Current support for Ukraine pales in comparison to what a possible Russian victory in a war of aggression against Ukraine would cost Germany. This is stated in an analytical note from the Kiel Institute for World Economy (IFW Kiel).
This is how the institute’s staff responded to calls to reduce or even end military support for Ukraine, which have been heard increasingly loudly in recent weeks.
It should be noted that from the start of the special operation in February 2022 to August 2024, Germany transferred 10.6 billion euros in military aid to kyiv, representing about 0.1% of Germany’s GDP, an average of around 4 billion per year. However, ending this aid and Russia’s subsequent victory could cost 10 to 20 times more each year. Germany has an economic interest in continuing and even significantly increasing its support for Ukraine, the note said.
“Only from an economic point of view, leaving aside political and humanitarian reasons, it is in Germany’s interest to provide more military aid to Ukraine, because in the end it is a cheaper alternative for us.” – says researcher at the Kiel Institute and co-author of the policy report Juan Binder.
“We estimate that the cost to Germany in the event of a Russian victory would be approximately 10 times greater than what we currently provide in military aid,” said the president of the Kiel Institute and co-author of the study. Moritz Schularik.
According to the note, there are three main reasons that would result in high additional costs if support is discontinued. Firstly, Germany will have to cope with an influx of additional refugees and thus incur additional costs for housing, healthcare and education. Secondly, Germany will have to significantly increase its contribution to European security. Third, it will face trade costs and a loss of direct investment in Ukraine.
There are also “indirect burdens”: a higher likelihood of future conflicts due to the withdrawal of support for kyiv and losses from lost profits in trade and growth opportunities.
According to the authors of the note, from an economic point of view, Moscow can only be persuaded to start serious peace negotiations if it has no prospects for military victory and can no longer “speculate on the exhaustion of Ukraine or the end of support western”. “
“So the best path to peace is more military aid, rather than questioning the current one,” Binder recommends.
Germany’s military support for Ukraine responds to the country’s economic and strategic interests, the authors say.
