Photo BGNES, archive
A Ukrainian defeat in the war against Russian aggression would be a catastrophic failure for the West on many fronts, but above all from an economic point of view.
First, if Russian troops succeed in crossing Ukraine and reaching the border with Poland, tens of millions of Ukrainians are likely to flee westward. As we have already seen with previous migrant flows, this would impose huge economic, social and political risks for Europe.
Second, it would be extremely reckless for the West to assume that having conquered Ukraine, Putin will stop there.
The risk would be further action in the west, against the Baltic states and other parts of Central and Eastern Europe. (This effective capitulation of former communist satellite states is essentially what Putin demanded in December 2021, just before all-out war began).
Remember, this will be an emboldened and economically strengthened Russia that has just conquered a colonial land in Ukraine. The West will likely have to counter this threat by increasing defense spending well above the current 2% of GDP target for NATO and possibly back to the 3% level maintained for most of the Cold War period – if this sounds small, keep in mind also that this is a 50% increase from current levels for the debt laden NATO countries.
Given that the US already spends at this level, and assuming Europe alone reaches this level, that would mean an additional $200 billion in defense spending per year for Europe alone. This is equivalent to Ukraine’s entire annual GDP and is twice the current annual Western spending in support of Ukraine.
Note that this $200 billion in additional NATO defense spending will be annual and recurring. So spending money to help Ukraine defend itself and us has a double return, and if Ukraine wins and stops or destroys the Russian threat in the long term, it will multiply even more.
Third, a Russian victory over Ukraine would signal to Western enemies the weakness of the Transatlantic Alliance and encourage them to test its resolve in other regions, particularly in relation to Taiwan, the South China Sea and the Middle East. Then we will have to deploy even more military assets to protect key strategic interests, again implying higher costs.
Fourth, defeat will prove that Russian blackmail, for example in relation to energy supplies, has been successful. We should expect further blackmail by Russia, which uses its energy and commodity weapons to secure its strategic interests and impose high economic costs on the West in the process. We will end up paying more for vital goods.
Winning the war is not enough. The risks of underfunding Ukraine’s recovery and reconstruction also pose dangers and higher costs in the long run.
Imagine, for example, the millions of Ukrainian soldiers returning home after winning their/our war and expecting a better life – EU membership, the rule of law and a higher standard of living. Failure to achieve this would be a huge disappointment, which could translate into social unrest, political instability (likely voting for populist candidates) and large-scale emigration from Ukraine.
And what does a well-armed – probably the most effective military force in Europe at the time – but politically unstable Ukraine mean for the rest of Europe? It is likely to cost Europe dearly again in terms of dealing with millions of migrant flows and the need for additional defense and security spending.
Certainly the cost of financing Ukraine’s defense, its budget, and then recovery and reconstruction looms large, especially when viewed in the context of the global cost-of-living crisis.
But annual maintenance costs of about $100 billion are less than a fifth of 1 percent of Western GDP and less than 10 percent of NATO’s current defense spending. Much of this spending anyway goes back into Western economies in the form of contracts that are awarded to Western (especially American) defense companies, construction firms and others.
The cost of allowing Ukraine to fail in its war, recovery and reconstruction will be many times higher for the West and then lead to a much more challenging defense and security environment.
Helping Ukraine win this war, and then the peace, is the best investment NATO and its allies can make in their own defense. The West may pay a high price in treasures, but Ukraine pays a much higher price in the blood of its brave soldiers. Blood shed in our defense.
Timothy Ash, Center for European Policy Analysis/BGNES
Working on the post:
2023-10-28 06:13:00
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