The New Russian Émigré - Massive Brain Drain
Demographics and Labor - Aging Population and a Low Fertility Rate. Russian Émigré Profile and Where are They Going? What is to be Done?
Dear Subscribers,
“Barbershop Whispers….Russia” begins with “My Takeaways”on the main topic followed by the main topic discussion. The last two sections of “Barbershop Whispers…Russia” will be follow-ups from previous publications and emerging events.
In the previous issue, I discussed the Ukrainian drone attacks deep into Russia becoming a common feature of the war and the state of the Ukrainian counter offensive.
This issue focuses on Russia’s demographics and the on-going brain drain of young well educated workers leaving the country in droves.
My Takeaways:
EDUCATIONAL CRISIS: Putin’s war is hollowing out the Russian brain trust. Leading scientists and academics are leaving Russia because they do not support the war. This will impact the quality of higher learning for decades to come;
HUMAN CAPITAL: Russia has lost at least 1M highly educated and experienced workers who contributed to Russia’s economy and global competitiveness. The longer the war continues, the greater the probability they never return;
DEMOGRAPHICS: An aging population, low fertility rate (1.52), and no real immigration policy. The loss of the 1M workers and new mobilizations for the war will strain the economy and erode the standard of living;
BENEFICIARIES: Western and neighboring countries – Turkey, Kazakhstan, Georgia, etc. – will benefit from the migration of talent out of Russia.
Russian Demographics and Labor
The importance and value of human capital was not lost on David Rockefeller, Chairman of Chase Manhattan Bank.
“The bank’s greatest assets leave at 5 o’clock and return the next day at 9 o’clock” – David Rockefeller
Russia’s population in 2023 is estimated at 142.7M, according to the CIA World Factbook. This number does not include the occupied territories of Crimea, Donetsk, Luhansk, Kherson, and Zaporizhzhia. This number represents a roughly 5M decline from the 1993 level, largely due to low fertility and high death rates.
(Source: ROSSTAT)
These problems were brought on by economic and political crises. By 2023, Russian fertility rate had improved to 1.42 children born per woman and average life expectancy to 73 years, compared to 1.34 and 64 years in 1993, respectively. While the fertility rate today remains below the 2.1 replacement rate need for a stable population, the rising average life expectancy ensured some stability up until 2020, the beginning of the COVID pandemic.
Russia, like many European countries, is experiencing an aging and declining population. The Kremlin has implemented financial incentives for young families to have more children, but these policies will take time to take effect and on their own will not solve the depopulation problem. Without a substantial immigration solution, as discussed by Igor Yefremov, an economist at the Gaidar Institute for Economic Policy, the depopulation problem will become more acute over time, severely impacting both economic growth and global competitiveness.
Estimates put the size of the Russian labor force at 73M. According to the International Labour Organization, public sector employees account for 40% of all employment in Russia (This figure includes the 1.2M full-time soldiers currently in service). Such a large public sector demand for labor puts a strain on supply, with the private sector competing in the same labor pool.
The above sets the background for the impact the war has had on labor. Mobilization has reduced the labor pool in terms of quantity and quality. An estimated 300,000 citizens have been mobilized to date, and another mobilization is expected by the end of 2023. The first mobilization included established high value labor reservists taken out of existing jobs. The first mobilization also triggered the emigration of 800K to 1M citizens. In all, an estimated 1.3M citizens have been taken out of the labor force.
Who are the Russian Émigré? Where do They Migrate?
The current exodus from Russia may well exceed in numbers the emigration in the early 1920s, when Russians fled the Bolshevik revolution and civil war. How this wave of emigration plays out will be a function of how long the war lasts, as well as how isolated Russia, and Russians, are from the global economy.
To generalize, today’s Russian émigré calls themself a “relocant” — someone who has relocated — not a refugee or migrant. The term implies a voluntary and temporary movement from the home country with the expectation of return relatively soon. The “relocants’” primary reason for leaving Russia is Putin, whom they believe is isolating Russia from the global economy and is out of touch with the Russian people.
These new Russian émigrés are mostly young men under 40, college-educated, from the larger Russian cities, and significantly wealthier than the average Russian. They are also well traveled and integrated into the global economy, as tech engineers or entrepreneurs. For example, within five weeks of the February 2022 invasion an estimated 70,000 IT workers left for Kazakhstan, Georgia, and Armenia.
According to research conducted by the Re: Russia, an analysis and policy network, up to 922,000 people have left Russia since February 2022, after Putin’s second invasion of Ukraine. The biggest beneficiaries of this migration have been Kazakhstan and Serbia.
