Germany urged to boost aid to Ukraine to deter Russian aggression

Supporting Ukraine is in Germany's political and economic interest. The costs of a Russian victory would be 10 times, or perhaps even 20 times higher than the current aid.

Therefore, Germany should maintain or even increase its aid, contributing to credible deterrence against Russia and thereby enhancing the likelihood of ending the war.

These conclusions are drawn from the report published on Saturday by the Kiel Institute for the World Economy.

So far, German military aid to Ukraine has been considered limited by the authors and amounted to 10.6 billion euros, which is equivalent to 0.1% of the German GDP. By comparison, during the first Gulf War (1991), Germany spent six times more—0.6% of GDP or 4% of the annual budget. Even including humanitarian aid, current aid amounts to 0.14% of GDP annually.

According to the authors—President of the Kiel Institute, Moritz Schularick, and his colleague Johannes Binder—the cost of interrupting aid would be very high due to the influx of refugees from Ukraine, increased spending on NATO due to the need to defend the Baltic states, and the severance of trade relations with a Ukraine conquered by Russia. A Western defeat would also increase the likelihood of new conflicts worldwide.

Binder and Schularick emphasize that Russia will agree to negotiations and an end to the war only when it concludes that it cannot win militarily, and the West demonstrates a firm commitment to supporting a fighting Ukraine.

Detailing various points of the report, the authors emphasize that German military aid is limited and has amounted to 10.6 billion euros since 2022, which corresponds to 0.1% of cumulative GDP. Germany ranks only 16th, surpassed by countries like Denmark (0.65%), Estonia (0.57%), and Latvia (0.43%), as well as Poland.

To illustrate the thesis of limited aid, the authors point out that budget subsidies for company cars with combustion engines cost the budget 13.7 billion euros annually.

Referring to the anticipated consequences of a Russian victory over Ukraine, experts write that German defence spending would have to increase from 0.5% to 1% of GDP annually. Germany would also have to anticipate a wave of refugees estimated at from 2 million to 4 million and face economic losses from halted exports and lost investments in Ukraine.

Binder and Schularick state that only credible deterrence can encourage Russia to end the war. They reject populist slogans suggesting that ending arms supplies to Ukraine will lead to peace. They note that the EU's economic strength is nine times greater than Russia's (EU GDP – 19 trillion dollars, Russia – 2 trillion USD), and industrial production is five times greater. Even without US aid, Europe's potential is sufficient to repel Russian aggression. However, political will is necessary, they emphasize.

By adhering to the principles of consistent deterrence, the West can make Russia realize it will not win the war by military means.

In an interview with the weekly "Die Zeit," Schularick stated that Germany lacks the proper attitude toward the new security situation rather than the financial resources.

Since the end of World War II, we have relied on someone else to defend us—the Americans, NATO, the Western world. (…) The belief that someone else will do it for us is still widespread. (…) We do not want to take on the responsibility. But peace and freedom can't be free – noted the president of the Kiel Institute.

Schularick advocated for increased military spending. He recalled that when Willy Brandt was chancellor (1969-1974), Germany spent 3% of GDP on defence.

"If Germany reaches a level of 3%, it would be 120 billion euros, equivalent to the annual subsidy from the central budget for pensions," he emphasized.