost of the association is capped not to exceed 5% of the funds raised. Anyone that wants to support KSE is welcome, and there is also an opportunity to join the association.

Disclaimer: Opinions expressed during events and conferences are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Support the Future of Ukraine

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The Stockholm School of Economics (SSE) together with the Stockholm Institute of Transition Economics (SITE) and the Embassy of Ukraine in Sweden invite students, faculty, staff and partners to a hybrid event to learn more about the impact of the war in Ukraine and to support fellow students and faculty members from the FREE Network partner school, the Kyiv School of Economics (KSE) and Ukrainian academics and students more generally.

Speakers

This event launches the support association, Friends of KSE, and will host speakers and participants from all over the world, including of course colleagues from the Kyiv School of Economics (KSE). A number of highly distinguished speakers will join this event to discuss the matter, among them:

The moderators will be Torbjörn Becker, Director of SITE and Board Member of KSE together with Wilma Liewendahl, President of the Student Association (SASSE) at SSE.

During the evening, funds will be raised for the newly formed Swedish nonprofit organization, the Friends of KSE, to help provide intellectual and humanitarian support to researchers and students at KSE, working within and outside Ukraine’s borders.

Registration

The event will take place in a hybrid format and will be open to the public, however, registration is necessary. Please register via the Trippus registration platform (click here). The event will be held in the SSE Aula at the Stockholm School of Economics main building at Sveavägen 65 and available online via the Zoom platform.

About “Friends of KSE”

Friends of KSE is a Swedish nonprofit (“Ideell förening”) with the purpose to support academics with links to Ukraine and in particular, though not exclusively, those at the Kyiv School of Economics. This will be done through fundraising and financial as well as intellectual support. The funds raised will only be used to support Ukrainian academics and faculty, staff, and students at KSE. The administrative cost of the association is capped not to exceed 5% of the funds raised. Anyone that wants to support KSE is welcome, and there is also an opportunity to join the association.

Disclaimer: Opinions expressed during events and conferences are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Sergei Guriev: Spin Dictators, Information Wars, and the Conflict in Ukraine

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In recent decades, a new generation of media-savvy authoritarian leaders has emerged. They have adapted their strategies to a digitally connected and information-driven world. These rulers, often called “Spin Dictators”, maintain control not through violence or fear but through careful manipulation of media narratives and public opinion.

The concept of Spin Dictators is crucial for understanding how modern autocrats sustain power while appearing democratic. In this discussion, Sergei Guriev, co-author of Spin Dictators: The Changing Face of Tyranny in the 21st Century, joins Maiting Zhuang, Assistant Professor at the Stockholm Institute of Transition Economics (SITE).

Sergei Guriev on Spin Dictators and Putin’s Shift to Fear Dictatorship

Sergei Guriev, Professor of Economics at Sciences Po, explains how modern autocrats differ from their 20th-century predecessors. Instead of relying solely on repression, Spin Dictators use propaganda, controlled media, and strategic disinformation to build legitimacy.

However, Guriev argues that Vladimir Putin’s transformation from a “Spin Dictator” into a “Fear Dictator” marks a turning point. As the Russia-Ukraine war continues, both repression and censorship have intensified. Consequently, the spin-based model of control is collapsing, giving way to classic fear-driven authoritarianism. This shift demonstrates how fragile image-based regimes can be once truth and credibility begin to erode.

Economic and Media Implications for Russia

During the conversation, Guriev analyzes how the war in Ukraine has transformed Russia’s economy and information environment.  The suppression of independent media has forced citizens to rely on state-controlled news outlets. As a result, the gap between perception and reality continues to widen. The shift from Spin Dictator to Fear Dictator shows the regime’s rising insecurity and declining legitimacy. Therefore, understanding this transition is essential for policymakers, journalists, and citizens seeking to grasp the new dynamics of modern authoritarianism.

About Sergei Guriev

Sergei Guriev is a Russian economist and Professor of Economics at Sciences Po. From 2016 to 2019, he served as Chief Economist at the European Bank for Reconstruction and Development (EBRD). Before that, he was the Rector of the New Economic School (NES) in Moscow, where he also held the Morgan Stanley Professorship in Economics.

In addition, Guriev is a co-founder of True Russia, an organization that collects donations for Ukrainian refugees and promotes freedom of speech and democratic values. He is also known for his outspoken criticism of the Russia-Ukraine war, making him one of the most prominent academic voices on authoritarianism and democracy today.

About Maiting Zhuang

Maiting Zhuang is an Assistant Professor at the Stockholm Institute of Transition Economics (SITE) and an Affiliated Researcher at the Mistra Center for Sustainable Markets. She received her PhD from the Paris School of Economics in 2020.

Her research focuses on Political Economy, Development Economics, and the Economics of Media. Moreover, her work sheds light on how information systems sustain or undermine authoritarian regimes, aligning closely with Guriev’s analysis of Spin Dictators.

Explore More on Sergei Guriev Spin Dictators

To learn more, watch the full discussion with Sergei Guriev and Maiting Zhuang

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.

German Dependence on Russian Energy, Economic Stress and Green Transition

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The invasion of Ukraine has created a reassessment in many European governments of the risks that Russia inflicts on countries and the current world order. This has implications for both the military buildup and the reliance on trade and exchange with Russia in particular in the area of oil and gas.

Perhaps nowhere has this turnaround been more significant than in Germany. Probably the country within Europe that has maintained the closest business ties with Russia since 1991.

Anders Olofsgård, Deputy Director at the Stockholm Institute of Transition Economics, and Associate Professor at the Stockholm School of Economics discusses the turnaround of German policy towards Russia with Guido Friebel, Professor at the Goethe University in Frankfurt.

Professor Guido Friebel is also a Fellow at CEPR, IZA, a VP of SIOE, a founding member of the Organizational Economics Committee of the German Economic Association (VfS), and a member of the Scientific Advisory Board of Sciences Po, and of ConTrust at Goethe University. He also serves as a Scientific Director of CLBO. Before joining Goethe, I held positions at the Toulouse School of Economics and EHESS, and at SITE, Stockholm School of Economics.