For years, Vladimir Putin has focused on transforming Russia into a war-driven state.
This shift has come at a staggering cost. Hundreds of thousands of Russian soldiers have died on the front lines in Ukraine.
Now, a prominent Western economist is predicting a financial crisis that could spell the beginning of the end for Putin's ambitions, reports Ziare.
Russia’s financial reserves are depleting rapidly, and the consequences could force a halt to the war.
Anders Åslund, a Swedish economist and expert at the Atlantic Council, has warned about Russia's dwindling foreign exchange reserves.
According to him, these reserves have dropped to $31 billion by the end of 2024, compared to $117 billion in 2021.
Åslund believes this sharp decline could severely impact Russia's ability to continue funding its war efforts.
With its current spending trajectory, Russia’s reserves could be completely drained by the fall of 2025.
Russia has been spending unprecedented amounts on defense. The 2025 budget allocates a record $130.5 billion for military expenses.
However, Åslund predicts that by autumn, the country will face budgetary shortfalls. To sustain the war economy, Russia may have to resort to drastic measures, such as price controls and rationing.
These tactics echo the policies of the Soviet era, which contributed to its eventual collapse.
The rapid decline of Russia’s reserves is largely due to Western sanctions. These sanctions have cut off Russia from borrowing on international markets.
Foreign debt has plummeted from $729 billion in 2023 to just $293 billion by late 2024.
Inflation, a declining ruble, and a labor shortage have also weakened the economy. Åslund describes this as “stagflation,” where inflation coincides with little or no economic growth.
Other experts share similar concerns. They argue that Russia’s economic instability will make it increasingly difficult to sustain the war.
Some suggest the financial strain might push Moscow to seek an end to the conflict.
If this prediction holds true, 2025 could mark a turning point, forcing Russia to confront the limits of its war machine and economy.
