Russia’s economic instability may limit its war efforts in Ukraine - ISW
Photo: The cost of war for Russia is likely to increase even more (Getty Images)
Russia is losing its ability to effectively sustain its defense sector while maintaining economic stability. This is due to rising war expenses, corruption, a labor shortage, and other factors, according to the Institute for the Study of War (ISW).
Before drawing conclusions, the analysts presented recent data regarding Russia's finances.
On December 7, US Defense Secretary Lloyd Austin stated that Russia has spent more than $200 billion on the war against Ukraine and has suffered at least 700,000 casualties since February 2022. Recent losses amounted to around 1,000 soldiers per day.
On December 9, the Ukrainian Center for Countering Disinformation reported that Russia’s liquid assets in its National Welfare Fund had decreased from $140 billion in February 2022 to $53.8 billion as of December 1, 2024. The Center noted that Russia increasingly relies on reserves in Chinese yuan and gold sales to cover its budget deficit. Additionally, it has allocated one-third of its national budget for 2025-2027 to defense spending, indicating an unstable prioritization of war at the expense of economic stability.
Furthermore, on December 9, Russian Prosecutor General Igor Krasnov reported that corruption-related crimes, including bribery, had increased by nearly 30% in 2024 compared to 2023. Meanwhile, Russian authorities have held over 30,000 officials accountable for corruption violations in 2024.
ISW’s conclusion
Analysts believe that the growing economic pressure on Russia caused by the war, combined with widespread corruption, a shortage of labor, and the inefficiency of Russia's defense industry, is likely to increase the cost of the war for Russia and further undermine its ability to effectively support defense sector activities while maintaining economic stability.
Earlier, ISW had already observed similar trends and statistics in the Russian economy. They noted that Russia's economic trajectory is unsustainable in the medium and long term and will increasingly limit its ability to wage war against Ukraine.
Recently, The Washington Post, citing US officials, reported that Western sanctions are gradually undermining Russia's arms production. These sanctions are having an effect in such a way that, over time, they will hinder Moscow's ability to achieve its objectives on the battlefield.
Additionally, many independent experts agree that sanctions have worsened the quality of Russian equipment and made supply chains more fragile.
