Panicking Putin ‘fears Soviet-style collapse’ as Russia feels soaring Ukraine war pressure. (Image: Getty)
Vladimir Putin is reportedly feeling the strain of economic pressures that resemble those that led to the collapse of the Soviet Union.
Forced to increase defence spending while cutting back on social services, Russia’s president is grappling with the financial toll of the ongoing war in Ukraine, Western officials say.
Despite ongoing hopes for a breakthrough, the conflict is expected to continue grinding on in eastern Ukraine.
This week, Russian forces captured the strategic town of Vuhledar, while Ukraine launched surprise attacks in Russia’s Kursk region. But the strain of war is visible in Russia’s economic decisions.
Russia’s central bank recently raised interest rates to 19 percent – a consequence of Western sanctions and labour shortages in critical sectors.
Military mobility of Ukrainian Soldiers continues in the Kharkiv
The conflict is expected to continue grinding on in eastern Ukraine. (Image: Getty)
Draft budget documents also showed Moscow plans to boost national defence spending by a quarter in 2025 to 6.3 percent of GDP – the highest level since the Cold War.
In contrast, the Russian government is cutting back on social services, including pensions by around 15 percent.
“So Putin knows his economy is under pressure,” a Western official said, adding this mirrors the economic strain that contributed to the Soviet Union’s downfall.
They also stressed: “He takes the advice of the central bank governor, because he is very well aware that this is what brought down the Soviet Union.
“But this is a very high interest rate, and it’s not really addressing the underlying inflation, the critical shortages in componentry [caused by Western sanctions] and in manpower.
“I’m not suggesting an imminent sort of financial crisis in Russia. What I am saying is that there is mounting economic and political pressure which will build over 2025.”
On top of that, Putin’s hesitation to extend mobilisation, fearing further economic disruption, means Russia faces daily casualties of around 1,200 soldiers, according to estimates.
However, US officials stress while the economic situation is precarious, there is no immediate financial collapse on the horizon.
Russia’s military spending is projected to rise to 13.5 trillion roubles (£110.5 billion) by 2025, more than double the amount allocated for social needs, Al Jazeera reports.
Defence spending will account for 32 percent of the overall budget, a figure not seen since the late Soviet era when the USSR was engaged in the costly war in Afghanistan.
Russia’s Ministry of Finance stressed that the increased funds would be used to equip the military, pay soldiers, and support the defence industry.
About 10 percent of this spending will go towards military personnel salaries, with front-line wages reaching record highs.
Meanwhile, the budget deficit is forecast to grow in 2024 and 2025 due to lower oil and gas revenues, which have long been a backbone of Russia’s economy.
As Finance Minister Anton Siluanov put it, the country is slowly moving away from its dependency on oil and gas, but the shift is contributing to economic uncertainty.
Source: Khabooem
14 Comments
He should be scared.
If he had any fucking brains he would get cosmetic facial surgery and good hair transplant, take the next flight to Istanbul and dip the fuck out this sinking ship. Take as many billions as he can and live on some beach for the remaining few years he has left.
Let one of the doubles take the fall. A bullet to one of their heads wouldn’t expose the ruse. Hush it all up. And then, just let the chips fall where they may. The fuck he cares about the actual russian person or state.
Whenever talk of the ongoing diplomatic efforts to end the war with a ceasefire and ukraine under nato protection come up, somebody invariably asks why russia might potentially agree to such terms. This is why. There is definite logic and motivation for all sides at this point to come to a “west germany” solution. This is not the ideal situation: the ideal situation is putin in the hague and ukraine whole. however, this is where things actually stand.
So… Get out of Ukraine, Georgia, Moldova pay reparations to all parties, and join the human race.
Come on up to the 17th floor of my luxurious hotel for a cup of tea……the views are awesome Vlad
They’ve got energy and raw materials.
Economics don’t lie.
The bigger issue imho isn’t general economic stress. Russia is enough of a dictatorship for enough time people can’t or won’t complain too much. And there will always be willing buyers for Russian resources.
It’s that much of Russias political power structure is dependant on patronage. The corruption is endemic because it’s key to keeping Putin in power – you hand off bits and pieces of the economy to various people in exchange for them being loyal and doing that Putin tells them.
So the bad economic situation presents a pretty stark choice for the powers that be because there’s no more of the economic poe to hand out, and the existing people are seeing their “investments” dwindle in comparison to what they could be doing. Which isn’t a good spot to be in. Similar things have happened in Venezuela and Egypt for example where military apparatchiks were put in charge of things lile oil and gas production, banks, even hotels and tourism in order to ensure loyalty.
Why doesn’t he
1) Declare that they won because they destroyed the “nazis”
2) Retreat from Ukraine
3) Double down on internal security
4) Let the money flow again
How did the Express, a rag with no money, get this information?
it keeps amazing me, 110 bilion while in war. Our tiny country (1/7th the population) spends around 1/5th of that during peacetime. We also have about half the GDP of the whole of russia while russia has oil, gas, uranium, iron ore.
Russia has seriously been doing things wrong the last few decades (and continues to do so)
He can solve this really easily…
GTFO of Ukranie.
He’s fallen victim to the sunken cost fallacy. He and his cronies drummed it up as this existential stand-off with the West. Now he can’t go back without losing face. Even if it costs the russians their future.
Withdraw your troops, tell your uninformed population the SMO has been a success. Have a victory parade through Red Square and call it a day. Return Ukrainian territories. Crimea is for negotiation
Good.
Chop down the state to size, autonomous regions ruled by people who actually know the area and care for its people.
Cmon guys let’s be real:
As a matter of fact they are still making progress on the battlefield and that‘s the only thing that is relevant. Wake me up when UKR actually is able to stop that. For now they are not