Gone are the days when kings emptied their coffers and levied emergency taxes to go off on crusade. Today, waging war is above all about juggling the financial instruments of the 21st century. Between colossal debts, international aid and sources of funding that are, let’s say... creative, states have built a whole economic arsenal to back their military ambitions.

Take the United States after 9/11. Between the wars in Afghanistan and Iraq and the fight against terrorism, American public debt literally exploded: from 55% of GDP in 2001, it is now close to 120%. The most surprising part? Not a single cent of extra tax was raised to pay for these military adventures¹⁸. Worse (or better), the Bush administration actually cut taxes in 2001 and 2003 while launching two wars. Washington put the whole lot on the national credit card, unlike every previous war, when citizens were asked to put their hands in their pockets¹⁹.

The strategy isn’t new. During the Vietnam War, the United States had already funded much of the military effort through debt, contributing to the budget crisis and runaway inflation of the 1970s. But this time, the scale is unprecedented.

Behind the scenes, states also issue discreet bonds meant to fund the defence industry, sometimes under cover of “post-Covid economic recovery” or “industrial transition”. War debt that dares not speak its name. Financial markets swallow these securities without blinking, only too happy to park their money in state-backed assets. That, incidentally, is exactly Europe’s problem right now: defence funding is very limited, countries are already on the verge of bankruptcy, and defence… isn’t even an EU competence. I wrote about it here (in French).

Compound interest turns these choices into a financial time bomb. The total cost of the post-2001 wars could reach $8tn by 2050²⁰. Interest alone on that war debt is expected to top $2tn.

But while borrowing remains the great powers’ weapon of mass financing, international aid has taken on a new dimension with the war in Ukraine. In the space of two years, Kyiv has become the largest recipient of military aid since 1945. A record that says a lot about the nature of this war. More than $75bn from the American side, more than €50bn from the European Union. And that’s only the visible part. In all, more than 40 countries are taking part in this unprecedented effort, which already exceeds²¹ the roughly $150bn injected by the Marshall Plan after 1945. With one difference: back then the aim was to rebuild Europe, not to feed a front line.

That said, military aid isn’t just a transfer of weapons. It’s a disguised industrial stimulus, in which every billion granted to Ukraine turns into an order book for the arms giants: Raytheon, Rheinmetall, BAE Systems... all rubbing their hands. Emptied stocks have to be replenished, new orders pour in. The war in Ukraine has become the biggest life-size trade show for the Western military industry. In the end, Zelensky may well be the industry’s best CMO.

Aid takes every form: military equipment delivered straight from stockpiles, ammunition produced in a hurry, training for soldiers, satellite intelligence, and even direct budget support to pay Ukrainian civil servants. It’s the return of Lend-Lease, the mechanism Roosevelt invented to help the British without breaching American neutrality. The United States has in fact officially revived it with the Ukraine Democracy Defense Lend-Lease Act of 2022.

The formula is simple and cynical: the allies pay, Ukraine fights. A division of labour that suits everyone. Except perhaps the Ukrainians, who are watching their country turn into a battlefield. As some American think-tank strategists coldly put it, this may be the best value for money in recent military history: weakening Russia for the long term without losing a single Western soldier.

But for how long?

Behind the grand figures, there are growing tensions between the hawks, ready to back Ukraine to the bitter end, and the accountants, who are starting to look at the bill. Hungary is blocking, Slovakia is dithering, even Germany is hesitating. The show of unity barely hides the cracks deepening within the Western alliance.

Still, indirect support for Ukraine lets Western governments stay popular at home: no coffins to fly back, just contracts to sign.

So you have to be creative, and come up with solutions that would have made Louis XIV’s financiers green with envy.

First, there is the seizure of assets. Around $300bn of the Russian central bank’s reserves are currently frozen in Western banks²². A war chest eyed by those who want it used to rebuild Ukraine. The legal debate is raging, but the idea is gaining ground: why not make the aggressor pay with its own money? As usual.

More surprising still, cryptocurrencies are emerging as a new channel. Ukraine has raised more than $200M in Bitcoin and Ethereum since 2022, thanks to donations from individuals and tech companies all over the world. Hard to trace, impossible to seize, these digital currencies also make it possible to dodge sanctions and fund operations in the shadows. And not only in Ukraine.

The Ukrainian diaspora in the United States and Canada is said to have contributed several hundred million dollars since 2022, according to some estimates. The Armenian diaspora in France, the Tamil diaspora in the past... Out of patriotism or community pressure, they pour millions into conflicts, often without any oversight. Transfers that leave Los Angeles or Toronto and end up as rockets on the front line.

But the prize for creativity probably goes to the Syrian regime and its Captagon business. This amphetamine, nicknamed poor man’s cocaine, reportedly brings Damascus $5-6bn a year²³. More than all the country’s legal exports combined. When the state turns dealer to pay for its survival.

That said, none of this is new. Blood diamonds funded the civil wars in Sierra Leone and Liberia in the 1990s. Terrorist groups such as AQIM (al-Qaeda in the Islamic Maghreb) or Islamic State turned kidnapping for ransom into a system (in French), sometimes several million dollars a head. Arms smuggling, notably from the arsenals looted in Libya after Gaddafi’s fall, fuels conflicts from the Sahel to Syria.

In some conflict zones, even humanitarian aid becomes a resource. Parcels stamped “humanitarian” change hands and end up being sold on the black markets of Yemen or Gaza.

Paramilitary groups have invented their own model of the “franchised war economy”. Wagner got paid in mining concessions in Central Africa and Sudan. The Houthis tax ships in the Red Sea, turning a strategic strait into a mafia toll booth. Hezbollah runs a parallel economic empire in Lebanon, from smuggling to social services.

Finally, plunder version 2.0 is making a strong comeback. In the occupied areas of Ukraine, grain and industrial equipment mysteriously disappear, only to reappear on international markets. Satellite images show columns of lorries crossing the borders. Islamic State had perfected the system with Syrian and Iraqi oil, generating up to $1.5M a day at the height of its “caliphate”.

These alternative funding mechanisms sketch the outline of a parallel war economy, where the traditional rules no longer apply. In this organised blurring of the legal, the grey and the illegal, war is no longer an economic rupture: it becomes one of the system’s adjustment variables. The price to pay? A descent into the underworld of the global economy, where the line between legal and illegal fades into the smoke of the guns.