Russia’s economic and war efforts are facing mounting pressures, testing President Vladimir Putin’s capacity to sustain the ongoing conflict over the long term, according to the Institute for the Study of War (ISW).
Struggle With Military Pay
Russia’s economy is reportedly “at risk of overheating,” as Moscow’s excessive military spending has artificially fueled economic growth, pushing private companies to raise wages significantly to compete with the high salaries offered to Russian soldiers.
Russian Central Bank Chief Elvira Nabiullina warned this summer that Russia’s workforce and production capacity are “nearly exhausted.”
Russian companies now struggle to match military pay, often offering wages multiple times higher than typical industry averages.
This wage inflation comes as Russian regional authorities have substantially increased sign-on bonuses for contract soldiers to meet a target of 30,000 recruits per month, according to Hotnews.
The situation highlights that Russia’s human resources are limited, forcing the Kremlin to reckon with the rising financial and social costs of replenishing its forces.
More Strain on Russian Economy
Adding to these challenges are Russia’s strict migration policies, which have further reduced the available workforce. Since a March 2024 attack at Crocus City Hall, Russia has restricted labor migration, making the country increasingly unattractive to foreign workers.
Putin faces a difficult balance between appeasing his ultranationalist, anti-migrant voter base and addressing the practical need for migrant labor in both economic and military sectors, ISW explains.
ISW’s analysis suggests that a general mobilization would be too politically costly, leading Putin to rely on “pseudo-mobilization” efforts, which are adding more strain to the Russian economy. The recent arrival of North Korean troops in Russia, deployed to areas like Kursk, further underscores the fragility of Putin’s force-generation system.
As the war continues to consume both personnel and resources, Russia’s limited reserves mean that Putin cannot indefinitely absorb the war’s rising costs.
ISW predicts that Russia will eventually hit a “burnout point,” which could force Putin to make critical decisions on how to fund the war or adjust Russia’s combat strategy to maintain his regime’s stability.
