It has now been 3.5 years since Russia launched a full-scale invasion of Ukraine. We’ve gone through several cycles of attacks and counter-attacks, claims that Ukraine will soon or will never join NATO, unilateral ceasefire offers, and Donald Trump tweets about how he plans to punish Russia.
Strangely enough, very little ink has been spilled on the issue of who has benefited and lost from this war. The conventional wisdom in the West appears to be that the US is spending too much money on the war and must shut it down. Likewise, many analysts seem to believe that Russia has been “winning” because it has gained territory.
I’m here to make you see the war in a completely different light. The post below will be ruthlessly pragmatic.
Losers: Russia
That’s right. Despite gaining control of a large chunk of the Donbass, creating a land bridge to Crimea and bombing Ukraine every night, Russia remains worse off than it was in 2022. Think about this logically from a pragmatic point of view: in what way has Russia benefited? Its economy is worse off than it would be had there been no war. Interest rates remain at 18% and trade has been cut off with most of the West. The country has also lost access to Swift.
Militarily Russia’s weakness should be obvious - a few months into the war it couldn’t prevent border clashes between two of its allies - Kyrgyzstan and Tajikistan. More than a year in, it watched Azerbaijan demolish what remained of the Nagorno-Karabakh Republic, significantly reducing Russia’s military leverage in the Southern Caucasus. Russia now has to contend with both Finland and Sweden in NATO and an Armenia that is slowly inching Westwards. Oh and it has sustained something close to a million casualties in total.
Make no mistake, this is not what Russia wanted. The hope was that Russia would take Kyiv in three days (something that even CIA analysts believed) and watch NATO collapse. Instead, they now find themselves forced to sell energy to India and China at a discount with no capability to use the Europeans to their advantage.
Losers: Ukraine
I hope you didn’t expect me to be naive about this. The fact that Russia is worse off than before does not mean that Ukraine has won. The facts of the conflict are straightforward here: (1) Ukraine has lost a significant chunk of its territory (2) roughly seven million refugees have left the country (3) hundreds of thousands of Ukrainians are dead (4) there is no end in sight for the war.
There is, of course, some hope here. There is some future where the war ends with security guarantees for Ukraine and EU membership. This would allow the country to, to quote Kotkin, “win the peace” and turn into a proper Western liberal democracy. But we are still far from that future.
Losers: Europe
Europe is worse off for two broad sets of reasons. One is related to the costs associated with the war. They have been financing Ukraine with the few arms they have and have had to stop trade with Russia. This has given their economies a hit, but the effect is ultimately small (you can note that the blip is superficial in EU GDP).
The more important issue for Europe is that the war has led to an American reassessment of obligations. If Hegseth is to be believed, the US is now considering eventually leaving the continent. Many of you may not realize this, but US presence in Europe was heavily requested by even Russia. This is because the US has played the role of a pacifier on the continent and prevented other countries from rearming. This in turn ensures that security competition does not return to the continent and that Germany or France does not go insane if either gets some crazies in power.
Winners: United States
Here we are. The US has not lost from this war, it has in fact gained a tremendous amount. Let’s start with the easy part (1) Finland and Sweden are now in NATO, which helps US power projection. (2) Europe is scared and starting to spend on its own defense, making it easier for the US to pivot to Asia.
But what about the huge war spending? Hasn’t the US spent tremendous sums on the war? No. First of all, most of the spending is inflated. The US usually sends outdated equipment to Ukraine and pretends the original sticker price is still representative of the value. Nevertheless, even if we take the official numbers seriously, the claimed aid to Ukraine totals around 200 billion. This is across a 3.5 year period, giving us a yearly cost less than 60 billion. That is around 0.2% of US GDP per year.
Let’s put that into perspective: the US military plans to spend almost a trillion dollars on defense in 2026. So around 6% of US military spending is going to Ukraine and incapacitating the country’s primary geopolitical rival after China. That is obviously a good deal.
The counter-argument here may be that the US should not seek to weaken Russia because Russia would prove a valuable ally against China (this is sometimes referred to as the “reverse-Kissinger” argument). Though popular, this position is naive. Russia will not abandon its alliance with China regardless of how hard Trump (or any other President) tries. The fact of the matter is that the US is a democracy. And Russia will remain afraid that US policy could change in the blink of an eye after elections pass. Therefore, any hope of splitting up Russia and China should be abandoned. And when one abandons such hopes, the optimal policy prescription becomes obvious: spend 0.2% of GDP per year to hamper your second largest rival.
Winners: Post-Soviet States
Natural winners from the war have included post-Soviet states that have their own ambitions that conflict with Russian interests. Russia being bogged down in Ukraine has led Azerbaijan to reclaim Nagorno-Karabakh and Armenia to establish a strategic partnership with the US.
Even states with no grand ambitions have benefited. First of all, they have spent over three years sleeping easy because Russia has had no wherewithal to invade them (I can attest that my REM sleep has improved since 2022). In addition, post-Soviet states have served as conduits for sanctions evasion, allowing them to take part in the profits. Honestly, it’s fun to border Russia if they can’t invade and instead pay you royalties for trade.
Unclear: China
This is the big one and I’m afraid I have no obvious answer (and in fact, I would appreciate your own takes in the comments). China has benefited from the war because Russia is now fully dependent on it. With nowhere left to run, the Chinese are able to buy Russian energy at a discount and help dictate policy. On the other hand, the war has resulted in their primary geopolitical ally becoming much weaker. As a result, it’s quite unclear whether China is better or worse off than it would have been without a war in 2022.