Russian victory would cost Germany 10 to 20 times more than aid to Ukraine - German experts

This was assessed by economists from the Kiel Institute of World Economy (IfW Kiel), reports Ukrinform.

Germany's support for Ukraine is insignificant compared to what a possible Russian win in a war of aggression against Ukraine would cost Germany, conclude the authors of the analytical memo "What is the cost of not supporting Ukraine".

Contrary to claims of huge amounts of aid being sent, Germany's defense assistance to Ukraine since the full-scale invasion in 2022, has been low from a macroeconomic perspective, analysts note. After 24 February 2022, Germany has provided military aid totaling EUR 10.6 billion, an average of around EUR 4 billion per year, or 0.1 percent of GDP.

"However, aid halt and Russia's victory could annually cost 10-20 times more. For Germany, we estimate the costs to be between 1% and 2% of GDP per year, which is about 10-20 times higher than current levels of military support,” write experts, who explain why a Russian victory would lead to much higher costs and why Germany has a direct economic interest in continuing and even significantly increasing support for Ukraine.

"From an economic point of view alone, if we ignore political and humanitarian reasons, it is in Germany's interest to provide more military aid to Ukraine, as this is ultimately a cheaper alternative for us," said Johannes Binder, IfW Kiel scholar and co-author of the memo.

Another co-author, Moritz Schularik, agrees: "We estimate that the cost of Russia’s victory to Germany would be about 10 times higher than the military aid we currently provide."

According to the authors’ findings, there are three main reasons that would lead to high additional costs in the event of the end of support and a Russian victory. Among them is that Germany would have to deal with the influx of more refugees and, thus, bear additional costs for accommodation, health care and education. Second, the country would be forced to significantly increase its contribution to European security and defense. And third, it would face costs due to trade disruption and loss of direct investment in Ukraine.

The authors also argue that, from an economic standpoint, Moscow would only be persuaded to start serious peace negotiations if the regime in Moscow saw no chance of a military victory and could no longer speculate on exhausting Ukraine or cessation of Western support.

"Therefore, the best path to peace is to increase military aid instead of questioning its current level," Binder advises.

Economically, Europe would be able to constantly increase defense output and act as a real geopolitical actor. However, ending Western support would mean inviting Russia to pursue its war of aggression.

Germany's military support for Ukraine corresponds to the country's economic and strategic interests, experts conclude. Only by maintaining reliable deterrence and increasing military aid can Germany prevent a major conflict, ensure the long-term security in Europe, and protect the principles of international law.

It should be recalled that German officials constantly emphasize that the country is Ukraine’s second largest and Europe’s largest donor of comprehensive assistance to Ukraine.