Freedom isn’t Free | A cost-benefit analysis of support for Ukraine

More than two years after the large-scale Russian invasion, Ukraine continues to largely hold its ground, in part due to extensive Western military and financial support. After the unsuccessful Ukrainian counteroffensive in the fall of 2023 and since the stalled American support, Russia has once again taken the initiative due to a quantitative superiority in manpower, equipment, and ammunition. Ukraine has been forced into a defensive position, with little prospect of a swift end to the war. Despite broad support in parliament, this has sparked debate in the Netherlands about the costs and benefits of continuing or reducing support for Ukraine, and the associated implications for the outcome of the war. This debate encompasses not only financial and economic aspects but also security-related and geopolitical consequences, as well as the implications for the international legal order.

This policy memo by HCSS and the Clingendael Institute analyses the impact of European and American decisions regarding support for Ukraine and outlines three possible outcomes. It is important for European countries to realise that despite the recently passed aid package of sixty billion dollars, future US military support for Ukraine cannot be taken for granted. If both Europeans and Americans continue to support Ukraine on a large scale and for an extended period, Ukraine still has the potential to win in the long run. Kyiv could achieve this by inflicting such heavy losses on Russia that the current or future leadership in the Kremlin is compelled to cease hostilities and reach an acceptable compromise for Ukraine. However, if the US significantly reduces or completely withdraws support, Europe, without deploying its own armed forces, will not be able to help Ukraine win. Instead, it could counter Russian material and economic advantages, thereby preventing Russia from being able to impose its will on Ukraine on the battlefield. This would lead to an unstable situation of protracted conflict, where Ukraine would also resort to irregular warfare, and neither party could fully achieve its goals. Conversely, if both the US and Europe reduce support, Russia could indeed achieve its military goals and force Ukraine to make significant concessions.

This memo analyses the costs and benefits of the three different outcomes across three dimensions: the geopolitical and security dimension, the financial-economic dimension, and the international legal and moral dimension. The main conclusions are as follows:

1. A Ukrainian victory, even if it occurs in the long-term and requires extensive and prolonged support, is by far the best outcome for Europe. Across all dimensions, except for the increased risk of nuclear escalation associated with a Russian defeat and the short-term financial costs of supporting Ukraine, the cost-benefit analysis of this outcome is the most favourable.
2. However, a future American administration may decide that for the US, a protracted conflict in which Russia remains tied down in the long-term is a more cost-effective strategy than a Ukrainian victory.
3. Even if the Americans completely cease or significantly reduce support to Ukraine, it remains the preferred strategy for Europe to continue fully supporting Ukraine, as the costs of a Russian victory on all dimensions are much higher than those of a protracted conflict.

Based on this, we make the following recommendations for the Dutch government:

1. Invest in structural and multi-year military support for Ukraine and continue to play a leading role in the international support coalition. A NATO- or EU-fund, as proposed by Stoltenberg and Breton respectively, could provide opportunities for this.
2. Develop contingency plans for a European response in case American support for Ukraine remains permanently stalled or is completely withdrawn. This could be done through purchasing American equipment and/or locally producing it within Europe.
3. Continue the course set within Europe (as described in the European Defence Industrial Strategy) (EDIS)), to pool not only the delivery of military equipment to Ukraine but also the procurement of goods within Europe. This provides economies of scale regarding European purchasing power on the European and international defence market, and offers a long-term financial commitment for the European defence industry to scale up the production of equipment and ammunition.
4. Support, in addition to providing military supplies, the building and scaling up of the Ukrainian defence industry so that the country can eventually produce the necessary ammunition and equipment to sustain a war of attrition.
5. Create conditions for sustainable war termination in case of a ceasefire, including robust security guarantees for Ukraine.
6. Continue to work on specific measures to prevent escalation of the war to a direct confrontation between Russia and NATO, including utilising or reopening direct crisis communication lines with the Kremlin.
7. Invest in Dutch defence capabilities regardless of the outcome of the war. A Ukrainian victory will further increase Russian resentment; a loss of Ukraine could lead to further action by Russia; and a protracted conflict increases the chance of horizontal escalation. In each of the scenarios, a long-term effort to strengthen Dutch defence capabilities is necessary.

This is the English language version of a policy brief published in Dutch in April 2024, with some minor updates.

Authors: Tim Sweijs, Bob Deen and Roman de Baedts.

The authors would like to thank Rob de Wijk, Dick Zandee, Ko Colijn and Frederik Mertens for their contributions. The report has been translated from the original Dutch version by Stephanie Govaerts with the help of OpenAI’s ChatGPT and DeepL Translator.

The research for and production of this report has been conducted within the PROGRESS research framework agreement. Responsibility for the contents and for the opinions expressed, rests solely with the authors and does not constitute, nor should be construed as, an endorsement by the Netherlands Ministries of Foreign Affairs and Defence.