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The Numbers Behind the Russian Paradox

The Kiel Institute speaks of “structural exhaustion” in the Russian economy. Russia’s GDP in the first quarter of 2026 fell by 0.2%, and the IMF has revised its forecast downward to 0.8% annual growth. On June 22, 2026, The Economist ran a headline stating that Russia’s war economy is in trouble but will not collapse—and that is precisely where the danger lies. A wounded but functional economy remains a war economy.

Zelenskyy’s sanctions adviser stated on June 26, 2026, that the Russian economy has reached a stalemate, according to RBC-Ukraine. But a stalemate is not a collapse. Putin can hold out for years in a stalemate if the West does not apply more pressure. Russian regions, meanwhile, are drowning in debt because of the war, as confirmed by the dn.gov.ua portal. The social cost is very real. But the regime is weathering the storm by shifting the burden to the periphery.

War Rubles and Their Limits

Increasing military spending by an additional four to five trillion rubles when the currency is under pressure and bond yields are soaring to 15% is playing with fire. Independent Russian economists—those who are still able to speak out—warn of monetary overheating. Inflation is eroding the purchasing power of ordinary Russians. The Central Bank of Russia is maintaining prohibitively high key interest rates to curb the spiral.

Yet Putin is holding on. He’s holding on because oil and gas revenues, though reduced, continue to flow. He’s holding on because countries like China, India, and Turkey are snapping up Russian oil at rock-bottom prices, blithely circumventing Western sanctions. That’s where Europe needs to look. That’s where the 21st sanctions package must strike.


The Russian economy resembles a boxer who has been taking blows for rounds on end, who is bleeding and staggering, but who remains on his feet because his opponent refuses to put his full weight behind his punches. Europe can win this economic battle. But it must stop boxing with velvet gloves.

This content was created with the help of AI.

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