Vladislav Grigoriev18:27, 02.03.25

Russia is spending huge amounts of money to continue the war in Ukraine.

US President Donald Trump has launched a mission to reset relations with Russia, promising that Russian dictator Vladimir Putin will honour a peace deal if one is signed. However, the Russian economy is directly dependent on the war in Ukraine, The Telegraph reports .

It is noted that the Russian economy has suffered greatly due to the full-scale invasion of Ukraine, for which Moscow has to spend huge amounts of money. The situation is aggravated by Western sanctions, labor shortages, high inflation and record interest rates.

The publication emphasized that the paradox is that the only engine of growth for the Russian economy at the same time remains the continuation of military actions. Moreover, nationalist anti-Western propaganda has become the basis of Putin’s power, which is why he does not intend to end the war.

“Putin does not want peace and is not going to make peace. He enjoys war. It is terrible. But he does not want to stop the war,” Simon Johnson, a professor at the Massachusetts Institute of Technology and former chief economist at the IMF, told reporters.

Trump is confident that improving economic ties with Ukraine will be enough to deter future conflict. However, Johnson believes that a peace deal will not force Putin to abandon his imperialist ambitions.

“Trump is playing a big trick on Putin. Trump wants a quick win. He wants a triumph and a show, and Putin is going to play along. He is being played,” he explained.

Alexander Kolyandr, an employee of the Center for Analysis of European Policy, shared that the military economy currently makes up from 8% to 10% of Russia’s GDP.

“For a country that is waging a war outside its own territory, this is a lot. The military industry has become the main driving force of the Russian economy,” he added.

The publication noted that it now appears that war spending is helping the Russian economy grow. According to the IMF, Russia’s real GDP will grow by 3.6% in 2024, more than three times the growth seen in the UK last year.

The problem for Russians is that due to the military actions, only the defense sector of business is thriving, the publication emphasized.

“The manufacturing industry, which includes defense, was the only sector to show growth in 2024,” said Alexandra Prokopenko, a research fellow at the Carnegie Russia Eurasia Center.

The publication shared that Russia has doubled the production of armored vehicles, and some ammunition manufacturers have increased the scale of production fivefold. In the first nine months of 2024, production in the manufacturing industry increased by 7.6%.

“Consumer spending is driven by increased salaries for military personnel or even payments to victims,” ​​explained Agnia Grigas, a fellow at the Atlantic Council’s Eurasia Center.

In this regard, the Kremlin is not going to prepare for peace, but is only strengthening its military machine, the publication added. In its autumn budget, the Russian government increased its forecasts for military spending and reduced nominal spending on social policy.

“Military spending has begun to turn into a kind of ‘black hole,'” commented Andrei Yakovlev, a research fellow at the Harvard Davis Center for Russian and Eurasian Studies.

Alexander Kolyandr believes that removing the state engine of military spending will plunge Russia into economic stagnation on a scale not seen since the 1980s.

“They will continue to spend on military production not only to replenish the arsenal, but also to keep the economy from sliding into recession,” said an official at the Center for European Policy Analysis.

Simon Johnson assured that the Russian economy without war would simply become the Russian economy preparing for war.

“Whether you call it war or peace, it doesn’t matter. It’s still a militarized economy financed by oil,” he explained.

Russian Economy – Other News

Bloomberg reported earlier that Russia’s economy is bursting at the seams . It is noted that US President Donald Trump could deliver the decisive blow.

In addition, the Financial Times wrote that Russia’s military economy is a house of cards . The financial basis of Russian dictator Vladimir Putin’s policies looks increasingly fragile.

(C)UNIAN 2025