WP: Russia’s economy overheating but can fund war for ‘several more years’

Russia has the resources to sustain its war in Ukraine for several more years, even as its economy is producing beyond its potential at unsustainable levels due to massive military expenditures, according to a Washington Post article that cited Russian economists.

The article notes that “Russia can afford to fund its war in Ukraine for several more years…because of massive oil revenue and Western sanctions failures, particularly the oil price cap put in place by the Group of Seven nations, which has failed to squeeze Russia’s oil income.“

High military spending, which includes significant payments to occupying troops, has driven economic growth and resulted in rising wages and inflation. The economy is particularly strained by Kremlin leader Vladimir Putin’s need to replace 20,000 soldiers killed or injured each month during the conflict.

Despite these pressures, the Russian dictator’s plans to continue fighting in Ukraine are outlined in the country’s recent budget. 

“Putin’s economic priorities were spelled out in Russia’s recent budget, with military and security spending set to reach $142 billion in 2025 – 40 percent of budget spending, or more than 8 percent of gross domestic product,” the text reads. “Defense spending will remain high in 2026 and 2027, a sign of his determination to fight on.” 

Earlier, Politico reported that Saudi Arabia’s plans to increase oil production and regain market share could leave Moscow without petro dollars for its war coffers.

Yuriy Gorodnichenko, professor of economics at the department of economics at the University of California in Berkeley, and adviser to the chairman of Ukraine’s central bank, Andriy Pyshnyy, believes Russia is highly dependent on oil revenues. If something happens to this resource, Russians will face extremely difficult conditions, as they are cut off from external markets.