Russia’s defense industry thrives while civilian economy collapses, warns diplomat

Speaking on Espreso’s host Antin Borkovskyi, Ohryzko said:

“When it comes to Russia’s internal economic situation, economists have long been saying that Russian reserves and resources are being exhausted. Entire sectors of the economy are collapsing. Take, for instance, housing construction: even in Moscow, it’s reported that this sector has practically stopped producing results. Demand for new housing is shrinking, which has a very negative impact on developers who cannot repay their bank loans. The domino effect follows—banks risk massive losses.”

Ohryzko noted that by the end of this year, up to a quarter of developers in Russia could declare bankruptcy. This was predicted earlier, and it’s now becoming a reality.

“Look at the coal industry—it’s stagnating and operating at a loss. Look at Gazprom, which once laid ‘golden eggs’ for the Russian budget—it’s now in total deficit. The Russian railway system, which is supposed to transport cargo across the country, is asking the government for subsidies. The government, grinding its teeth, is providing them, but probably not for much longer. Aviation, car manufacturing, and so on—it’s the same story.

By the way, China is taking full advantage of this situation, effectively transforming Russia from a resource appendage of the West into a resource appendage for its own economy. Soon, China will start dictating what happens in Russia’s major regions,” he added.

Ohryzko said Russia lacks a labor force because all available workers have been absorbed by the military-industrial complex, the only sector showing any growth, but at the cost of the civilian economy.

“Also, don’t forget that Russia’s demographic crisis has reached a critical point. It’s gotten to the stage where some members of the so-called State Duma are proposing to pay high school girls to have babies. That’s beyond common sense, but it’s an official proposal from Duma members.

They understand that in 20 to 30 years, Russia will shift from being a so-called Slavic country to a Muslim-majority one, with all the consequences for the state. Though, I think this pseudo-empire won’t last that long,” Ohryzko concluded.

• Earlier, Valeriy Pekar, a lecturer at Kyiv-Mohyla Business School and UCU Business School, told Espreso that Russia’s economy is in terrible state. While it won’t collapse in a matter of weeks, the second half of 2025 will bring serious challenges that the country won’t be prepared to handle.