Nearly three years after the invasion of Ukraine, Russia's economy is stumbling. The ruble is falling, inflation is rising, and sanctions are taking their toll.
The Biden administration recently decided to "ratchet up" sanctions on Gazprombank (one of Russia's last unsanctioned banks, which Moscow uses to pay soldiers), triggering the slide in the ruble's value, said The Wall Street Journal. Meanwhile, Russia's wartime spending is crowding out investment in nonmilitary sectors. "Difficulties are expected to mount the longer the war persists."
What did the commentators say?
"If you are an entrepreneur in Russia who doesn't make, say, ballistic missiles, then you are having a tough time," Alexander Kolyandr, an expert at the Center for European Policy Analysis, said to The New York Times. But it's dangerous for business leaders to blame the slowdown on the Ukraine war, which "would risk [Vladimir] Putin's ire." Russian elites have turned instead to blaming each other.
"The economic bill for the war is at last coming due," said The Economist. Russia "confounded many analysts' gloomy predictions" by maintaining a strong economy for the first two years of the Ukraine war, despite strict sanctions.
That may not be sustainable, not that Putin is willing to admit that. "There are certainly no grounds for panic," he said to reporters in November.
That kind of talk is "usually a sign that something is wrong," said The Economist. And it's troublesome for the war effort. The devalued ruble will make imports more expensive, which "will raise the cost of military equipment" purchased from China.
There's also an economic cost to ending the war. Russia's military spending has "enriched elites and boosted domestic demand," said Alexander Mertens at The Atlantic Council. That helped "foster pro-war sentiment and bolster support" for Putin's regime.
This leaves Putin caught between hard choices. Russia's economy risks "overheating" if wartime spending continues. But if that spending ends, the "economic repercussions could be dire."
What next?
Putin just signed a new budget to "boost defense spending to a record level next year," said Business Insider. Military spending will take up nearly a third of the government's budget, up from 28.5% this year.
Russian business elites like Andrei Kostin, the CEO of VTB bank, are bracing for the results. "It's impossible," he said, for the "economy to go through such events without consequences." | 
