A Historical and Financial Reckoning of Russia’s War in Ukraine
By Todd Davis
Editor’s note: The opinions expressed here are those of the authors. View more opinions on ScoonTV
King Louis XIV, the Sun King, had the phrase Ultima Ratio Regum inscribed upon his cannons. Latin for war is the last argument of kings; the phrase suggests that when all other diplomatic and political tools have failed, war is the ultimate and final lever a ruler can pull to exert their will.
War, however, especially modern war, is not fought in a vacuum. Total war involved all aspects of a state, and the effects reverberate throughout the society. The Sun King’s great-great-grandson would feel this wave after financing the American Revolution, largely through borrowing, which led to a financial collapse for France in 1788 and eventually a revolution of his own. One he didn’t survive.
Well-versed in forever wars, Americans know conflicts are easy to start but perilously difficult to leave. Russia finds itself trapped in one currently. The war with Ukraine has dragged on and on, with the fiscal cost rising higher and higher. Russia is no stranger to the destabilizing effects of war, having experienced it previously in 1905 following the wake of its defeat in the Russo-Japanese War and in World War I, where Tsar Nicholas met the same fate as Louis in a revolution.
Russia is facing costs in Ukraine that will almost certainly never be recouped. The question today is not whether the war is costly. It is. The question is whether victory, in any attainable form, can ever pay the bill. Even under the most generous assumptions for Moscow, the answer is almost certainly no. The fiscal weight of the conflict already exceeds the total economic value of the territory Russia aims to control, and the long-term strategic liabilities created by the war compound the deficit rather than reduce it.
This article examines the war as a balance sheet. It evaluates the human, material, industrial, and geopolitical costs incurred by Russia; estimates the economic value of annexed Ukrainian territories; models a break-even timeline; and assesses whether additional territorial expansion would improve the picture. War causes immense human tragedies, and financial analysis cannot, and should not, obscure that reality. But numbers matter because governments must eventually pay the bills created on the battlefield.
Human Capital: Losses That Cannot Be Recovered
Military casualties are difficult to verify, particularly when governments restrict information. Estimates vary widely, but using a conservative blend of Western, Ukrainian, and independent Russian sources yields a baseline of 150,000 Russians killed in action and 300,000 wounded, a significant portion of whom will face long-term disability or reduced employment capacity. These are conservative estimates, and others will place the death toll much higher.
In economic terms, these losses represent long-term erosive strains. Permanent reduction of the working-age labor pool, lower future tax revenue, Increased pensions, disability, and medical obligations, and demographic contraction in already underpopulated regions.
Russia’s demographic challenges predate the war. Male life expectancy has fluctuated for decades, birth rates remain low, and emigration since 2022 has accelerated the loss of skilled labor. War casualties deepen this structural deficit, especially among younger male cohorts critical to industrial and military labor markets. Unlike tanks and aircraft, people cannot be replaced by production surges. Their lost future productivity is permanent.
Even if Russia secured all intended territorial gains, annexed territories would not replenish this demographic gap. Most of the captured regions have experienced population decline, outward migration, and wartime displacement. Their net contribution to Russia’s future workforce, even under optimistic reintegration scenarios, is marginal relative to Russia’s own losses.
Material Losses: Hardware Attrition on a Modern Scale
The war in Ukraine has consumed matériel at a rate unmatched in Europe since 1945. Russia retains deep reserves of Soviet-era equipment, but industrial storage cannot erase replacement costs.
Below is a conservative estimate of equipment losses and their approximate value.
Table 1: High-Level Russian Equipment Losses (Rounded, Conservative)
| Category | Estimated Losses | Approx. Unit Cost | Estimated Value Lost |
| Aircraft (fighters/attack) | ~90 | $35–50B total program value | $8–12B |
| Helicopters | ~120 | $15–20M | $2–3B |
| Tanks | ~2,700 | $3–4M | $8–10B |
| Armored vehicles | ~5,000+ | $0.5–1.5M | $3–6B |
| Naval losses, incl. Moskva | Several vessels | $750M–$1B+ | ~$1B+ |
| Ammunition, depots, logistics | — | — | $10–15B+ |
Estimated matériel losses: $32–47B
This does not include annual operating costs, ammunition expenditure, accelerated manufacturing runs, mobilization support, and riveted-in wages, pensions, and benefits.
Russian budget documents released in 2023–2024 suggest military expenditures exceeding 6% of GDP, levels not seen since the Soviet-Afghan War. These costs will continue to rise year by year.
