Russia is shifting to a total war economy as its progress in Ukraine stalls

A pro-Russian man (not seen) holds a Russian flag behind an armed servicemen on top of a Russian army vehicle outside a Ukrainian border guard post in the Crimean town of Balaclava March 1, 2014.Baz Ratner/Reuters

  • Russia is shifting to a total war economy as its invasion of Ukraine drags on and progress stalls.

  • International relations expert Christoph Bluth pointed to toll of military spending on Russia’s economy.

  • The effects of the war are now starting to be felt by ordinary Russian citizens, he said.

Russia is shifting to a total war economy as its invasion of Ukraine takes a toll on its economy.

Christoph Bluth, an international relations professor at the University of Bradford, noted that in addition to battling western sanctions, military spending is costing the Kremlin around $90 billion a year, per an estimate from the German Council on Foreign Relations, amounting to about 5% of Russia’s GDP.

Meanwhile, it has ramped up its efforts to produce even more military goods, with the government and Russian banks offering large loans to arms manufacturers, the Economist reported.

But the effects of war are now starting to be felt by everyday citizens, Bluth said, as Russia has needed to substitute many goods in its economy that are normally supplied by western nations. Half of Russians polled by the research firm Romir have complained about the quality of substitute goods.

“The Kremlin is playing a delicate balancing act of redirecting significant resources to the military and related industries while trying to minimise the disruption of the general economy, which would risk losing support of large sections of the population,” Bluth said in an op-ed for The Conversation on Wednesday.

“So ordinary Russians – those who haven’t lost loved ones on the battlefield or to exile – remain relatively sanguine about everyday life. But a longer, more intense conflict, requiring a shift to a total war economy, could be a different matter altogether,” he later added.

Experts have flagged pressures mounting on Moscow’s financial state since Russia first began its “special military operation” in Ukraine last year. The invasion has deepened the nation’s budget deficit and forced it to become more dependent on other countries as it attempts to side-step western trade restrictions.

Though some experts have predicted Russia’s economy to in fact grow in 2023, those estimates are based off “cherry-picked” figures touted by Russia’s central bank, researchers from Yale said in April, arguing that unreleased statistics, such as capital flows in and out of the country, paint a far bleaker picture of Russia’s situation.

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