There are a lot of numbers floating around about the cost of helping Ukraine defend against Russian aggression. I myself used a price tag of $100 billion a year to keep Ukraine in the war, and probably a price tag of $50 billion a year to fund post-war reconstruction.
The Kiel Institute for the World Economy provides the best tracking information on Western aid to Ukraine. Please refer to the following.
https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-support-tracker/
We also combine this with the website of the Ministry of Finance of Ukraine, which provides tracking of budgetary support to Ukraine.
https://mof.gov.ua/en/news/ukraines_state_budget_payment_since_the_beginning_of_the_full-scale_war-3435
According to Kiel data, total U.S. and European aid to Ukraine (military, budget/humanitarian) from the start of the full-scale invasion to the end of February 2024 was 156.7 billion euros. In addition, Japan provided approximately 6 billion euros and Canada approximately 5.4 billion euros during the same period. This would bring the total amount to over 168 billion euros. Of this total, approximately 67.1 billion euros was provided by the United States, which apparently does not include the latest $61 billion aid package for Ukraine approved by the U.S. Congress in April 2024.
This total of 168 billion euros does not include multilateral loans (IMF and World Bank plus EIB) and, according to Ukraine's Ministry of Finance, will cover the period from the start of the full-scale invasion until March 2024. The amount is said to reach approximately $11 billion.
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The EU and other donors also brought forward some spending to Q124 to fill the hole created by delays in U.S. funding from a $61 billion aid package originally scheduled for last fall. Please also note that. The Treasury therefore reports that over $8 billion in additional Western funds were directed to Ukraine in March 2024, including $4.8 billion from the EU (for the period up to 2027). part of the 50 billion euro quota agreed at the EU Council in December to cover Ukraine). , another $1.2 billion from Japan, $1.5 billion from Canada, and just over $500 million from the United Kingdom.
The 168 billion euros equates to about $180 billion in US funds, and if you add in the $11 billion in multilateral loans and the $8 billion for March detailed above, it's already 199 billion in 25 months. The amount is slightly more than a dollar. Perhaps he could also add that the amount of external debt service relief accrued to Ukraine during this period is well over $10 billion.
Suffice it to say, the $100 billion annual cost of aid to Ukraine looks about the same, and from my fingertip approach, it's not bad.
However, it is worth noting that the above numbers are meant to keep Ukraine in the war and do not actually guarantee victory. Nothing we do will be enough because Ukraine is currently in a weak position. The West is simply providing Ukraine with enough money to continue the war. In recent months, financial support from Western countries has waxed and waned. In the first six months of 2023, just before Ukraine's counterattack, Western countries were providing Ukraine with $8.5 billion per month. However, that fell to just $3.7 billion per month between October 2023 and February 2024, no wonder Ukraine was militarily inferior at the time. The latter funding cuts were also tied to a funding logjam in Congress and weak U.S. funding.
What is clear from all this is that the West needs to provide Ukraine with at least $100 billion a year to maintain the status quo on the battlefield. Anything below this will put Ukraine at a disadvantage. On that basis, I believe that ensuring Ukraine's positive momentum will likely require more than $100 billion in Western financing per year ($8 billion + month), but perhaps $150 billion. I would argue that it would require close to $12.5 billion per month.
The obvious question is what will happen if Trump is elected US president in November and US funding to Ukraine falls off a cliff in 2025. That would risk reducing funding to Ukraine to nearly $50 billion to $60 billion a year. In that case, other Western allies would step in to cover the $40 billion annual funding shortfall from the United States, and beyond that they would be prepared to provide an additional $50 billion to bring funding to the $150 billion level. I wonder. That's unlikely.
Obviously, $100 billion to $150 billion a year in aid to Ukraine sounds like a big number. But these must be contrasted with the costs of not supporting Ukraine and the costs of a Russian victory. Perhaps NATO's defense spending will need to increase, not just the current 2% of GDP target, but closer to the 3%-plus of GDP spent on defense during the Cold War. To name a few numbers, NATO's European members are on track to achieve a 2% of GDP target in 2024, with combined defense spending expected to reach $380 billion in that year. Increasing this to 3% of GDP would add an additional $190 billion to Europe's annual defense spending. If the US wins in Ukraine, this number could double if it works with Europe to increase defense spending by 1% of gross domestic product (GDP) to counter the further threat from a resurgent Russia. . So if you think about ban-for-back here, investing $150 billion a year in Ukraine for just a few years and potentially saving $400 billion in recurring costs and additional spending if Ukraine loses is, It looks like a very good investment by Western countries in their own security. We don't know if the ECB will be cost-effective.