Unexpectedly Low Aid Provided to Ukraine
As per the forecasts of the Kiel Institute for the World Economy (IfW), Ukraine's reliance on aid from Western nations could be weakened in the future due to potential changes in political climate. A second term for President Donald Trump or a shift in European aid to NATO contributions or the use of funds from unfreezed Russian assets could impact Ukraine significantly.
Nonetheless, Ukraine saw an uptick in aid during the summer months compared to the spring, largely due to economic stabilization funds. This is reflected in the latest update of the Ukraine Support Tracker, tracking aid till August 2024, which shows a total of approximately 14.6 billion euros in aid from Western donor countries for July and August.
Pietro Bomprezzi from the IfW Kiel emphasizes, "While population support and reconstruction are crucial, the allocated funds remain surprisingly limited. With winter approaching, Western countries should urgently bolster their aid for reconstruction." According to IfW projections, if Western allies maintain their current course, aid to Ukraine in 2025 would amount to approximately 100 billion euros, with around 59 billion euros for military aid and around 54 billion euros for financial aid.
European aid substitution is merely temporary
Absent fresh aid packages from the USA, military aid would decrease to around 34 billion euros and financial aid to around 46 billion euros. If European donors also curtail their aid in line with Germany's announcement to reduce contributions by half, military aid would plummet to around 29 billion euros and financial aid to around 27 billion euros. In such a scenario, Ukraine's aid would be slashed roughly in half to around 55 billion euros.
For reference, the Support Tracker indicates Ukraine received 46.8 billion euros in aid from the USA and Europe by August's end this year. Other sources of financing, such as NATO contributions or income from unfreezing Russian assets, as per IfW expert Bomprezzi, can provide valuable support but cannot fully replace prolonged bilateral aid from the West in the long run.
The European Union might consider shifting some of its aid resources from Ukraine to NATO contributions or the use of funds from unfreezed Russian assets, potentially impacting Ukraine's aid situation. Despite the European Union's potential role in aid substitution, long-term bilateral aid from Western countries, including the EU, remains crucial for Ukraine's economic stability and reconstruction.
