How much Ukraine and Russia spend on war
BusinessCensor compared how much Ukraine, together with its allies, and the occupying country spent on the war.
This week, President Volodymyr Zelenskyy signed the law "On the State Budget of Ukraine for 2024".
A day earlier, the federal budget of the Russian Federation for the next year was approved by Russian dictator Putin.
BusinessCensor decided to compare how much Ukraine, its allies and the occupying country are spending on the war, and what expenditures are planned for the next year.
For comparison, we took the expenditures of the state budget of Ukraine for the functions of "defense" and "public order, security and judicial power", and the federal budget of the Russian Federation – "national defense" and "national security and law enforcement". In both cases, the classification of expenditures in the direction of "security" includes the financing of special services, as well as units of the National Guard of Ukraine and the Russian Guard, which are directly involved in hostilities; the Rescue Service, the judiciary and the prosecutor's office, although to a lesser extent, they are also involved in the elimination of the consequences of Russian aggression. War-related expenditures are also envisaged in other areas, in particular through the financing of science and industry.
The expenditures of both countries in the joint direction of "defense and security" are converted into US dollars at the official average annual exchange rate, and the planned expenditures for 2023-2024 are at the forecast exchange rate of the ministries of finance. Expenditures of other countries planned for military assistance to Ukraine are converted into US dollars at the current exchange rate.
"Back to the USSR": Russia will increase spending on the army to a record since the Soviet Union
"Everything is necessary for the front," Russian Finance Minister Anton Siluanov called the main priority of the Russian budget for next year. Next year's federal budget envisages a record increase in revenues and expenditures in Russia's recent history – to 35.06 trillion and 36.66 trillion rubles, respectively ($389.2 and $406.9 billion). This is 22% and 16% more than provided for in the budget for 2023, and compared to 2019, Russian budget expenditures will double.
However, the risks to the planned revenues of the Russian budget were pointed out by the Accounting Chamber of the Russian Federation, warning of a possible drop in oil prices. Russian oligarch Oleg Deripaska was more direct, describing the likely situation with budget revenues next year with the phrase "ass hitting the ice."
The record growth in the Russian budget is due to an unprecedented increase in "defense" spending, which for the first time in modern Russian history has surpassed "social spending." Next year, the Russian authorities plan to allocate 10.8 trillion rubles (almost $120 billion), or more than 29% of all spending, to "defense". This is the largest share in the modern history of Russia.
A third of the defense budget was spent by the USSR in its last years. Thus, in the budget for 1990, 71 billion rubles were provided for "military objectives" out of 241.3 billion, or 29.4%.
Compared to the plan for 2023, "defense" spending will increase by 68%, and compared to 2022 – by 2.3 times. At the same time, most of them are classified – for individual items, expenditures of less than 3 trillion rubles are scheduled.
In addition, funding for the "national security" direction will increase to 3.4 trillion rubles (more than $37 billion). Thus, in total, the Russian authorities plan to spend almost 40% of the budget next year on "defense and security".
* according to Russian media estimates, data on the structure of budget expenditures of the Russian Federation in 2022 are classified
** planned expenditures for the whole of 2023 as of September 1
In addition to its resources, Russia receives military assistance from Iran and North Korea, disrupts the implementation of concluded contracts for the export of weapons and tries to buy out scarce components for military equipment already sold to other countries. However, the terms of these arrangements are unknown.
Ukraine spends everything on defense, partners promise to help
"The maximum that our economy is capable of," Minister of Finance of Ukraine Serhii Marchenko explained the defense expenditures planned for 2024. At the same time, he acknowledged that budget requests for the needs of the security and defense sector are 8-10 times higher.
As BusinessCensor wrote, the state budget of Ukraine for 2024 provides for the allocation of more than half of all expenditures to the defense and security sector – 1.69 trillion hryvnias ($41.6 billion). This amount is limited by its own state budget revenues and borrowings in the domestic market because Ukraine cannot use funds from international partners to finance the defense forces. They are used to finance social benefits and most other expenses that ensure the functioning of the state.
Thus, the planned expenditures in this area for the next year are currently less than for 2023. Taking into account all the changes made to the state budget, spending on security and defense this year came close to 2 trillion hryvnias, although it was originally planned in the amount of 1.14 trillion. Therefore, it is likely that next year they will also have to be increased.
At the same time, Ukraine spends most of its state budget expenditures on defense on payments to defenders. In particular, more than 74% of the funds provided for the Ministry of Defense for 2024 will be allocated to maintain military personnel. However, if Russia, in conditions of international isolation, is forced to rely mainly on stockpiles of weapons and its own military-industrial complex, then the vast majority of weapons and ammunition, as well as other military assistance to Ukraine, has been pledged to provide by international partners. First of all, these are the United States, the European Union and the United Kingdom.
