The war in Ukraine is going into its 3rd year, and doesn't seem to be anywhere near its end. We shall look at the situation:
Both the EU and the US have committed considerable funds to the war.
The EU paid about 100 billion dollars, one quarter being military equipment. That is just over 200 $ for every EU citizen sent to Ukraine.
The US paid 70 billion, two thirds of which in military equipment, the vast majority of which is produced by the US industry and a bit out of date. This amounts to just over 200 $ for every American citizen.
International orders for US produced military equipment and US oil and gas that replaces lower cost Russian exports will somewhat soften the blow, but this is, by dollar amount, the largest US and European involvement since World War II.
Ukraine has received about 200 billion dollars in various forms of support to fight this war. That his about $5000/person. This gives Ukraine a considerable incentive to fight, despite its massive losses.
The loss of life is unprecedented in military conflict, since World War II.
Ukraine lost about 250 000 people, and Russia lost a similar number.
Many Ukrainian dead are civilians, while most Russian dead are young soldiers, some of which are criminals drafted from prison and purposefully enrolled in combat missions with extremely high mortality rates.
Ukraine had a prewar population of about 40 million. The 250 000 people killed in the war represent 1 in every 160 Ukrainians. It means everyone in Ukraine has friends, neighbors or family who have died because of this conflict. Of course, death is not uniform. In some areas many more have died, and some have almost no civilian losses. But overall this death rate is again unprecedented in Europe since World War II.
The West has paid, in all forms of aid, about $ 800 000 for every death. Sure, this money was not received by the family of the deceased. However, both sides try to make dying worthwhile for its military personnel. The Ukrainian government offers a payment of 15 million Ukrainian Hryvna (about 400 000 USD) in compensation to the families of every dead soldier. This does not apply to civilians, and other people killed in the war. It is not clear what fraction of the families of the soldiers who died will receive this money.
Putin is also offering $ 70 000 to the families of dead soldiers and $40 000 to those injured. It is not at all clear if the convicts qualify, or what fraction of the soldiers who died have been honored with such payments. In Russia, this is a fair bit fo money and a good reason to die.
Ukraine lost 10 million people to Europe. This is, by far the largest loss of Ukraine, as a country, but for many of the people who moved west, this is a dream come true. They are allowed to work and will integrate themselves in their new countries. They've lost everything at home, but have new lives ahead. Ukraine sent the women and children first, maximizing their chances to live, but also taking a heavy population loss for many generations to come.
For every person who died in the war, 40 moved to Europe. These 10 million form 2% of EU population now, and, in a few places, the main source of population growth was Ukrainian migration. I think (need to double check!!) Germany is in this position -- for good periods of time since the war began, the number of Ukrainian migrants exceeded the number children born.
By having fewer people left, and after suffering massive losses to its infrastructure, Ukraine is in a weaker position to defend itself and has less to lose in losing the war or losing part of its territory. It is reasonable to expect that the 10 million people who left Ukraine included a disproportionate fraction of the best and the brightest -- the most educated, the rich and the younger people. There is also a very good chance that these people took a good portion of their savings and assets with them, thus weakening Ukrainian tax base.
≠≠≠≠≠≠≠≠≠≠ Russian Losses ≠≠≠≠≠≠≠≠≠≠≠≠≠≠≠≠≠≠≠
Russia lost about 250 000 people in the war. With a high incarceration rate, and a pre-war prison population of 400 000 people, the Russian army had a unique human resource to draw on. In many prisoner units, the mortality was huge -- at times 80%. So people were essentially sent to death, and I very much doubt their families received $70 000 each. Given Russia's population of about 120 000 000 people, this means 1 in every 500 Russians died in Ukraine. Mostly men, and convicts being disproportionately represented among the dead.
Russia also lost over 1 million people to immigration. This is not very much. Only 1 in 100 Russians moved abroad, but the best and the brightest are disproportionately represented in this group. They would have taken out of Russia some of their assets and savings. This is major loss.
