- Russia's invasion of Ukraine has cost Moscow a small amount by historical standards, per the Economist.
- Russia's spending remains opaque, but its war budget is about 3% of GDP.
- By comparison, the Soviet Union spent 61% of GDP in World War II.
Russia's invasion of Ukraine has come at a steep geopolitical price and tens of thousands of people have died, but a new analysis by the Economist suggests the country is actually spending a small amount on the war effort.
The direct fiscal cost of the war — spending on soldiers and machines — is estimated to be about 3% of Russia's GDP, or roughly $67 billion a year, according to the report. That figure comes from a comparison of Moscow's pre-invasion spending forecasts for defense and security with what it actually spent.
By historical standards, the current war pales in comparison. The Soviet Union during World War II, for example, spent about 61% of GDP, and the US at the same time put about 50% of its GDP toward the conflict.
However, 3% is substantially higher than the 0.4% of GDP the Soviet Union spent on its war on Afghanistan.
One reason for the relatively low spending on Ukraine is political, as the government has repeatedly called the war a "special military operation," which could preclude using an exorbitant percentage of the GDP.
There are also economic reasons. Printing additional cash to fund the war would push inflation higher and weigh on Russia's citizens. Saddling banks with war debt could do the same, and both options in turn could harm Vladimir Putin's political aims.
Plus, the technology underpinning armed forces today is more advanced than ever, which means militaries require fewer people and machines for a war effort.
To be sure, the war has resulted in widespread sanctions that have reshaped global oil flows and trade, and cut into Russia's energy supremacy. Western nations have barred or boycotted Russian commodities, which has pushed Moscow to seek alternative destinations for its oil and other goods.
