Russia Can Afford the Ukraine War. It May Not Be Able to Afford Peace

Vladimir Putin can probably afford another year of the Ukraine war more easily than he can afford the first year of peace.

That’s the possibility sitting underneath the recent talk about Russia’s economy running out of road. The numbers are bad: growth is forecast at just 0.4 percent for 2026, and the federal deficit hit 5.73 trillion rubles in the first half of the year alone, already past the full-year target. Government budget data now suggest that spending, and the deficit, could exceed the official plan by more than another trillion rubles. Most commentary stops there and treats the arithmetic as the whole story. It isn’t. Four years of war have built a domestic political economy in Russia that now depends on the war continuing, and unwinding it doesn’t just relieve pressure on the Kremlin. It takes away things ordinary Russians and regional officials have come to count on.

A War Economy That Feeds on Its Own Constituents

Start with what the war has actually done inside Russia, as opposed to Ukraine. Defense plants in depressed regions have hired workers and raised wages for the first time in a generation, something that would have sounded like a joke in 2019. Regional governments pay enlistment bonuses and cover expenses for soldiers’ families. Banks carry part of the load too, through subsidized lending meant to keep favored borrowers and defense contractors afloat even as high interest rates strangle everyone else, and Moscow has protected military spending while hunting for cuts elsewhere in the budget. None of this is patronage you can unwind quietly. Somebody will notice the moment it stops.