Mariupol is Putin’s blueprint for occupation, and the world is barely paying attention
18.05.2026
When Russia launched its full-scale invasion of Ukraine in 2022, Mariupol quickly became the site of…
Russia’s circumvention of sanctions amounts to more than $100 billion for the war against Ukraine. This is exactly the sum allocated to the army in Russia’s 2024 budget. For Russia, this figure is record-breaking since the collapse of the Soviet Union. Despite sanctions, the Russian economy is stabilizing and demonstrating its readiness to sustain a long-term war in Ukraine.
RESILIENCE OF THE RUSSIAN ECONOMY
Throughout 2022–2023, unprecedented sanctions were imposed on Russia in the oil and gas, financial, technological, and other sectors. These measures were expected to reduce Russia’s financial ability to wage war against Ukraine. The terrorist state was predicted to face economic catastrophe.
Even according to Moscow’s own forecasts, the Russian economy could have collapsed, yet the situation has now stabilized. Economic indicators show that the Kremlin has managed to keep the situation under control, restructure and reorient its economic system to new realities, and increase spending on the war in Ukraine.
Since the beginning of the so-called “SMO,” Russia’s year-on-year GDP decline in 2022 amounted to 2.5%, while the budget deficit reached 3.3 trillion rubles, or 2.2% of GDP. Despite significantly worse indicators compared to 2021, the economic downturn was not as sharp as international financial institutions had forecast.
Although Russia’s economy deteriorated significantly compared to 2021, the country managed to pull out of a steep dive—largely due to record export figures and oil and gas revenues. High oil prices and ruble devaluation generated record export revenues of $591 billion for the Russian budget. This also included the use of Russia’s National Wealth Fund reserves to cover the deficit.
At the same time, Russian authorities began actively seeking ways to circumvent sanctions.
International financial institutions (IMF, World Bank, etc.) forecast real GDP growth in Russia of 1.6–2.2% this year and 1.0–1.5% next year. As a result, although Russia entered 2023 with significant financial difficulties, it is expected to end the year with GDP growth of about 3% and a budget deficit around 1% of GDP. For example, by November 2023, Russia’s real GDP had already reached pre-war levels.
It should be noted that GDP is not the best indicator for a country at war with a defense industry geared toward military needs. However, Russia’s budget indicators and deficit levels at least demonstrate Moscow’s ability to manage financial risks and sustain budget revenues.
Another clear indicator of stabilization is activity metrics: industrial production, retail sales, and the PMI (Purchasing Managers Index), which reflects business activity across sectors. Russia’s PMI dropped to critical levels only in spring 2022.
Various indicators present a consistent picture of economic recovery after the 2022 downturn, which has effectively ended. In recent months of 2023, revenues from energy extraction taxes and export duties rebounded significantly, reaching their highest levels since May 2022 due to higher export revenues and a weaker ruble. As a result, the federal budget deficit in January–September shrank to 1.7 trillion rubles, broadly in line with the original 2023 budget plan.
The new budget, already approved by the State Duma, projects that Russia’s revenues in 2024 will grow by more than one-third to 35 trillion rubles ($385 billion), including 11.5 trillion rubles from oil and gas. Planned expenditures amount to 36.6 trillion rubles ($402 billion), a 26.2% increase year-on-year. This implies that the budget deficit is expected to shrink from 2% of GDP in 2023 to 0.8% in 2024.
THE KREMLIN’S BUDGET IS FILLED BY OIL
According to KSE experts, since February 2022 Russia’s losses from energy sanctions are estimated at $140–170 billion. Sanctions reduced oil sales to Ukraine’s allies, cut pipeline gas exports to Europe by 80%, and significantly decreased sales elsewhere. While energy sanctions proved effective, the Kremlin found ways to bypass them—primarily by expanding its shadow tanker fleet and reorienting exports.
RUSSIA’S WAR ECONOMY
Russia’s budget figures indicate that Moscow plans to focus on financing the war in Ukraine by increasing military spending—a trend evident since 2023.
According to documents obtained by the media, in 2023 Russia allocated nearly 10 trillion rubles ($106 billion) to the army and defense industry—three times more than before the war.
In total, Russia plans to spend at least 25.1 trillion rubles ($276 billion), or 68.5% of total budget expenditures, on security forces and the war in Ukraine in 2024.
CONCLUSIONS
Macroeconomic indicators show that since the full-scale invasion, Russia has managed to stabilize its economy in the medium term. Sanctions evasion and maritime oil exports continue to fill the state budget. As a result, budget expenditures for 2024—especially those related to the war in Ukraine—are reaching record highs. With two-thirds of the budget tied to war spending, Russia’s economic reorientation toward a prolonged war is evident.
Sustained focus on war will inevitably exhaust financial, human, and other resources, leading to long-term negative consequences for Russia’s economy. However, current analysis should push Western partners toward tougher sanctions and stricter enforcement, depriving Russia of tools for hybrid and political influence—while Ukraine must continue strengthening its own defense capabilities.
