The Russian-Ukrainian war began in 2014 after pro-European protesters toppled the government of the Moscow-backed president Victor Yanukovych.
This led to a rapid escalation of a crisis that resulted in the annexation of Crimea by Russia in March 2014 and the establishment of two Russian-protected de facto states in eastern Ukraine: the so-called Donetsk and Luhansk people’s republics (DPR, LPR).
By the time their territory had been consolidated with Russian help in February 2015, around 10,000 people had lost their lives as a direct consequence of the fighting. Since then, the number of casualties has risen to over 13,000, including nearly 300 people onboard Malaysia Airlines flight MH17.
For the past seven years, this war on the territory of Ukraine has continued. It is fought between Ukraine’s armed forces and the forces of the Russian-backed DPR and LPR along the 2015 ceasefire line, monitored by the OSCE’s Special Observer Mission to Ukraine.
The economic dimension of the war is primarily related to Ukraine losing its status as a transit country for Russian gas to the EU, costing the country around 1% of GDP – more than US$1 billion – while also creating gas supply problems.
The diplomatic dimension of the war is closely connected to unresolved tensions between Moscow and the west.
This is being played out in international arenas such as the 57-member Organization for Security and Co-operation in Europe (OSCE) and the Normandy Format, which brings together Ukraine, Russia, France and Germany. These have so far prevented a major escalation of the war and a massive humanitarian crisis.
The situation along the line of contact in eastern Ukraine, however, has remained highly volatile. Moreover, Russia has gradually stepped up pressure on Ukraine and its western allies.
There have been constant ceasefire violations, economic pressure, cyberattacks, some as early as 2014, information warfare – and now once more the threat of a full scale invasion, dependent on western guarantees for a Russian “zone of influence” in the post-Soviet space.
Beyond Russia and the West
But what is often missed in coverage of the Ukrainian crisis is the cumulative toll it has taken on the Ukrainian state and society. These have put Ukraine into a geopolitical position where the country remains in the crosshairs of rival great powers and has limited agency of its own.
All of this has significantly hampered reform efforts in Ukraine. Progress on curtailing corruption, strengthening the rule of law, decentralization and other governance reforms have either been put on hold or rolled back in the face of Russian invasion, which is now not just possible but seen as increasingly likely.
Ukraine’s continuing security concerns over the past eight years have exhausted state institutions and further diminished their effectiveness. Added to that, military spending has increased steadily from $1.6 billion in 2013 (1.6% of GDP) to $4.1 billion in 2020 (4% of GDP).
Spending on procurement alone is scheduled to rise from $838 million last year to just over $1 billion in 2022. This has further diminished the state’s ability to invest in public services and infrastructure, which in turn also means that the country’s attractiveness to foreign investment has further suffered.
After sharp declines following the 2008 financial crisis and the onset of the current crisis in late 2013, foreign direct investment in 2019 was just over $5.8bn compared with $8.2bn in 2012 and $10.7 billion in 2008. While the country has seen steady economic growth again since 2016, GDP in 2020 ($155 billion) was still well below the post-independence high of 2013 ($190bn). It declined further by 4% in 2020.
This has in part been the result of Covid – but, according to the World Bank’s Global Economic Prospects outlook of January 2022, Ukraine’s “longer-term growth prospects are constrained by sluggish reform momentum, which has hindered competition and private-sector development.”
Ukrainian society and Kyiv’s western partners have also become more tolerant of human rights restrictions. These may be an understandable, albeit short-sighted response to the acute external threat the country faces. But they are bound to damage the government both domestically and overseas and may affect EU assistance.
This is likely to further stretch Ukrainian institutions, potentially to breaking point.
Crisis of legitimacy and identity
In response to the latest escalation of the crisis, Ukraine has adopted the doctrine of “national resistance.” Under this, all men and women under 60 are subject to mobilization for military service.
While opinion polls show that 33% of Ukrainians are ready to offer armed resistance to Russia in the event of an invasion, a further 21% will render non-violent resistance.
But 14.3% would rather migrate to a safe place within Ukraine, and 9.3% would leave Ukraine in the case of a Russian invasion. Almost one in five Ukrainians (18.6%) will not resist Russian aggression.
Considering that in 2021 alone, 600,000 people (about 1.5% of the population) emigrated – the largest annual number since independence, indicative of the country’s demographic crisis – these figures also illustrate the continuing crisis of legitimacy and identity of the Ukrainian state.
So Ukraine’s crisis is not just military or geopolitical. These are, of course, at the forefront of policymakers’ minds, and they must be addressed with speed and determination.
But beyond these crises – and closely connected to them – there has also been a domestic crisis that requires sustained attention. Without resilient institutions, Ukraine will forever remain dependent on external support and be vulnerable to geopolitical shifts.
Ukraine’s domestic situation is as important a contribution to European and global security in the long term as the immediate imperative of deterring Russian aggression.