Estonia, Latvia, and Lithuania are small, open economies on the Eastern edge of the European Union and NATO. For understandable reasons, these countries are not often talked about (they collectively have a population smaller than Massachusetts) but when they are talked about it is usually to highlight their dynamism, innovation, and impeccably capitalist credentials. Estonia, for example, attracted a lot of media attention with its e-citizenship initiative, while the Baltics have generally gotten high marks, at least from conservatives, for their embrace of austerity and extremely tight fiscal discipline.
Among Westerners, then, the Baltics, to the extent that anything is known about them, have generally become hallmarks for economic dynamism, open and competitive markets, and taxes that are both very flat as well as very low.
The central fact about the Baltics, though, is that they are the most rapidly depopulating countries in the world. Since 1990, the Baltics have collectively lost 22% of their total populations. On a proportional basis, no other country really comes to close to the Baltics’ experience (the former East Germany is probably the closest analogue).
It is helpful and instructive to compare the Baltics to a country that has become a synonym for “death and recession,“ a “drunken nation” sitting on a “ depopulation bomb,” and a place where the population is “dying for lack of hope.” I’m talking, of course, about Russia whose demographic crisis during the 1990′s spawned a shockingly long list of eulogies for a country that had “lost the will to live.” Numerous books have been written about how Russia’s population crisis reflects its deep moral decay, or about how “the end of Russia” will impact American national security.
Here, based on information gathered from the relevant national statistical agencies, is what has actually happened since 1990. Please note that the Russian figures in the chart do not include Crimea, and have thus not been artificially inflated by the recent annexation of the peninsula.
Over the past decade Russia’s population has broadly (albeit, in all likelihood, temporarily) stabilized. Russia’s population in 2015 was about 500,000 more than it was in 2005. In the Baltics, meanwhile, the past decade saw the loss of roughly 730,000 people. That is to say that over the past decade the Baltics have been depopulating more quickly than Russia not just in relative terms but in absolute terms as well. For a handful of small countries with a collective population of a little more than 6 million, that is a shockingly rapid rate of decline.
Does any of this matter? Well, it obviously matters quite a lot for people living in the Baltics. Depopulation isn’t necessarily a completely unsolvable problem (Germany has done some creative planning on how to manage shrinking cities) but it’s pretty difficult to manage at the rate currently being experienced. From a long term perspective, it will be extraordinarily hard to keep pension systems solvent when the population is decreasing by upwards of 1% a year. Perhaps the Baltics will find a way to square that circle, but it won’t be easy.
More interestingly for American taxpayers, the Baltics are NATO members. Various presidential candidates, including Jeb Bush, have spoken of the need to bolster our presence in the region, and there are indications that the British are also going to deploy troops in order to deter any Russian aggression. Since the Baltics are already in NATO this seems the only possible path forward (refusing to station any forces would imply that NATO’s Article V guarantee had become moot) but given the Baltics’ extreme demographic weakness it seems worth noting that these deployments aren’t going to be temporary, but permanent. The Batics currently have extremely limited military capabilities, and, given their negative demographic trajectories, those capabilities are likely to further erode.
Despite all of the flack Russia gets as the “dying bear,” the reality is that demographic decline in the former Soviet Union is far more of a problem for America’s allies.
by Mark Adomanis at Forbes.com
