A war in a pandemic - Implications of the Ukraine crisis and COVID-19 on global governance of migration and remittance flows

Remittance flows to low- and middle-income countries are expected to grow by 4.2 percent to reach $630 bn in 2022. This increase is on the back of a robust recovery of 8.6 percent achieved in 2021 during the COVID-19 pandemic.

The latest Migration and Development Brief reports remittances to Ukraine are expected to rise by over 20 percent in 2022, but those to many Central Asian countries dependent on Russia are likely to fall. Overall, remittance flows to the Europe and Central Asia region are projected to decline modestly in 2022.

In other regions, remittance flows are projected to return to moderate growth in 2022: East Asia and Pacific (excluding China), 3.8 percent; Latin America and the Caribbean, 9.1 percent; Middle East and North Africa, 6 percent; South Asia, 4.4 percent; and Sub-Saharan Africa, 7.1 percent.

The Russian invasion of Ukraine this year has not only triggered large-scale humanitarian, migration, and refugee crises, it has also added downside risks to the global economy that is still dealing with the COVID pandemic. The direct effects of a decline in remittance flows and the indirect effects of rising food, fuel, and fertilizer prices have increased the risks of food insecurity and rising poverty in many low-income countries.

During the COVID-19 crisis spanning 2020-21, the stock of international migrants declined. The Ukrainian crisis has reversed that trend. Including the refugees from Ukraine, the stock of international migrants and refugees is likely to reach around 286 million in 2022.

The Ukraine crisis will affect the global governance of migration in the coming years. As of the end of April 2022, according to the UNHCR, 5.5 million Ukrainians had left for Poland and other countries. An even larger number of persons had been displaced internally. The rapid pace and scale of the displacement of Ukrainians has shifted global policy attention away from other developing regions and peoples affected by fragility, conflict, and violence. It has also shifted policy makers' focus from addressing economic migration toward addressing the needs of refugees. This shift is likely to affect the proceedings and outcomes of the upcoming International Migration Review Forum.

The Ukraine crisis has further strengthened the case for creating a Concessional Financing Facility for Migration to support both destination communities experiencing a large influx of migrants and origin communities experiencing return migration during the COVID-19 crisis. As the long-term and short-term consequences of this crisis begin to unfold, it is increasingly evident that supporting host communities is the need of the hour.

The war in Ukraine has also affected international payment systems, with important implications for cross-border remittance flows from Russia to Central Asian countries that have a large dependence on remittance inflows from Russia. The exclusion of Russia from the SWIFT payment system has added a national security dimension to international payment systems, which are likely to become multipolar in the future. A continuation of different payment systems or even further diversification/fragmentation is likely to slow progress in fostering interoperability of payment systems and reducing remittance fees (SDG indicator 10.c.1).

Lowering remittance fees by even 2 percentage points could potentially translate into $12 billion of annual savings for international migrants from the LMICs. Applying risk-based, proportionate and simplified anti-money laundering and counter-terrorist financing (AML/CFT) procedures for small remittance transactions as well as Customer Due Diligence (CDD) and AML/CFT compliance processes could help to reduce remittance costs and mobilize diaspora investments.

The global goodwill towards refugees and migrants from Ukraine opens an opportunity to develop and pilot programs to facilitate their access to jobs and social services in host countries. The COVID-19 pandemic and the Ukraine crisis have further highlighted the need for frequent and timely data. In April, the World Bank, under the auspices of KNOMAD and in collaboration with countries where remittances provide a financial lifeline, has launched an International Working Group to Improve Data on Remittance Flows. This initiative supports the first objective of the Global Compact on Migration.

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