The Long-term Impact on Estonia of the War between Russia and Ukraine

Report: It must be taken into account that many war refugees will remain in Estonia

According to the Foresight Centre report “Long-term Impact of the Russo-Ukrainian War on Estonia. Population, Integration, Foreign Trade”, which was published today, Estonia must take into account that many war refugees will remain in Estonia for an indefinite time. The Centre drew up scenarios about 10,000, 30,000 and 60,000 war refugees remaining in Estonia.

Raporti "Vene-Ukraina sõja pikaajalised mõjud Eestile"

“The Russo-Ukrainian war has lasted for four months already and it shows no signs of ending in the nearest future,” Head of the Foresight Centre Tea Danilov said. “Besides the changed security situation, the war impacts Estonia also through the refugees who arrive here and the increase of the price of import,” Danilov pointed out. “Estonia’s opportunities are limited and it is important to be as far-sighted as possible in these circumstances. It is also necessary to take into account that many war refugees may remain in Estonia.”

Impact of the immigration of war refugees on the population and the revenue and expenditure of Estonia

Using Eurostat’s baseline population projection, the Foresight Centre assessed the impact of war refugees on the population of Estonia until 2100 according to three scenarios (when 10,000, 30,000 and 60,000 war refugees remain in Estonia). “The basic concerns of Estonia’s population will not be solved by the immigration of war refugees. The decreasing number of population will stabilise to a certain extent. Thus, the potential settling of war refugees in Estonia would postpone the decrease in the number of population, but would not prevent it,” expert of the Foresight Centre Magnus Piirits said. “10,000 war refugees would keep Estonia’s population number above its usual level for nine years, 30,000 for 22 years and 60,000 for 40 years,” he stated.

Piirits thinks that the state’s expenditure and revenue relating to war refugees above all depend on the integration pattern, or on the integration of refugees mainly with the Estonian community or with the local minority nations. “In these circumstances, we need to consider large-scale integration activities so that refugees could cope with everyday life as well as possible and the burden on our social system would remain affordable for Estonia,” Piirits added.

Commenting on the population trends relating to the refugees, former Minister of Population Riina Solman underlined that the refugees needed full support, but Estonians alone were responsible for the preservation of the Estonian values. “The survival of Estonia’s population depends first and foremost on the birth rate, which, according to the calculations of the Foresight Centre, needs to increase by 10% for Estonia to be sustainable in the long term,” she stated.

Long-term prospects of integration of war refugees

In the opinion of expert of the Foresight Centre Johanna Vallistu, the motivation for long-term integration is influenced by the possibility to return to homeland in foreseeable future, integration with Estonians or minority nations and the capability of the social system in supporting integration. “Supportive education and social system as well as the possibility to find employment as soon as possible play a major role in integration. Therefore, it is important to review and acknowledge the qualifications of immigrants if these essentially correspond to the standards in force in the Estonian education system.” Vallistu emphasised.

Director of the Integration Foundation Irene Käosaar pointed out that the cultural associations of minority nations that had been supported for a long time had proved to be Estonia’s strength in receiving the war refugees. “Estonia has a strong Ukrainian community that has contributed to the integration of war refugees. Over time, it is the Ukrainian community that has ensured that children arriving in Estonia go to Estonian-language schools,” Käosaar said. “The education system will become a very important factor in the integration of refugees. Thus, it could also support sooner transition to common education system in Estonia.” 

Impact of replacing imports from Russia and Belarus

Speaking of the economic impact of the war, expert of the Foresight Centre Uku Varblane pointed out that since 2016, the import from Russia and Belarus has been larger than Estonia’s export to these countries. “Replacement of all imports would cost the Estonian companies 860 million euro in 2021 prices. Logistics, metal, chemical and timber sectors have the greatest dependence on import from Russia and Belarus,” he said. “Most of the products that are imported are available on the global market, but at higher prices. The impact of import restrictions reaches companies also indirectly, through price increases for domestically purchased goods and services that depend on Russian-Belarusian raw materials and global value chains.”

Economist of the Bank of Estonia and Economic Adviser to the President of the Republic Kaspar Oja thinks that transit and commission trade (e.g., energy and oil products imported from Russia and Belarus) also has a role in the price increase of import. “In the case of Estonia, it is important to note that, in addition to import prices, export prices have also increased faster than the EU average. Estonia produces goods whose price has risen rapidly on global markets,” Oja said. “In addition to the cost of substitution, there has been a general global increase in the prices of the categories of goods imported from Russia and Belarus. In conclusion, therefore it is complicated to assess the exact cost of replacement of imports.”

Read the report “Long-term Impact of the Russo-Ukrainian War on Estonia. Population, Integration, Foreign Trade” (in Estonian)

Video of the presentation of the report can be watched (in Estonian) on the Foresight Centre’s Facebook page and website

In 2022, the Foresight Centre launched a special research into the long term impact of the Russo-Ukrainian war, which analyses the possible long-term impact of the influx of refugees on the population, employment, and the state’s revenue and expenditure in Estonia.

The Foresight Centre is an advisory board at the Chancellery of the Riigikogu that analyses long-term developments in society and economy. The Centre conducts research projects to analyse the long-term developments in the Estonian society, and to identify new trends and development directions.

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