How far is Russia really from failure?

And now, even this piece of paper—the agreement—is nearly ready to be signed. This is not an isolated case. Armenia’s withdrawal from the alliance is merely the first domino in the collapse of Russia’s ‘friendship circle.’ Belarus is walking a tightrope; Kazakhstan has abandoned Russian as an official language; for the first time ever, all five Central Asian states collectively skipped Moscow’s Victory Day parade; Serbia has pivoted toward Kyiv; and India has been downgraded—from a ‘special partner’ to a mere ‘transactional counterpart.’ Even Foreign Minister Sergey Lavrov was forced to admit: Russia currently has no allies. But Putin’s troubles go far beyond this. Consider the following figures: In the first seven months of 2026, the Russian federal budget deficit reached 6.45 trillion rubles—70.5% higher than the full-year target and 1.3 times greater than the same period in 2025. Of Russia’s 85 federal subjects, 71 are running fiscal deficits; the consolidated deficit has already exceeded $34 billion. What about oil and gas revenues? In the first four months of 2026, oil-and-gas budget revenues fell by 38.3% year-on-year; in January alone, they plunged by 50.2%. Finance Minister Anton Siluanov stated that oil-and-gas revenues will account for less than 20% of total federal budget revenue in 2026—down sharply from 40–50% before 2022. A country that lives off selling oil and gas has seen its hydrocarbon income halved. So how will it survive the coming days? Andrei Klepach, one of Putin’s most trusted economists, provided data showing that if the war, sanctions, and austerity policies continue, Russia’s economy can grow by no more than 2–2.5% annually. If Ukraine’s strikes intensify further, growth could slow to just 1–1.5% by 2027. Then he said one sentence—and was fired the next day. That sentence was: “In this war of attrition, we cannot win.” Even those who speak truth are being purged—indicating that the Kremlin can no longer tolerate reality. The firing of an economist is merely the tip of the iceberg. According to the Kyiv Post, German Gref—the head of Russia’s largest bank and a former member of Putin’s inner circle—has publicly demanded an end to this failing war, accusing the Kremlin of deliberately wrecking the economy to avoid signing a humiliating peace agreement. Such an open demand is virtually unprecedented. Even more painful is the money. According to The Washington Post, in August 2026, Russian billionaires withdrew approximately $3.4 billion from banks. Over the past year, Russia’s wealthiest individuals have transferred hundreds of billions of dollars overseas. Bloomberg estimates that, in the first half of 2026 alone, hundreds of billions of dollars in private capital—unrecorded in official statistics—fled Russia. The elite are voting with their feet—even Putin’s staunchest supporters are turning against him. Ramil Remezlov, a prominent pro-Kremlin blogger and once one of Putin’s most loyal supporters, shocked observers in March by publishing a lengthy public critique condemning the war as ‘a failure’ and demanding Putin step down as a ‘war criminal.’ When even the most faithful begin to betray you, the foundations of power are already cracking. And what is Putin’s response? According to the Kyiv Post, his primary wartime residence at the Valdai Club has been encircled by 27 modern air-defense systems. They’re designed to guard not only against Ukrainian drones—but also against his own people. Moreover, 50 countries have jointly issued a statement calling on Russia to implement a ‘full, immediate, and unconditional ceasefire.’ This signals that Russia’s diplomatic environment has deteriorated to a shocking degree.

The central bank says resources are exhausted; the Ministry of Economic Development says the economy is on the brink of recession—Putin faces a choice between war and economic survival.

Russia’s economy is teetering on the edge of recession: the Central Bank declares its resources exhausted; the Minister of Economic Development warns it stands at the precipice of recession. At the St. Petersburg International Economic Forum (SPIEF), Putin insisted that economic stagnation must not be allowed—yet GDP growth has slowed to 1.4%, corporate profits have plummeted, and inflation remains high. Experts point out that the war has drained resources, eroded the investment climate, and sapped economic momentum—potentially transforming recession into outright collapse. Though Putin promises a ‘soft landing,’ experts argue the economy cannot be rescued without ending the war. Russia now confronts a stark choice between continuing the war and preserving its economy—a future fraught with uncertainty. I. In an unusually blunt statement, Putin declared he would not permit Russia’s economy to stagnate or contract under any circumstances. The annual St. Petersburg International Economic Forum (SPIEF) is Russia’s flagship economic conference—but this year is unlike any before. From June 19 to 20, Russian economic managers and policymakers attending the forum delivered uniformly bleak assessments of the national economy—even as the Kremlin urged participants to avoid pessimistic commentary and inject optimism into discussions. Putin himself—who had repeatedly assured the Russian public and the world that Russia was unafraid of Western sanctions, and that the Russian economy grew faster amid war and sanctions—rarely broke character. Yet this time, he explicitly declared he would not allow economic stagnation or decline under any circumstances. On June 20, during his keynote speech at SPIEF-2025, Putin claimed that despite difficult external conditions, Russia’s GDP had grown by over 4% annually over the past two years—outpacing global averages. But circumstances have changed: according to Rosstat data, growth had slowed to just 1.4% by the end of March, and the economy began contracting quarter-on-quarter—the first such contraction since 2022. Putin stated: “Some experts have pointed to risks of stagnation—or even recession. Naturally, this must not be permitted under any circumstances.” The day before Putin’s speech, Maxim Reshetnikov, Russia’s Minister of Economic Development, announced at the forum that Russia stood “on the brink of economic recession”; Central Bank Governor Elvira Nabiullina warned that economic resources enabling growth amid hostilities and sanctions had been “exhausted”; Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, noted that many Russian enterprises were in a “pre-default state”; and Alexey Mordashov—the principal owner of Severstal and Russia’s second-richest billionaire—warned that high policy interest rates and falling demand posed a serious threat of mass corporate bankruptcies. Yet Putin assured the assembled audience in St. Petersburg that he rejected pessimistic forecasts and was pursuing ambitious goals: by 2030, poverty should fall to 7%, then to 5%; Russia should transition to a high-wage economy; non-oil-and-gas exports should increase; Russia should rank among the world’s top 20 nations in business conditions and investment climate; investment should rise by 60%; and R&D spending should reach 2% of GDP. Below are key macroeconomic warnings issued by Russia’s top economic officials. II. Central Bank Governor Elvira Nabiullina: After more than three years of war, the resources that sustained Russia’s economic growth have been exhausted.

One of Russia’s Richest Men Says Economy Has Yet to Hit Bottom

17 hours ago

MMC Norilsk Nickel head Vladimir Potanin warns Russia's economy hasn't bottomed out, citing investment shortages worsened by new windfall taxes on miners aimed at funding the war effort.

bloomberg

2026-10-10

One of Russia’s Richest Men Says Economy Has Yet to Hit Bottom

One of Russia’s Richest Men Says Economy Has Yet to Hit Bottom

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