I am critical to EU for not opening its borders to Russian citizens, thus making it easier for them to escape Putin and taking advantage of this windfall for cheap skilled labour, just like they did with the Ukrainians. We must not forget that every Russian not in Russia is another Russian not paying taxes to support the war. It is also another Russian not available to fight in Ukraine, and another Russian who will not die an early death for no good reason. Soldiers are people too, and at times almost children, and we should protect them from being drafted in a war if we can.
The Western Economic sanctions, although massive, did (surprisingly?) little. They also went against some of the core principles of the free market (and, thus making the West behave in ways more common in countries like Russia or China). The West violated the private property of Russian people as well as that of Russian institutions. Russia has only seen negligible inflation and negligible loss , if any, in their GDP. Inflation peaked at 17% in 2022, just after the invasion, and went down to under 10% for all of 2023. At times, it was as low as 2%, For comparison, in 2015, Russian inflation peaked at 16%, following the invasion of Crimea. Those sanctions, like these ones now, didn't do much to the Russian establishment.
So what's high inflation in Russia? In the '90's, following the breakdown of the Soviet Union, inflation in Russia was as high as 2000%, and the Russians did this to themselves without any sanctions and war from the West. If we want to disrupt Russia, this is the level of pressure the is necessary.
To put the loss of live in perspective, the 250 000 lost lives represent 0.2% of the population, and about the same number of people Russia lost to the Corona virus. The difference is that in Corona death generally lost 1 year of life expectancy, most of which was end of life care, whereas the soldiers lose, on average, 50 healthy happy years (a good portion of which would have been spent in prison, for this particular population group.). This, naturally, casts doubt on the honesty of the Russian government when it comes to Corona measures. If they were indeed as motivated to save those Corona patients from a natural death, why are they sending children to die in war now? Or, maybe, their main goal in Corona was to continue their transition into a dictatorship and consolidate power in Putin's hands? Just asking.
========== Financial sanctions ===============
The Russian Central Bank has about 300 billion dollars in frozen reserves. This is 50% more than what the West paid Ukraine. Should the West keep this money, as it seems likely now, they should be able to make a profit on the whole military operation. Have a war against Russia financed be Russian money. Per person, this is 2400 $ for every Russian citizen. In addition, I guess other Russian entities lost another 300 billion to Western freeze. Thus, overall, on average, the West took $ 5000 from every Russian. Maybe, this gives them a good reason to go to war.
The army appears to have burned through only 40 billion dollars in the first year of war. That's a modest $300/ person, compared to Ukraine's 5000/ person in aid only. The GDP lost in the first year of war was 100 billion, but seems to have recovered in the second year. That's 750/ person. The Moscow Stock Market lost about 320 billion in 2022. Roughly 2500/person.
====== The Problem ====
One can thing of Russia as something made of 2 non-cooperating halves. One half of Russia is Western . This drives the economy. Some is even in Western hands: e.g., in corporations like McDonald's or Shell. This Western part of Russia is driven by the same principles as the West. People want to be rich, successful and happy. These people don't want war, and many are not even Russian. In fact, a good portion of the money in not in Russian hands. This part of Russia lost greatly in the war. Some companies were forced to leave Russia, and were sold at a deep discount to Russian operators. These buyers who took advantage are more loyal to Putin than the pervious owners who left.
The other half of Russia is a KGB-led mafia state . This part drives the war, and, unfortunately, under our watch and under our nose, this part was grown. They bought western owned assets at deep discounts. They are operating them now, and earning money. Even if the overall economy of Russia takes a hit, as long as this KGB led part of Russia grows, the world is in danger. It is also this part of Russia that owns the nuclear weapons and the army.
So what do I fear? I fear an ISIS like instability in the Western World. The core of the ISIS phenomenon was that a group of people (we call them terrorists) were able to use violence to acquire more assets than the cost of the violence. This enables them to grow exponentially and, without US intervention, would have taken over the Middle East.
I fear a situation where Russia is able to fight a war with Europe, like it does in Ukraine today. I fear that, in such a war, we may find ourselves in a situation where the Russian profits from the war exceed their costs (perhaps taking into account that Russia has free nuclear weapons). If, in this situation, a Trump-led America does not intervene, we may find ourselves in a world where America is great again, and every one else either poor or dead.
