The full-scale war against Ukraine, which has been going on for over 1,500 days, has become not only a military disaster for the Russian Federation, but also a catalyst for irreversible economic destruction. Despite the loud statements of the Kremlin propaganda about “resistance to sanctions”, the real intelligence figures, according to President Zelensky in his video address, and analytical reports, demonstrate the exact opposite: the aggressor’s financial system is bursting at the seams and collapsing every day.
In this article, we will analyze three main factors that prove that the systemic collapse of the Russian economy is no longer a distant prospect, but an everyday reality.
Paralysis of oil refining: minus 10% of capacity and well preservation
The Russian economy is critically dependent on the export of raw materials, namely oil and gas. However, recent months have dealt a devastating blow to the main source of financing the war – the fuel and energy complex and its processing facilities.
Thanks to long-range sanctions, as the president calls them (meaning drone and missile strikes deep behind enemy lines), and the systematic counteraction to Russian terror, Russia has lost 10% of its oil refining in the last few months alone . But the real financial time bomb leading to inevitable disaster for the Kremlin lies elsewhere: Russian companies are being forced to massively shut down and conserve oil wells, which is a fatal step.
Why is the well shutdown a sentence for Russia? Unlike OPEC countries, which can easily regulate oil production depending on market fluctuations, Russia’s geological and technological conditions do not allow this. To restart a blocked well, Russian companies will need enormous investments and technologies, access to which they are currently deprived due to the technological blockade.
Budget gap: annual deficit in 5 months
The main marker of any economic collapse is the state’s ability to balance income and expenditure. In Russia, this balance is completely negative, meaning that expenditure is many times greater than income.
Thanks to the comprehensive and coordinated pressure of Ukraine, together with members of the international community, in just the first five months of the year, the Russian state budget deficit dramatically exceeded the figures that the Kremlin had planned for the entire year .
According to V. Zelensky, Putin certainly made savings for waging an aggressive war. However, these reserves are melting much faster than expected and it is almost impossible to stop this without stopping hostilities.
Regional paralysis: federal subjects declare bankruptcy
While the federal center is trying to paint “beautiful” statistics, the Russian hinterland is already on the verge of survival. Currently, a significant number of Russian regions are in a state of de facto bankruptcy , – said President Zelensky.
The financial model of Russia is built in such a way that the regions give the lion’s share of income to the center, in return receiving subsidies. As Moscow has less and less money, funding for subjects has shrunk to a critical minimum. Regional authorities are unable to fulfill social obligations, which triggers a chain reaction of internal crisis.
The Kremlin is trying to salvage the situation by inventing various shady schemes to circumvent sanctions and make illegal profits. However, international intelligence and financial monitoring quickly detect and destroy these channels.
Does the Kremlin have a safety margin?
Russia’s economic collapse is not an instant explosion, but a systemic, daily blood loss. Every blow to the infrastructure, every closed well and every blocked financial scheme is a small cut in the giant, which by the method of a thousand cuts is bringing the end of this war closer. The Russian economy is no longer able to support a long-term military potential, and the bankruptcy of an entire state is the logical conclusion of its current policy.
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