Compiled 22 March, updated 30 April 2025
Russia is now a war economy, that’s why Putin will never sign peace
Trump repeats Obama’s mistake: on Ukraine he seeks an impossible deal, the Kremlin doesn’t want it
There is little doubt that in 2014 Vladimir Putin was insulted when then US President Barack Obama described Russia simply as ‘a regional power that is threatening some contiguous states, due not to its strength but to its weakness’.
Yet eleven years later, and three since Putin’s attempted all-out invasion of Ukraine, Obama’s comment is as true today as ever. The problem is that both Putin and President Donald Trump are acting as if Russia is strong instead of weak.
The figures of the war say otherwise. According to new estimates released by the British Ministry of Defence, since February 2022 the Russian army has lost nine hundred thousand men, 200-250 thousand of whom were killed and the rest seriously wounded. Russia is allocating 40 per cent of its federal budget to its armed forces, quantifiable at 8 per cent of the country’s entire GDP.
Nevertheless, all these losses and all that money have left Russia in control of just 20 per cent of Ukrainian territory, and there has been no progress inside Ukraine in the last three months.
The only recent Russian success has been in pushing Ukrainian soldiers out of the Kursk region near the border, which was invaded by Ukraine last August, and to a large extent this only happened when Trump deprived Ukraine of US intelligence support. Ukrainian soldiers have not yet been completely driven out of Kursk.
The Russian economy has proved capable of withstanding Putin’s prolonged war failure, but that does not mean the country is strong. Sales of oil, gas, and other goods to China, India, and other customers have kept the economy afloat, but Russian banks have been forced to make subsidised loans for defence, construction, and agriculture.
This situation, however, only paves the way for more trouble in the future. To keep inflation under control, the Russian Central Bank raised interest rates to 21%, pointing out that without subsidised loans, the entire economy would come to a standstill and many borrowers would go bankrupt.
The truth is that the war was wanted by an authoritarian leader who used the only weapons at his disposal: military power and nationalist rhetoric. Now, in 2025, the truth is emerging: despite his failure, Putin may not want to end the fighting because, if spending on the war effort stopped, or even slowed, the Russian economy would be in serious trouble.
Eleven years ago, Obama was right in his judgement, but wrong in his reaction: had he and his European allies responded firmly and forcefully to Putin’s aggression, Russia could have been pushed back. Instead, it preferred to opt for petty and lenient sanctions, continued to buy gas …
It should be noted that the Kremlin is increasing military spending at a dizzying pace. By 2025, it will amount to about EUR 120 billion, which corresponds to over 6% of GDP. Thus, Russia has almost quadrupled its military budget compared to 2021. Read also : La militarizzazione crescente della Russia