Industrial Damage and the Cost of Economic Isolation
Beyond the battlefield, Russia’s economy has undergone structural shifts, including the redirection of oil and gas exports toward Asia at discounted rates, declines in foreign direct investment, and increased reliance on domestic production with higher input costs. Mounting sanctions limit access to advanced components. Ruble depreciation requires repeated interventions. Reallocation of labor toward the defense sector at the expense of civilian industries is a real concern now that the Russian state is fully mobilized for war.
These are opportunity costs, losses that do not appear as destroyed equipment but as forgone economic potential. The longer the conflict continues, the more these shifts harden into long-term constraints.
Russia can still generate revenue through energy sales, but its prewar European market is unlikely to return. Some military-industrial expansion will bolster GDP on paper, but war-driven production rarely translates into broader prosperity. It creates goods that cannot be exported widely and are consumed immediately by ongoing attrition.
What Is the Value of the Annexed Territories?
Russia has declared the annexation of four Ukrainian regions: Donetsk, Luhansk, Zaporizhzhia, and Kherson. Let us assume that Russia receives all four regions in totality under the terms of a peace deal.
The combined economic value of these territories, based on prewar 2019 GDP, can be summarized as follows:
Table 2: Prewar GDP of Annexed Regions (2019 USD)
| Region | GDP (USD) | Notes |
| Donetsk | ~$10–12B | Heavy industry; extensive wartime damage |
| Luhansk | ~$4–5B | Coal/minerals; infrastructure degraded since 2014 |
| Zaporizhzhia | ~$8–9B | Nuclear/industrial corridor |
| Kherson | ~$2–3B | Largely agricultural |
Total Prewar GDP: $24–29B
Much of this economic capacity is significantly degraded: Azovstal and other major industrial sites have been destroyed. Agricultural land is disrupted or mined. We have seen from the battlefields of World War I, the war that most closely resembles the current conflict, that mines and undetonated bombs are found even to this day. Power generation facilities were damaged, and logistics corridors were severed or under fire control. Even under accelerated reconstruction, short-term output might reach only $10–15B/year.
Break-Even Modeling: When Does the War Pay for Itself?
The central question is simple: Can Russia ever recoup the economic losses through control of additional territory?
A simplified model:
- Estimated cumulative war-related losses (human, matériel, industrial, sanctions drag): $1–1.4 trillion
- Maximum plausible annual extractable GDP from occupied territories: ~$15–20B
Grand Total War Cost Estimate (High Scenario)
| Category | Estimated Cost (USD) | Notes |
|---|---|---|
| Killed in Action (150,000) | $150 billion | Valued using lifetime productivity + pensions + demographic loss |
| Wounded (300,000) | $300 billion | Medical care, disability, pensions, lost productivity |
| Equipment Losses (Vehicles, Tanks, Artillery) | $120 billion | High estimate including full replacement costs |
| Aircraft Losses | $30 billion | Includes fixed-wing and helicopter fleet depletion |
| Naval Losses | $10 billion | Flagship and amphibious losses dominate the figure |
| Missile & Drone Expenditure | $80 billion | Includes long-range and high-precision missile depletion |
| Industrial Damage & Mobilization Costs | $200 billion | Factory harm, mobilization inefficiencies, sanctions adaptation |
| Macroeconomic Impact (GDP drag + sanctions) | $250 billion | Lost growth, capital flight, reduced foreign investment |
| Long-Term Veteran Care (50-year horizon) | $100 billion | Conservative estimate for pensions, medical care, benefits |
Divide losses by annual gains:
$1T ÷ $15B ≈ 66.6 years
$1.3T ÷ $20B ≈ 65 years
This produces an optimistic 65–70 year break-even window. Even to reach this point three generations from now, we are making aggressive assumptions in favor of Russia, including: no further sanctions, total political recognition of annexation, no ongoing insurgency or occupation costs, rapid and cheap reconstruction, no additional conflict escalation, no external support for Ukraine, and no depreciation of captured industrial assets.
These assumptions are unlikely to hold. In practice, the real break-even point drifts infinitely into the future.
States rarely expect territorial conquest to pay off financially in a single generation. But a multi-decade break-even timeline, approaching three human generations, is historically associated not with stable geopolitical gains but with severe internal strain.
The New Strategic Frontier: A Permanent Cost Center
Even in a scenario favorable to Moscow, one that secures all four annexed regions and halts the war, the geopolitical environment has changed permanently. Russia emerges into a security landscape significantly more hostile than in 2021.
Key new liabilities include:
- An expanded and heavily militarized Ukrainian frontier
- Two new NATO members, Finland and Sweden, are adding over 800 miles of NATO-Russia border
- Enhanced NATO ISR, strike, and air-defense networks
- Permanent force requirements for occupation, garrisoning, and border security
These liabilities generate new annual expenses.
