Russia can finance war against Ukraine for several more years despite overheating economy

The Washington Post recently reported that the Kremlin’s heavy spending on its military efforts in Ukraine has stimulated economic activity in Russia, leading to a unique paradox: while the war drives growth in certain areas, it simultaneously strains resources and workforce availability. The high military expenditure has led to significant wage inflation, forcing private companies to raise wages to attract talent. Regional governments are even offering unprecedented recruitment bonuses to address soldier shortages, with Belgorod Oblast, for example, paying up to $31,200 per recruit. This has contributed to substantial wage increases, notably in lower-paid sectors, where wages rose by 67% early in 2024.

Russia's economy, bolstered by substantial oil revenue and the limited effectiveness of Western sanctions on oil income, remains capable of sustaining the war effort for the foreseeable future. Economists believe that while economic overheating is evident—manifested in worker shortages and the strain on private-sector salaries—the Kremlin’s revenue sources are sufficient to cover ongoing military expenses for at least a few years.

Yet, the labor shortages are creating visible challenges. The Russian Union of Industrialists and Entrepreneurs revealed that over 80% of firms struggle to fill positions, with fields like public transportation particularly affected. In Siberia, male bus drivers have become scarce, driving some cities to consider initiatives like a “women’s battalion” of drivers to fill gaps. Migrant labor has also dwindled due to Russia’s recent deportation policies, leaving the country with fewer low-wage workers to support sectors that once relied on them.

Despite these pressures, the Kremlin appears committed to its aggressive recruiting and economic mobilization, maintaining high wages for soldiers and military personnel, which remains a priority amid ongoing military demands.

Russian soldiers shoot civilians in Selidovo near Kokrovsk in Donetsk oblast

Drone operators in Ukraine recorded the bodies of people in civilian clothes, mostly in private houses. Presumably, these murders took place after the occupation of the territory by the Russian military.

Putin threatens the West with a response if it approves striking Ukrainian deep into Russia

Russian President Vladimir Putin has suggested that if Ukraine were allowed by the U.S. and its allies to carry out long-range strikes into Russian territory with Western-supplied weapons, Russia would be compelled to respond. In a recent interview, Putin highlighted that such a move could signify NATO’s direct involvement, as it would rely on Western infrastructure like satellite data for targeting and require NATO personnel to operate the weaponry. While he didn’t elaborate on specific countermeasures, he confirmed that Russia's Defense Ministry is actively evaluating possible responses.

In a similar stance in September, Putin implied that allowing Ukraine to strike deep within Russian territory would escalate the conflict to a point that NATO’s role could no longer be considered indirect. This latest statement appears to continue his warnings, hinting at potential countermeasures without yet specifying what they might entail.