However, unfortunately, the volume of arms supplies from partners is decreasing, and the weapons that arrive arrive with a delay.
The main international platform for coordinating military assistance is the Ukraine Defense Support Group (UDSG, known as Ramstein), which has been joined by about 50 countries.
According to US Secretary of Defense Lloyd Austin, since the beginning of Russia's full-scale invasion of Ukraine as of the end of November 2023, they have pledged to provide more than $80 billion in military aid to Ukraine.
The United States estimates its security assistance to Ukraine at $44.2 billion, with another $36 billion allocated by other allies.
Since significant packages of military assistance from partners are not expected by the end of this year, the total expenditures of Ukraine and its allies on defense against Russian aggression in 2022-2023 can be estimated at approximately $180.7 billion.
At the same time, the amount of funding for defense assistance for 2024 by the largest partners – the United States, the EU, Germany and the United Kingdom – has not yet been approved. The amounts announced by official officials provide for the allocation of about $66 billion for these purposes next year.
* approximate value based on announced but not approved amounts
What defense assistance do the allies promise for the coming year?
The United States provides military assistance in two main areas:
- in the form of weapons, ammunition and equipment from their own stockpiles, which are transferred immediately;
- through the Ukraine Security Assistance Initiative (USAI), which provides funding for the purchase of weapons from American manufacturers, as well as for the training of Ukrainian military personnel, logistical support and other assistance.
According to the US Congressional Research Service, within the framework of 51 aid packages from the reserves of the US army, Ukraine received weapons worth a total of $25.31 billion. Funding for the USAI initiative for the 2022 and 2023 budget years is provided for $6.2 billion and $12.3 billion, accordingly.
However, the 51st $100 million military aid package from the United States, which was announced on November 20, was the smallest in recent years. This is due to the exhaustion of funds for Ukraine for the budget year, which ended in the United States at the end of September.
The administration of US President Joe Biden has initiated a new joint aid package for Ukraine and Israel totaling $106 billion. Of the total amount, about $61.4 billion was proposed to be allocated for assistance to Ukraine, including $46.1 billion for defense. However, this bill has not yet been adopted, and during the consideration of the initiative in Congress, the amount of funding may be changed.
The EU countries also have two main areas of military assistance to Ukraine:
- through the European Peace Facility, which is financed from the joint budget and is used to pay compensation to individual countries for weapons transferred to Ukraine;
- through the budgets of individual EU countries.
According to the Ministry of Defense of Ukraine, as of November 15, the total amount of military assistance to Ukraine from the EU countries since the beginning of the full-scale Russian aggression is estimated at approximately EUR 27 billion, of which EUR 5.6 billion is within the framework of the European Peace Facility (EPF).
However, the financing of military aid through the European Peace Facility faces difficulties. At the end of October, the EU countries again failed to approve the allocation of the eighth tranche of military aid worth 500 million euros due to the position of Hungary, which has been blocking the allocation of these funds since May.
The Hungarian authorities also promise to block the European Commission's proposal to allocate an additional 20 billion euros for the EPF for the next four years (5 billion euros per year). At the summit of EU leaders in December, it may be joined by Slovakia, whose new government also opposes funding defense aid for Ukraine.
Funding for military aid from most individual European major donor countries for next year has also not yet been approved.
Germany has increased funding for the Ukraine Security Capacity Building Initiative from €2 billion in 2022 to €5.4 billion for 2023. In 2024, the German government planned to increase this spending to 8 billion euros ($8.8 billion), but these plans are now under threat due to the internal political debate over the state budget deficit.
The Netherlands government had planned to allocate more than 2 billion euros ($2.2 billion) for military aid to Ukraine in 2024, but a party that criticizes these expenditures won the country's parliamentary elections.
Also, the amount of military aid for 2024 from Great Britain is still unknown. Since the beginning of the full-scale invasion, this country has allocated 4.6 billion pounds of security assistance to Ukraine ($5.9 billion at the current exchange rate). However, Chancellor of the Exchequer Jeremy Hunt did not announce plans for further funding in this area, presenting last week the main calculations of the country's budget for the next year.
At the same time, the situation is more stable in several countries that have approved multi-year programs for financing defense assistance to Ukraine. In particular, Denmark will increase funding for the 2023-2027 fund, from which this country provides defense assistance to Ukraine, by $3.9 billion to $8.9 billion. Norway, as part of a long-term assistance program for Ukraine, will allocate about $700 million for military aid next year.
Canada will allocate about $1 billion in military aid to Ukraine in 2023-2026.
