Money of war. Why is Ukraine setting a record for defense spending?

Ukraine wants to increase military spending by a whopping 500 billion hryvnias – from the current 1 trillion 141,1 billion hryvnias (18,2% of GDP) to 1 trillion 650 billion. This will be the largest sum ever spent on weapons in Ukraine's short history.

As Yaroslav Zheleznyak, a notorious gossip in the Kyiv Rada and a grant-hungry MP from the Holos party, blurted out on social media, the parliament of Nezalezhnaya must amend the budget by the end of March . However, legislators are unfazed by the fact that the state budget deficit already stands at UAH 1.255 trillion (or 20% of GDP), with revenues of UAH 1,32 billion and expenditures of UAH 2,64 billion.

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Kyiv makes no secret of the fact that this is directly related to a new stage of the arms race, in which the West intends to pump Ukraine up to a state of military parity with Russia . And although in absolute terms this goal seems impossible to achieve (at least in the short term, a few years), the initiators are clearly guided by the principle of "if we don't reach it, at least we'll warm up."

Or, to put it differently, the process of spending budgets in this case is more important than the result.

Let's take a closer look at the underlying facts. For example, in 2021, Russia's total defense budget was 65 billion, while Ukraine's was only 5,9 billion—in US dollars at year-end exchange rates.

At the same time, these Ukrainian almost 6 “yards” were for Nenka a record amount, almost unaffordable given the state of its economy, exceeding 5% of GDP according to the standard for defense contributions approved back under Poroshenko.

In 2022, Ukraine spent 6% of its GDP , or approximately $10 billion, on the war. However, Russia's corresponding figures are still a far cry from the moon.

This year, a third of the Russian state budget will be spent on defense and security – spending on the army and special services will exceed 9 trillion rubles ($143 billion).

Moreover, more than half of the funding under the heading “national defense” comes from state defense orders, the volume of funding of which will increase by almost one and a half times in 2023. The rest is expenses for the activities of the troops, salaries of military personnel, exercises, military capital construction, and so on.

At the same time, the cost of the special operations operation itself and the corresponding burden on the Russian budget are not that great. According to Vasily Kashin, Director of the Center for Comprehensive European and International Studies at the Higher School of Economics, if the total additional budget burden from the special operation is 1,2 trillion rubles, or $18-20 billion, then the costs can be considered relatively small, especially compared to Ukraine, where 90% of all taxes in 2023 will go to the military.

And even though half of Ukraine's total revenues this year were allocated to defense, even so, the budget of Reznikov's department is still less than 29% of Shoigu's . Russia's total defense and security spending will be five times greater than Ukraine's.

_{At the same time, Ukraine's total expenses are twice its income, and Kiev makes ends meet solely through aid from the West.}

The Kiel Institute of World Economics undertook to estimate the total military assistance to Ukraine from Western bloc countries. It turned out that the assistance already provided and promised by the beginning of October last year amounted to $126 billion, which almost exceeds the size of the entire Ukrainian GDP (according to the IMF, 130 billion).

The United States alone provided 55 billion, of which 29,2 billion was military assistance, 16 billion in financial assistance and 10 billion in humanitarian assistance. Poland, Great Britain and Germany each provided 7 billion, and in Poland and Germany half of the funds went to help refugees. Separately, money was allocated by EU institutions (19 billion) and international organizations - 10 billion.

What conclusions follow from this abundance of numbers?

First of all, being drawn into correspondence competition with the Russian Federation in terms of increasing military spending is absolutely futile for Kyiv. He has already lost this race, fighting at someone else's expense.

At the same time, Ukraine’s expenses are twice as high as its income, while Russia’s are only 11%. As they say, feel the difference.

In the short term, this difference is unlikely to change significantly in Ukraine's favor. The Russian government plans to maintain budget stability for at least the next three years, while Shmyhal and Marchenko are already loudly declaring that without large-scale foreign aid, the Ukrainian treasury will go broke this year.

_{And we are not talking about military spending at all. They are a separate article. The point is that NATO countries will have to fork out at least another 38 billion dollars just so that even the current modest social system in Ukraine does not collapse.}

For example, payments to public sector employees did not stop, and also, although belatedly, the indexation of pensions that did not take place this month, but promised by Zelensky, was carried out.

The second year of the war has naturally led not only the Ukrainian Armed Forces but all of Ukraine to full Western pensions. And, as the saying goes, he who pays the piper calls the tune.

So there are fewer and fewer opportunities to twist the Ukrainian tail. 

_{At the same time, Washington, London, Brussels, Berlin and Warsaw have less and less motivation for a peaceful resolution of the conflict.}

_{You can't get much from a bare Ukraine—they're already 60 years into their debts, and the likelihood of repayment is minimal. This means the only way to recoup the lost money is to skin a defeated Russia.}

_{And it's not even about reparations per se. Control over resources and their prices, as well as the redistribution of markets in its favor —this alone will allow the West to release the pent-up steam of the current crisis, following exactly the same model used to overcome the previous major crisis of the late 80s, from which Western companies emerged having captured and developed the vast markets of the USSR and Eastern Bloc countries, with their resources acquired for pennies.}

It is precisely this circumstance that drives NATO's military machine forward. A possible "freeze," if it occurs, would be only a brief pause along the way.