Page 59 - bne monthly magazine June 2024 Russian Despair Index

bne June 2024 Eastern Europe I 59
support has ebbed and flowed. For the first six months of 2023, just prior to the Ukrainian counteroffensive, the West was funding Ukraine to the tune of $8.5bn a month. That had, however, dropped back to just $3.7bn per month
of not less than $100bn per year ($8bn plus a month), but more likely closer to $150bn (more like $12.5bn per month).
The obvious question is what happens if Trump wins the US presidency in
spending would need to increase not just to the current 2% of GDP target but close to the 3% plus of GDP spent during the Cold War era on defence. To put some numbers on that Nato’s European members are slated to meet the 2% of GDP target in 2024, which is expected to total $380bn in combined defend spending in that year. Pushing that to 3% of GDP would add an additional $190bn on annual defence spending in Europe. This number would double if the US joined Europe in increasing its defence spending by an additional 1% of GDP to account for the additional threat from a resurgent Russia, likely if it wins in Ukraine. Hence when we think of bang for buck here a $150bn annual investment
in Ukraine for just a few years to potentially save a recurring $400bn plus additional spend if Ukraine loses looks like a very good investment by the West in its own security. Not sure if the ECB does cost benefit.
Timothy Ash, the senior sovereign strategist at BlueBay Asset Management in London. This post first appeared on his substack blog here.
“The West is only just providing Ukraine with enough funds to keep it in the war.”
in the period from October 2023 to February 2024, and no surprise then that Ukraine was then militarily on the back foot. The latter reduction in funding was again related to the fall off in US financing as funds were logjammed in Congress.
What seems to be evident then from the above is that the West needs to provide Ukraine with at least $100bn a year to maintain the battlefield status quo. Less than this and Ukraine is pushed onto the back foot. I would then argue that to ensure positive forward momentum for Ukraine it likely will require Western financing
November, and then likely US financing for Ukraine falls off a cliff in 2025. This would risk funding to Ukraine dropping to closer to $50-60bn per year. Would other Western allies be willing then to step in to cover the $40bn per year plus financing shortfall from the US, and go beyond that to provide the additional $50bn to take funding to the $150bn mark. It seems unlikely.
Obviously $100-150bn annually
to support Ukraine sound like big numbers. But these have to be set against the costs of not supporting Ukraine and the costs of a Russian victory. Likely then Nato defence
As of April 25, 2024 Source: mof.gov.ua
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