Eat butter in peace, or be toast in war
Ukraine is not a rich country. The average Ukrainian earns the equivalent of $15,885 – PPP terms – in a year, which is 75% more than the average Indian but slightly less than the average Iranian. To catch up with neighbours like Romania ($40,304) and Poland ($43,625), Ukraine must spend more on development, but last year it spent a third of its GDP fighting Russia. Where India with a $4tn economy had a $75bn defence budget in 2024, Ukraine spent $65bn on defence from its meagre and stagnant $180bn GDP.
Guns Vs Butter
That’s the guns/butter trade-off of war. You can have more of one only at the cost of the other. As Eisenhower said: “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed…” It was 1953 and, perhaps, Eisenhower remembered how 3mn Indians had starved to death in the Bengal famine a decade earlier.Historians say the calamity wasn’t caused by drought but the misplaced priorities of Churchill’s wartime cabinet. True, there was a shortage of grain in Bengal in 1943, but London made it worse by continuing to export rice from the province for British troops. The price of grain skyrocketed, and when Indian officials sought an emergency supply of wheat, London declined. Saving Empire became more important than saving people.
People suffer
It doesn’t matter who imposes war on whom – whether Russia invades Ukraine or Afghanistan erupts in civil war – non-combatants pay a high price. A UN Women research paper shows how the Afghan govt spent 37% of its budget on defence and policing in 2019, as against 6% on health. In Mali, another war-torn country, defence expenditure in 2017 was five times higher than the outlay for social programmes.Contrast that with Kiel Institute’s data for G7 nations. Over a 90-year period, from 1872 to 1962, their military expenditure exceeded social programmes, dipping below 20% of their budget only once, immediately after WW-1. But today, these nations spend less than 10% of their budget on defence, as against more than 40% on social expenditure. Under pressure from Trump, Nato members have pledged to raise defence spending to 5% of GDP by 2035, but don’t count on it.
No winners
War can spur the economy – as it’s done in Russia – by increasing demand for killing machines, but data shows a dollar spent on the military produces fewer jobs than a dollar spent on infrastructure, health, education, etc. The Vietnam war may have been good for US defence contractors, but it hurt ordinary Americans by starting an inflation spiral that lasted till the 80s. Likewise, the post-9/11 American wars diverted money away from infrastructure and the social sector, and have run up an $8tn bill.So, guns or butter? Sometimes, countries – like Ukraine – don’t have a choice, but when they do – like Russia – they should pick butter, and a loaf of Borodinsky.