(Source: Re: Russia)
These émigrés are different from the media cohort that has been forced to leave Russia and have generally settled in, and operate out of, Europe. The latter represent a political exile émigré class that has been forced out of the country because they work for independent media platforms, an activity frowned upon by authoritarian governments. For example, the “Dozhd” (TV Rain) media platform and Novaya Gazeta belong in this émigré category.
Another important émigré class, often overlooked despite historically having made incredible contributions to western technology, are academia and scientists.
Novaya Gazeta-Europe conducted research into the departure of professors from high-ranking universities in St. Petersburg and Moscow over the past 18 months, since the second invasion on Ukraine was launched. Through open sources, they identified 270 university staffers, professors, and rectors who have left Russia. One example was Dr. Igor Lipsits, one of the founders of the prestigious Higher School of Economics (HSE), who was dismissed in August for public comments against Putin’s war on Ukraine. Another HSE example was Dr. Ilya Inishev, who emigrated to Germany after he signed the “scientists’ letter” against the war on Ukraine.
According to the research, Germany, Israel, and the US have been the top destinations for these scientists:
(Source: Novaya Gazeta-Europe)
Furthermore, and what should be alarming for the Kremlin, are the fields of study from which this exodus is taking place. As illustrated in the chart below, computer science, economics, and mathematics are fields particularly affected by this trend:
(Source: Novaya Gazeta-Europe)
These are hallowed and historical fields of expertise for Russia and Ukraine. Think of Igor Sikorsky, who was born in Kyiv and fled Russia after the Bolshevik Revolution to eventually found one of the most innovative aerospace companies in American history, Sikorsky Helicopters.
What is to be Done?
I attended a Carnegie-sponsored conference “Problems of Engagement: Russia’s Security, Economic and Banking Crises” in St Petersburg in September 2000. Over dinner with a US banker responsible for the CIS, Russian Admiral Alexei Ovcharenko turned the conversation towards western aggression against Russia. The banker responded with:
“Real aggression would be visa-free travel for all Russians to the US and EU….Russia would experience a severe brain drain.”
The United States’ economic success has its roots in immigrants starting over, launching and building new businesses, and sometimes with great success – Sikorsky and Google’s Sergei Brin are just two examples. Europe also has a history of immigrant founders of successful companies. For example, Diliara and Vladimir Lupenko, who founded Impress in Barcelona in 2019, now own and manage 130 clinics in eight European countries.
The emigration of highly educated Russians represents a business opportunity for companies in need of technical and entrepreneurial skills, as well as countries with aging populations and declining fertility rates.
On the political front, western governments can establish direct ties with the Russian people, circumventing the Kremlin’s:
“the west does not want you…they want to destroy Russia”
propaganda by welcoming these immigrants. These are highly skilled workers with money and potential to contribute to the economy.
The impact of the Russian brain trust exodus will be long-term, generational, and become more acute the longer the war continues. Once these immigrants are established in their new environment and have developed a sense of security and belief in the future, it will be very difficult to draw them back to Russia.
In the end, the war is undermining Russia’s future and global competitiveness for generations to come.
Follow-ups & Quick Bites:
Follow-Ups:
Ukrainian Drone Strikes
Ukrainian drones struck Russia's Rostov-on-Don command center Thursday (7 Sep) night. As predicted in the last issue of BWR, Ukrainian drone strikes into Russia are now a common feature of the war.
Quick Bites:
Cubans Break Up Recruitment Ring:
Cuba arrested 17 people over an alleged “trafficking ring” recruiting young men to fight in Ukraine. The nationality of the 17 people arrested was not disclosed. With the offer of Russian citizenship, money, and work, the Cubans are lured into one-year contracts to fight in Ukraine. For many young Cubans, this an escape from the island and hope for a better life. Does this reflect a rift between Cuba and Russia? Unlikely.
Armenia Takes a Stand:
Russia inherited from the Soviet Union the position of “fair” arbitrator in the Nagorno-Karabakh conflict between Armenia and Azerbaijan. However, Türkiye continues to support Azerbaijan in this conflict and increasingly exerts more influence in the region at Russia’s expense.
With signs pointing to another flare-up in the conflict, Armenia has announced it will conduct military drills with the US in Armenia and join the International Criminal Court. Both actions reflect Russia’s eroding influence in the region.
Putin and Erdoğan Meet in Sochi
This was the first face-to-face meeting of the two leaders since 2022, and the main topic was Russia rejoining the Black Sea Grain Initiative (BSGI). Türkiye was one of the biggest BSGI beneficiaries and Erdoğan has significant economic and political incentives to bring Russia back into the deal.
Vol 1, No 10 - BWR 10.09.2023
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