Russia cannot simultaneously provide a stable economy and maintain a defense industry, – ISW

Russia cannot simultaneously ensure a stable economy and maintain a defense industry, – ISW Vladislav Kravtsov

Russian authorities are facing even greater difficulties in simultaneously effectively ensuring the economic situation, as well as the effective production of the military-industrial complex. This is primarily due to a shortage of labor and systemic corruption.

This was reported by 24 Channel with reference to a report by the American Institute for the Study of War.

What problems does Russia have with the economy and “defense industry”

US Defense Secretary Lloyd Austin reported on December 7 that Russia has spent more than $200 billion on its war in Ukraine and suffered at least 700,000 military casualties since February 2022, and recent losses have averaged 1,000 soldiers per day.

At the same time, Ukraine's Center for Combating Disinformation reported on December 9 that Russia's liquid assets in the National Wealth Fund had fallen from $140 billion in February 2022 to $53.8 billion as of December 1, 2024.

“The Center noted that Russia is increasingly relying on Chinese yuan reserves and gold sales to cover its budget deficit and is spending a third of its 2025-2027 national budget on defense, indicating an unsustainable prioritization of war that neglects economic stability,” ISW noted.

Also on December 9, Russia's Prosecutor General Igor Krasnov said that corruption crimes, including bribery, had increased by almost 30 percent in 2024 compared to 2023. year, and Russian authorities have disciplined more than 30,000 Russian officials for corruption violations in 2024.

Russia's increased economic pressures caused by the war, coupled with widespread corruption, labor shortages, and inefficiencies in Russia's defense-industrial complex, are likely to increase the cost of the war for Russia and further undermine its ability to effectively sustain its defense industry while maintaining economic stability, the analysts concluded.

ISW also noted that it had previously observed similar trends and statistics in the Russian economy that indicated that the aggressor country's economic trajectory was unstable in the medium to long term and would increasingly strain its ability to wage war against Ukraine.