Nervos belli, pecuniam infinitam

Cicero apparently knew that the sinews of war are unlimited money. And no, I didn’t go to Eton and learned that stuff in school (something I don’t regret). I never had a single Latin lesson (something I very much do), but Jonathan Federle, Dominic Rohner, and Moritz Schularick use this quote to motivate their study if and how economic windfalls determine the outcome of wars.

To do this, they collected data on 742 international conflicts between 1977 and 2013 together with trade data for the countries involved in these conflicts. They argue that a classical study that looks at military spending or GDP and tries to correlate that with the outcome of wars has identification problems because military spending and GDP are interlinked but not always correlated in the same way to the outcome of wars. For example, one would normally expect that a country with larger GDP has more money to spend on the military and should thus be more likely to win a war. But in autocratic regimes, mismanagement of the economy leads to lower GDP while military expenditures rise, creating the opposite link between GDP and the probability of winning a war.

Instead of going through standard variables like GDP, they investigate what happens if a country enjoys windfall gains from an unexpected rise in commodity prices. The chart below shows how military expenditures, government revenues and external debt levels change (as % of GDP) in response to a positive or negative windfall of 1% of GDP during the conflict.

Response to 1% of GDP windfall gain or loss during conflict

Source: Federle et al. (2025)

A windfall gain allows a government to increase military spending and gives it a higher chance of winning the war. If a country has 10 percentage points more money to spend relative to its GDP and its opponent thanks to a windfall gain, it increases its chance of winning the war by 2.5 percentage points.

Now, let’s look at the military aid provided to Ukraine by the US and Europe below. About half of all military aid to Ukraine have so far been provided by the US and the other half by Europe. Other financial aid (incl. humanitarian aid) was almost exclusively provided by European countries.

Military aid to Ukraine by US and Europe

Source: Trebesch et al. (2024)

In 2025, Russia is expected to spend some 6.3% of its GDP on the war in Ukraine. Ukraine, meanwhile, spends some 26% of its GDP on the war with Russia ($53bn). On top of that the US committed $21.9bn in military aid a year ago and Europe provided total military aid over the last 12 months of the same amount.

If the US stops its military aid to Ukraine, that is a negative windfall of pretty much exactly -10 percentage points. Which of course means the odds of Ukraine losing the war have increased by some 2.5 percentage points if US military aid isn’t forthcoming anymore.

This may not sound like much but remember that the war in Ukraine has been very much in the balance for the last three years. Even a tiny shift in the odds can have a major effect. I don’t mean to equate elections with wars, but if the Brexit vote in 2016 had shifted by 2.5 percentage points in the direction of remain or the US Presidential elections in 2024 had shifted by 2.5 percentage points in favour of Kamala Harris, we would arguably live in a very different world today.