War against Ukraine is accelerating utilities collapse in Russia - Intelligence

According to intelligence reports, worn-out heating networks, the lack of planned modernization, and chronic underfunding in Russia have led to a situation where accidents that once were fixed within hours now last for weeks, leaving people without heat in the middle of severe frost.

One of many examples is the settlement of Atamanovka in Zabaykalsky Krai, where about five thousand people, including hundreds of children, have been without heating for more than a week.

The first ruptures of the heating pipeline occurred as early as December 30, but failures have continued one after another. Temperatures in apartments have dropped to almost zero while outdoor temperatures reached −25°C, forcing residents to live in winter clothing. Schools and kindergartens have been closed, and heating centers set up by local authorities turned out to be cold and effectively unusable.

Officials have traditionally limited themselves to promises and demonstrative meetings, but the problem runs much deeper: Russia’s utilities system has not been modernized for decades.

Rosstat (the official Russian government agency responsible for collecting, analyzing, and disseminating statistics) has previously acknowledged that one-third of heating networks are in critical condition. At the same time, in various regions of the country — from Siberia to the central regions — a series of mass accidents involving heating pipelines has already been recorded at the beginning of the year, leaving entire districts without heat.

Ukraine’s Foreign Intelligence Service noted that an additional blow to the sector was a sharp reduction in funding for housing and utilities services. The Kremlin has cut the budget for municipal infrastructure by more than half over several years.

"While trillions of rubles are being spent on the war, the money that remains for heating networks is enough to patch holes, rather than fully replace worn-out systems," the intelligence service added.

Economic collapse in Russia

Earlier, Ukraine’s Foreign Intelligence Service reported that the Russian economy had fallen into a trap of non-performing loans that could cause it to collapse. The problem is acknowledged even by the Russian government itself — effectively, the Kremlin has already confirmed a high likelihood of a banking crisis and a wave of corporate defaults.

The key factor is the hidden growth of distressed debt. Even when restructured loans are taken into account, the real volume of non-performing debt has already exceeded 11%, reaching approximately $131 billion.

According to intelligence data, since the beginning of 2022, Russia’s aggression against Ukraine has cost Russian taxpayers $550 billion.

Overall, Russia’s spending on the war has increased nearly fourfold since 2021.

The Foreign Intelligence Service notes that Russia’s financial and institutional system as a whole is sinking ever deeper into a mode of managed chaos. Banks are concealing ownership structures, civil servants have been exempted from asset declarations, and entrepreneurs are barely keeping their businesses afloat.

In addition, Russia’s economy is suffering not only because of sanctions and the war in Ukraine. Permafrost in regions critically important to the Russian economy is beginning to thaw, posing a threat to key infrastructure.