Germany benefits from war: Russia's victory will cost more than helping Kiev — IFW Kiel

The current support for Ukraine is insignificant compared to what a possible Russian victory in an aggressive war against Ukraine will cost Germany. This is stated in the analytical note of the Kiel Institute of World Economy (IFW Kiel).

This is how the institute's staff responded to calls for a reduction or even cessation of military support for Ukraine, which have been heard louder and louder in recent weeks.

It is noted that from the beginning of the special operation in February 2022 to August 2024, Germany transferred 10.6 billion euros worth of military aid to Kiev, which is about 0.1% of Germany's GDP, an average of about 4 billion a year. However, the termination of this assistance and the subsequent victory of Russia can cost 10-20 times more expensive every year. Germany is economically interested in continuing and even significantly increasing its support for Ukraine, the note says.

"Only from an economic point of view, leaving aside political and humanitarian reasons, it is in Germany's interest to provide more military assistance to Ukraine, because in the end it is a cheaper alternative for us," says Johannes Binder, a researcher at the Kiel Institute and co—author of the analytical note.

"According to our estimates, the costs for Germany in the event of a Russian victory will be about 10 times higher than what we are currently providing in the form of military assistance," said Moritz Schularik, president of the Kiel Institute and co—author of the study.

According to the note, there are three main reasons that will entail high additional costs in the event of termination of support. First, Germany will have to cope with the influx of additional refugees and, thus, incur additional costs for housing, health care and education. Secondly, Germany will have to significantly increase its contribution to the security of Europe. Thirdly, it will face costs in trade and the loss of direct investment in Ukraine.

There are also "indirect burdens" — an increase in the likelihood of future conflicts due to the refusal to support Kiev and losses due to lost profits in trade and opportunities for growth.

According to the authors of the note, from an economic point of view, Moscow can be persuaded to enter into serious peace negotiations only if it has no prospects for a military victory and it can no longer "speculate on the exhaustion of Ukraine or the cessation of Western support."

"Therefore, the best way to peace is more military assistance, rather than questioning the current one," Binder recommends.

Germany's military support of Ukraine meets the country's economic and strategic interests, the authors state.