Russia’s renewed aggression against Ukraine is in its second month. The massive mobilisation of Russian troops in the east of Ukraine indicates that the fighting is far from over. In the past six weeks the war has already had a profoundly destabilising impact on the EU’s eastern neighbourhood. The continuation of the war is likely to have long-term regional ramifications as well.
First and foremost, the war has led to one of the biggest displacements of people in Europe since the Second World War. Internally over 7.1 million people have been displaced, according to the United Nations High Commissioner for Refugees (UNHCR), while nearly five million more Ukrainians have found refuge abroad. These numbers are likely to increase in the coming weeks. Whereas large numbers of people have fled Ukraine, the population of Moldova has grown by 4 per cent in a month. With as many as 100,000 refugees from Ukraine on its territory, Moldova is struggling to cope with the biggest refugee crisis in its recent history. So far there are no tent camps in Moldova as up to 90 per cent of Ukrainian refugees have been welcomed into the homes of Moldovan families, according to the World Food Programme (WFP). But should fighting reach Odesa, and the influx of refugees increases, tent camps in Moldova will become a reality.
Cut off from the European market, its second biggest destination for exports, Belarus is looking at some extremely bleak economic prospects
It is not only Ukrainians who are fleeing their country: Russians are leaving in droves too, as the regime in Moscow has ramped up repression at home in the wake of its military offensive. Moreover, some male citizens, anticipating a general military mobilisation, have decided to leave in order to avoid being conscripted into the army. Armenia and Georgia are primary destinations in the eastern neighbourhood for this new wave of Russian émigrés. Armenia has reported 3.3 times more arrivals from Russia in the first quarter of 2022 than in the same period in 2021. Property prices in Tbilisi and Yerevan have gone up, OC Media reports, as Russians seeking sanctuary drive the surge in demand.
Besides the immediate impact in terms of the movement of people, Russia’s aggression may affect long-term migration patterns in the region too. As Russia’s economy is poised to contract by 12 per cent in 2022 and underperform in the coming years, temporary workers from Moldova, Armenia, Georgia and Azerbaijan may find the Russian labour market less appealing and return home or look for alternatives. This in turn will change the geography of migration and remittances in the long run.
The effects of the war have also been keenly felt in the economic sphere. Russia’s bombardments have caused significant damage to Ukraine’s infrastructure. The estimated cost of destroyed infrastructure during the first month of the war is around $63bn, according to the Kyiv School of Economics. The final bill will be much higher. The war has also led to a significant economic slowdown as factories and production facilities across the country have had to suspend activities. The World Bank forecasts that Ukraine’s economy might contract by 45 per cent this year.
The war has also resulted in the almost total suspension of trade between Ukraine and Russia as well as (co-belligerent) Belarus. The latter country is particularly affected as prior to the war Ukraine represented its third most important export market. Cut off from the European market, its second biggest destination for exports, Belarus is looking at some extremely bleak economic prospects. Its foreign currency reserves are melting fast, having declined by 8.4 per cent in March. To avoid collapse, Minsk will have no choice but to be drawn closer into Russia’s economic orbit.
The aggression against Ukraine has triggered a chain reaction in Moldova too. It has disrupted export and import routes in the east. Local farmers heavily dependent on the Russian market have almost totally lost access to it, a development which Russia’s political clients have not hesitated to exploit and use against the government in Chisinau. Instead of 8 to 9 per cent growth, under various scenarios Moldova’s economy may decline between 3 and 15 per cent in 2022. The war in Ukraine, a transit country for imported gas, also threatens Moldova’s energy security.
The economic impact in the South Caucasus is mixed. On the one hand, Armenia is feeling the heat as Russia, its main trading partner, experiences economic turmoil, which will also likely result in migrants sending less money back home. Armenia’s food security is in jeopardy as Russia is the country’s main source of grain. Yerevan must seriously rethink its trade policies. On the other hand, Azerbaijan may reap profit from the situation, as the EU is eager to diversify energy imports away from Russia and has begun to invest more diplomatic efforts in deepening relations with Baku. Azerbaijan and Georgia may benefit as well from increased transit traffic of goods between Europe and Asia via the South Caucasus, as the railway route via Russia and Belarus has been effectively shut down.
Russia’s progress in the southern military theatre would put Moldova’s statehood in peril
The third and arguably the most important effect of the war is in the security realm. With Russia bent on destroying Ukraine’s statehood and the regime in Minsk playing along, Ukraine will require a much bigger army, sizeable reserve corps and long-term investments in defence capabilities to survive as a sovereign state. For Moldova, the aggression is a serious wake-up call too. Russia’s progress in the southern military theatre would put Moldova’s statehood in peril. Chisinau has every interest in seeing Ukraine succeed. At the same time, Moldova will have to overhaul its national security policy to restore its defensive capabilities.
Georgia’s security situation on land and sea is precarious at best. Russia’s maritime policy in the Black Sea threatens to sever Georgia’s lifeline to Europe. Aggression against Georgia on land cannot be ruled out in the future. In the meantime, Russia could formalise the annexation of South Ossetia and its merger with North Ossetia. Russia’s aggression against Ukraine also has implications for the conflict between Armenia and Azerbaijan over Nagorno-Karabakh. In 2020 the military balance decisively shifted in Azerbaijan’s favour. Now Russia – Armenia’s security guarantor – is militarily overstretched in Ukraine. This has made Armenia’s position even more vulnerable. This partly explains why over the last few weeks Yerevan has intensified diplomatic efforts to normalise its relations with Turkey and stepped up its outreach to the EU with the aim to play a mediating role in relations with Azerbaijan.
Overall, the security and economic situation in the EU’s eastern neighbourhood is in great flux. Demands for the EU’s stabilising intervention, be it to provide economic assistance, diplomatic mediation or security support, will increase. To be able to respond, the EU must recalibrate its policy towards the region. It is no longer enough to be the biggest trading bloc. Clearly, the EU will have to take on a greater security role in the months and years to come.