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Russia’s War in Ukraine Could Affect Its Economy for Decades

July 11, 2024 By The Editors

By tynza @Adobe Stock

Thomas Lattanzio and Harry Stevens of War on The Rocks report that the cost of payouts to the family of a soldier killed in Ukraine would come to at least 14 million rubles at the time of writing, excluding several smaller, long-term payments.

Throughout its history, Russia has rarely cared for its soldiers, on or off the battlefield. The Kremlin’s current attempt to do right by its veterans looks to be simultaneously insufficient and unaffordable, destined to leave behind armies of broken men while draining state coffers. After nearly two and a half years of grinding warfare, both Ukraine and Russia have taken horrendous casualties and spent hundreds of billions of dollars. Despite such a price, the conflict is unlikely to end soon, with both sides believing they have more to gain. This price is not just paid on the battlefield. Even if the fighting were to end today, the economic and demographic impact felt by the Russians would be generation-shaping.

Through open source information on the costs of health care and the state of the Russian medical system, alongside historical scholarship and medical publications, we examine the crushing economic damage of the war on Russia from the lens of military personnel. We conclude that the state is logistically, fiscally, and culturally unprepared for the tremendous burden of supporting veterans and their families, presenting serious questions about state capacity going forward.

Above all else, the Russian state has to financially support the families of fallen soldiers in perpetuity. Many of the wounded (to say nothing of the dead) will permanently be out of the workforce, and even those who return to it will require lifelong mental and physical health care. And the numbers of dead or wounded servicemembers will only worsen the negative demographic trends in Russia. These challenges will grow larger as the war continues and the bodies pile up. […]

Holding aside the long-term implications of the personnel costs of the conflict, one has to appreciate how much the Russian state is currently spending to care for casualties. The one-time costs of compensating wounded and dead soldiers plus their families are very high, in no small part due to recent decrees that promise major payouts to incentivize volunteers. A law passed before the war entitles the family of a soldier who has been killed to 3.3 million rubles as an insurance payment from private insurers, and an additional 5 million rubles from the state. Wounded soldiers are entitled to 3 million rubles, as per a decree from the early days of the invasion of Ukraine. President Vladimir Putin has announced a separate 5 million ruble payment to families (this combines the previously mentioned 3 million ruble payout for injury with an additional 2 million in case of death). Every Russian oblast or province provides a separate payment of at least 1 million rubles, with some paying up to 3 million. Combining all of the above, the cost of payouts to the family of a soldier killed in Ukraine would come to at least 14 million rubles at the time of writing, excluding several smaller, long-term payments.

Based on open source estimates from the governments of France and the United Kingdom as of May 2024, the Russians have likely taken around 400,000 casualties, with over 100,000 of those dead. Simple math shows that one-time payments would equate to 900 billion rubles for wounded personnel and at least 1.4 trillion for families of the dead, 2.3 trillion rubles total. This equates to 6 percent of the 2024 budget, a truly staggering amount that will continue to climb.

Unfortunately for the Kremlin, it will not get off the hook with one-time expenses, at least if it wants to provide an adequate level of medical care for veterans. […]

The figures here are not exhaustive, and the true costs of veteran care will likely be higher. Even still, they demonstrate the tremendous burden that the war in Ukraine will exact on Russia after the guns go quiet. Treating post-traumatic stress disorder, caring for physically wounded soldiers, and supporting their families will become either a major budget item for decades to come, or a political weakness for the government if it fails to satisfy the expectations of veterans and families. In the long term, heightened expenditures, coupled with unstable revenues, will force the Russian state to make difficult choices.

Read more here.

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