Russia's Weak Hand

Moscow's escalation window is closing

(Ukrainian president Zelenskyy three days ago in Kupiansk, which Russian generals had falsely claimed to have taken in a briefing with ‘Putin’)

Amidst the squalid spectacle of a US Administration doing the Kremlin’s bidding, it’s easy to lose perspective on the issues that will determine this war’s outcome. Russia is now playing a very weak hand. Here are seven reasons why:

Russia has lost this war. In 2022, the Kremlin’s intention was to destroy Ukraine as an independent state. Today Ukraine is a more sophisticated international actor than ever before, with deepening partnerships in Europe and around the world. Far from wiping the country off the map, Russia has energized Ukraine. This strategic failure has triggered an escalating blame game in Moscow since 2022.

Moscow cannot afford a larger war. Russia’s current budget foresees military spending in 2026 of 13 to 14 trillion rubles – roughly equivalent to this year’s levels. With oil and gas revenue falling to 8.5 trillion rubles (from over 11 trillion last year), Russia faces a growing budget deficit. Net domestic borrowing via OFZ issuance/placements has doubled to about 5.6 trillion rubles. Russia is also drawing on the liquid portion of its National Wealth Fund and issuing yuan-denominate bonds. The war already consumes at least 40 percent of the federal budget: a larger war would require cuts to pensions, social programmes or core services.

Russians no longer support this war. While totalitarian Russia obviously lacks any reliable polls, all signs indicate public support for continuing the war has plummeted, with barely twenty percent of Russians now supporting it, down from over 70 percent early in the year. War fatigue and support for a ceasefire have risen sharply, further constraining military options. Moscow’s ill-starred fake peace pantomime with top proxy Trump has created expectations for a ‘war that will wind down’ and a ‘return to normal’ that the Kremlin will have difficulty fulfilling.