Putin's dilemma: Military crisis meets economic collapse!

Putin's dilemma: Military crisis meets economic collapse!

The current situation in Russia is anything but stable. While the Kremlin continues to pursue its military ambitions, he also has to make massive cuts in the defense budget. Loud The press violates Russia not only the airspace of its neighboring countries Baltic States, Poland and possibly Denmark, but also increases taxes to finance the expensive Ukraine conflict. These measures are contrasting to a budget that is already under enormous pressure.

The economic situation in Russia is alarming. With an inflation rate that has reached the 17 percent mark, and a budget deficit that added up to 3.8 trillion rubles in the first half of 2023-almost three times as high as planned-the economy is anything but at its height. Experts fear that this deficit could grow to 6 trillion rubles by the end of 2023. As the German Economics News Reporting, companies work with reduced income from oil and gas production and an overvalued ruble, which further exacerbates the situation.

Financial challenges and taxes

The Russian government is confronted with an urgent need to find new sources of income. Increasing military spending - which already made 13.1 trillion rubles in 2024, i.e. a third of the total budget - are directly related to the need to fulfill social obligations. This means that the areas of education and health receive fewer resources, which contradicts the needs of the population. The Kremlin must make sure to support both the civilian and the military economy without further burdening the budget, such as Cicero Notice.

Economic experts warn of the consequences of a possible planned economy in Russia. The government has difficulty maintaining social support programs and is fighting against an increase in living costs. For example, citizens have to expect up to 40 percent increase in housing costs. At the same time, the government is hesitating to introduce price controls for fear of driving the producers into bankruptcy.

The effects on everyday life

The Russian population feels the economic turbulence directly. According to the 2022 census, around a third of the citizens rely on government payments. The supply situation in agriculture has deteriorated and acute defects in staunch food such as potatoes are emerging. In addition, around 200 companies have been expropriated without compensation since the beginning of the war. Society is therefore under great pressure, while Russia is trying to rely on domestic measures.

The Kremlin is aware that high inflation and uncertainty in terms of sanctions influence the public mood. The upcoming budget 2026 is drawn up with more pessimistic assumptions for economic development. It remains questionable how long Russia can carry this double burden - military armor and the challenges of civil society.

Overall, the situation in Russia is a complex interplay of military goals and economic hardship. The decision -makers must find a narrow line between the requirements of the war and the needs of the population before the country finally reaches a turning point.