The ISW team concluded that already in 2025, the Russian economy will face large-scale problems against the background of the war of aggression, which it has been waging against Ukraine for more than 10 years.
Points of attention
- Cuts in public spending and the failed fight against inflation are destroying Russia's economic stability.
- Support for Ukraine at the international level exacerbates the Kremlin's economic problems.
- The cancellation of financial incentives for Russian soldiers undermined Putin's credibility.
What will happen in Russia
According to American analysts, Russian dictator Vladimir Putin is concerned about Russia's long-term economic stability.
Against this background, his team recently adopted a series of measures aimed at reducing public spending on the treatment of wounded soldiers of the Russian Federation, fighting inflation and solving long-term demographic problems.
This is another clear confirmation that the economy of the aggressor country is not as resistant to Western sanctions, monetary restrictions and the costs of military operations as the Kremlin constantly tells.
This policy also demonstrates that the Kremlin will not be able to sustain a protracted war for years and decades while protecting Russian society from economic challenges. Consistent Western and international support for Ukrainian resistance on the battlefield will further exacerbate Russia's economic problems.
Putin does not have the ability to finance the war at the same level
What is important to understand is that the Russian dictator did change the compensation promised to Russian soldiers wounded during the hostilities in Ukraine.
This instantly provoked a wave of indignation among the occupiers.
Financial incentives have been a key element of the Russian military's recruitment drive and retention efforts for the past nearly three years, and the removal of such incentives indicates that the system is becoming economically unsustainable for the Kremlin, experts say.
It is also impossible to ignore the fact that the efforts of Putin and his team to stop inflation have a direct impact on the expansion of the Russian defense industrial base (DIP) and the prospects for mobilizing the economy.
According to analysts, under such a monetary policy, the Russian defense industry will hardly be able to achieve the level of production necessary to replace the losses of the Russian army on the battlefield.
