Ukrainians Flee War and Recession

Ukraine's Maidan revolution, the seizure of Crimea by Russia, war against Russian-backed separatists in the east of the country and a deep economic recession have sent a torrent of Ukrainians either seeking shelter elsewhere in Ukraine or escaping east to Russia or west to the EU in search of a better and safer life. The figures are devastating: over 850,000 internally displaced persons and many more who have fled abroad.

Russia’s Federal Migration Service claims that over 200,000 Ukrainians had applied for refugee status or temporary asylum as of last October. In Poland alone, over 16,500 Ukrainians have applied for some form of temporary or permanent stay, and over 1,600 for refugee status – the highest figure in the EU. Official numbers on asylum seekers are just the tip of the iceberg.

The conflict also has implications for labour migration, a major feature of Ukraine’s economic and social landscape (especially in impoverished border areas). These could stretch far beyond the war-torn Donbas, as Ukrainians are forced to reconsider their priorities. Meanwhile, falling remittances – not least from Russia – are not good news for Ukraine’s struggling economy.

“The impact of protracted political crises on migration decisions is much more subtle and less researched than the influence of economic factors,” writes Marta Jaroszewicz of the Centre for Eastern Studies in Warsaw in an early paper considering the possible impact of the crisis in Ukraine on migration.

Even before the conflict began, the data on Ukraine’s migrant workers was incomplete. Many go abroad on brief stints, in what is known as circular migration. The fullest piece of research, a 2008 report by Ukraine’s statistics office, found that almost 1.5m Ukrainians went abroad at least once to work between January 2005 and June 2008 – that’s 5.1% of the working age-population. Two-thirds were men, though this varies between countries. Roughly half went to Russia, while others found work in EU countries such as Poland, the Czech Republic, Germany, Spain or Italy.

The remittances they send home matter on an individual and national level. In families with members working abroad, income can be up to one third higher than the Ukrainian average, by one estimate. In western Ukraine, children with parents working abroad are the ones with designer trainers or the latest gadget.

It is not just a question of pocket money. In 2013, remittances to Ukraine amounted to $9.7bn, or 5.4% of GDP, according to the World Bank. The figure for 2012 ($8.5bn) was just above FDI in Ukraine for the same year ($8.2bn). Around half the remittances come from Russia; 56% in 2012, according to World Bank estimates, or ten times more than from Poland.

But remittances have been falling since the start of 2014. They decreased by 13.2% year-on-year in the first half of 2014, according to the National Bank of Ukraine. The fall comes in a period of cooling Ukrainian-Russian relations and slower growth in Russia, where Moody’s expects GDP to contract by 5.5% this year.

Not only Ukraine has been hit. In the first quarter of 2014, remittances from Russia to other former Soviet countries contracted for the first time since 2009, according to the EBRD. Armenia, where remittances – largely from Russia – amounted to 21% of GDP in 2013, is one of the countries feeling the consequences. In January, Moody’s downgraded its issuer and government bond rating and changed the outlook to negative from stable, citing increased vulnerability due to falling remittances from Russia.

Still, lower remittances do not mean that Ukrainian migrants are shunning Russia. The decline in remittances is broader, with Russia responsible for some of it. Financial flows are increasingly difficult to measure because Ukrainians have lost confidence in the official wire transfer channels and are sending money home informally, Oleh Ustenko of Ukraine’s National Academy of Sciences told Capital. When the conflict in the Donbas ends, “the amount of cash transfers will be restored to its former level” and Ukraine will receive the money accumulated during the months of fighting, he added, perhaps somewhat optimistically.

Staying in Russia to work will become less simple, though. Russia has not introduced visas for Ukrainian citizens – as some feared it would do as tensions between Moscow and Kiev rose last year. But it has changed the rules for Ukrainian migrant workers. From the beginning of this year they face the same procedures as workers from other countries who do not need visas for Russia. That means they can stay for 90 days out of every 180 without additional documents.

Russia took a liberal attitude to Ukrainians in 2014 and it is time to stop treating them differently, said Konstantin Romodanovsky, head of Russia’s Federal Migration Service, announcing the changes in December. “With the exception of those who were forced to leave Ukrainian territory and are unable to return for objective reasons,” he added.

Analysts have suggested that restrictive measures like these might encourage more Ukrainian migrant workers to re-direct their efforts towards the EU. But it is not that simple, particularly if they lack the language skills, proximity and contacts of people living closer to Ukraine’s western border. The EU has been liberalising its visa regime with Ukraine and will – Kiev hopes – scrap the visa requirement sooner or later.

If the conflict with Russia intensifies, there may be a large-scale “mix of refugees and economic migrants” out of Ukraine, writes Franck Düvell of Oxford University’s Centre on Migration Policy and Society (COMPAS).

Annabelle Chapman for Central European Financial Observer.

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