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Insights
May 2025
As Europe runs low on weapons, Ukraine on fighters, the U.S. on patience, and transatlantic unity frays, President Zelenskyy will likely be forced to accept a negotiated settlement with Russia sometime this year that freezes the fighting but stops short of a comprehensive peace agreement. Putin’s losses are also far from sustainable. At its current rate of gain, Russia will control all of Ukraine in about…118 years. So Putin will aim to cut a deal that is favorable to his overall goal to eventually control Kyiv. 2025 was always going to be the year of negotiation, and the endgame is here. But will it last? The durability of any settlement will depend on: (1) how satisfied President Putin is with Ukrainian and Western concessions (did he get enough of what he wanted?). Both sides need a deal they can defend politically. And (2) the strength of the security promises underwriting it (are they sufficient to deter further aggression and allow Ukraine to rebuild with confidence?). These are in direct tension; the weaker the security promises, the more concessions Ukraine will have to swallow—neutrality, demilitarization, disarmament, territory, etc.—or risk a return to fighting. Generally, we see 4 possible outcomes, each with parallels to other countries today:
15%
Odds
Best case – “South Korea"
President Zelenskyy will get neither NATO membership nor the full restoration of Ukraine’s territory. However, if he can secure an in-country European tripwire force backstopped by an American security promise on assistance and intelligence support, then the 80 percent of Ukraine still under Kyiv’s control will be set on a much more stable, prosperous, and democratic trajectory. The West’s decision to leverage the approximately $300 billion it has frozen in Russian sovereign assets would also get reconstruction in Ukraine off to a good start.
20%
Odds
Still OK – “Israel”
Strong, enduring military and economic support without a significant foreign troop presence would likely still provide Ukraine the space to turn itself into a fortress, pursue military modernization, and eventually establish its own deterrent. But war would always be on its doorstep. Putin would still need to see sufficient economic benefits (including sanctions relief) and a stronger relationship with the U.S. Not great – “Georgia” In the absence of both foreign troops and strong military support, Ukraine will experience ongoing instability, stunted growth and recovery, waning foreign support over time, and the effective derailment of its Western integration (i.e., EU and NATO membership), with gradual drift back into Russia’s orbit. Worst case – “Belarus” If the United States abandons Ukraine—or is perceived as switching sides—and Europe fails to step up, Russia will hold firm to its maximalist demands and seek Ukraine’s total capitulation, turning the country into a vassal state of Moscow. In this scenario, Russia will have effectively won the war, divided the West, and irrevocably upended the post-World War II world order.”
50%
Odds
Not great – “Georgia”
In the absence of both foreign troops and strong military support, Ukraine will experience ongoing instability, stunted growth and recovery, waning foreign support over time, and the effective derailment of its Western integration (i.e., EU and NATO membership), with gradual drift back into Russia’s orbit.
15%
Odds
Worst case – “Belarus”
If the United States abandons Ukraine—or is perceived as switching sides—and Europe fails to step up, Russia will hold firm to its maximalist demands and seek Ukraine’s total capitulation, turning the country into a vassal state of Moscow. In this scenario, Russia will have effectively won the war, divided the West, and irrevocably upended the post-World War II world order.
Following its 2008 war with Russia, Georgia benefited from a surge of Western aid and political support that stopped short of troops and security promises. Today, Georgia’s ruling party, Georgian Dream—backed by a Russia-friendly oligarch—has frozen EU accession and adopted Kremlin-style “foreign agent” laws that led to the suspension of U.S. and EU funding. Political instability and democratic erosion, fostered by creeping Russian influence, have influenced investor confidence amid drops in FX reserves.
Meanwhile, economic connectivity with Russia has deepened: remittances from Russia alone accounted for over 15% of Georgia’s GDP in 2022–2023, making it the country’s largest source of remittance income. Trade and direct travel have expanded, and the inflow of Russian nationals has surged. With a 2023 GDP of just $30.5 billion—one-eighth the size of Oklahoma’s—Georgia’s small, remittance- and tourism-heavy economy is still growing but increasingly vulnerable. Once seen as a reform success story, Georgia illustrates how the absence of credible security and institutional anchors can gradually undermine democratic governance and weaken economic potential.
A Ukraine facing a similar outcome could initially benefit from a wave of donor enthusiasm and reconstruction assistance. But without firm integration into Western security and political structures, Ukraine would risk a slow drift into geopolitical gray space. Some percentage of the nearly 7 million Ukrainian refugees may choose not to return, depriving the economy of much-needed skilled labor. Risk-averse investors could choose to avoid an unstable, security fragile environment, limiting foreign direct investment and stunting diversification.
Ukraine could re-open vulnerable trade corridors or informal dependencies linked to Russia. Insurance costs and risk premiums for business would remain high, undermining competitiveness. Restrictions on military size and capacity—if part of a negotiated settlement—could prematurely stifle Ukraine’s dynamic defense and tech sectors, erasing a potential engine of postwar growth. Paradoxically, the loss of eastern territory might act as a tourniquet—cutting Kyiv off from a costly insurgency in the Donbas and allowing reconstruction to focus on more governable, less damaged regions requiring less public spending.
Absent firm commitments, Ukraine’s future could echo Georgia’s—a sobering reminder that wars can end without a just peace, and even the strongest pro-Western sentiment can fade if not adequately reciprocated by Western institutions.