Table 3: Estimated Additional Annual Defense Obligations
| Category | Estimated Annual Cost |
| Garrisoning the Ukrainian frontier | $8–15B |
| Western Military District expansion | $5–10B |
| Missile/aviation reinforcement | $3–6B |
| Nordic/Baltic posture adjustment | $4–7B |
| Total | $20–38B annually |
Even in peace, this cost remains. It does not produce revenue; it merely stabilizes the new borders.
When combined with war-driven economic drag, these recurring expenses effectively erase any financial benefit of territorial gain. A captured steel plant cannot balance the cost of an entire new defensive line stretching across two theaters.
The Dnieper Hypothesis
Some strategic analyses entertain the possibility of further Russian offensives aimed at seizing all territory east of the Dnieper River, including major urban centers such as Dnipro and Zaporizhzhia west bank infrastructure. From a purely economic standpoint, prewar GDP east of the Dnieper could be estimated at $40-60B annually. This appears more favorable, but economic value does not automatically translate into profit.
Consider that occupation and reconstruction costs would be immense. The closer you get to the Dnieper, the less the people view themselves as Russian. These regions have or will sustain heavy damage as the battlefield progresses West. Urban reconstruction alone could cost hundreds of billions.
Pacification would require large, permanent security forces. Russian control over these areas would be viewed as illegitimate. They would be prone to constant insurrection. Think Gaza on an enormous scale. This further increases the recurring cost structure.
Continued sanctions would deepen economic isolation. Going to the Dnieper ensures Russia will remain estranged from Europe. Additional annexation would likely foreclose any partial sanction relief. Therefore, international market losses would continue indefinitely. Territory cannot replace the revenue stream once generated by selling oil and gas to Europe.
Ultimately, expanding territorial control to the Dnieper does not improve the break-even timeline. It worsens it. The more territory taken, the more resources Russia must commit to administer, defend, rebuild, and integrate. The theoretical GDP of a region is irrelevant if the costs of extracting it exceed the value generated.
When War Costs Break a State
Russia has twice in modern history been pushed to the brink by the costs of war. In 1905, defeat in the Russo-Japanese War stunned a society that believed its empire too large to fail. Military losses were only part of the problem. The deeper shock came from the financial strain. Russia had poured money into a distant conflict it could not win, relying heavily on foreign loans. When victory failed to materialize, the economy contracted, prices rose, and confidence in the government collapsed. Strikes spread, the navy mutinied, and the Tsar was forced to concede political reforms simply to keep the state intact.
The pattern repeated more dramatically in 1917. Three years of World War I exhausted the treasury and shattered the logistics that kept cities fed and armies supplied. Inflation accelerated, wages collapsed, and the front consumed men faster than they could be replaced. The economic burden became indistinguishable from a national breakdown. When the system finally failed, it failed completely, the Tsar fell, and the empire with him.
Russia today is more resilient than its predecessors in 1905 or 1917, with a larger economy, better fiscal controls, and the ability to reroute trade. But resilience is not invulnerability. Even powerful nations face political consequences when wars impose decades-long economic burdens without producing offsetting benefits. When the financial demands of war exceed what a state can sustainably bear, even victories on the battlefield cannot prevent instability at home.
The Ledger’s Final Line
Wars are not fought solely for economic gain. States pursue strategic, ideological, and security goals that cannot be quantified in dollars and Rubles alone. Yet wars still produce financial consequences that governments must manage for generations.
When the running total is assembled in personnel losses, matériel attrition, industrial damage, sanctions, economic drag, and the cost of defending newly contested borders, the fiscal weight of the Ukraine conflict already exceeds anything Russia can plausibly extract from the territories it seeks to control. Even under the most optimistic scenarios, Russia faces a break-even horizon measured not in years or decades, but in generations.
Territorial control may offer symbolic value. It may provide strategic depth or political narratives for domestic audiences. But no realistic interpretation of the numbers suggests that the war can ever “pay for itself.” The costs are too high, the gains too modest, and the long-term liabilities too large.
Louis XIV’s motto, Ultima Ratio Regum, reminds us that war is the final argument once all others have failed. What the Sun King did not inscribe on his cannons is the second half of the equation: once fired, that argument generates debts that outlive kings, empires, and ambitions. In Ukraine today, those debts have already grown beyond recovery. Victory cannot balance the ledger.
Curtis Scoon is the founder of ScoonTv.com Download the ScoonTv App to join our weekly livestream every Tuesday @ 8pm EST! Support true independent media. Become a VIP member www.scoontv.com/vip-signup/ and download the ScoonTv App from your App Store.
