Russia’s provinces: hardships rise, but people must stay quiet

The facts are as follows: problems in Russia exist and are growing, but they appear somewhat differently. The fuel crisis affects not only the economy.

The main imbalances are between regions.

Moscow is doing well; its revenues are rising. The city administration is concerned with where to spend the money. But the rest of Russia, except perhaps for St. Petersburg and a few other places, is sinking into darkness.

Over the first three quarters of 2025, regional budgets show a deficit of 725 billion rubles. A year ago, there was a surplus of 472 billion.

Currently, 68 regions (80%) are running budget deficits. Revenues from personal income tax (paid to employees) have increased, while corporate income tax revenues have fallen.

Roughly speaking, the Russian government’s strategy boils down to balancing the situation at a low point, managing expectations, and controlling the emotional state of its subjects.

Russians must learn to eat less, receive fewer benefits, pay more taxes, and generally tighten all belts while feeling a sense of deep satisfaction.

The VAT increase in Russia has already been reported. Meanwhile, the process of eliminating tax concessions at the regional level continues. Moscow demands maximum local tax rates, shifting the burden onto federal subjects and small and medium-sized businesses.

On the other hand, the Kremlin (mainly its financial block) ensures that significant population groups are not left entirely without support and that despair does not arise.

For example, there is no unemployment in Russia — only palliative measures such as a 3–4 day workweek, other forms of part-time employment, or unpaid leave.

The authorities also respond to scandalous incidents. For instance, when a contractor failed to pay workers at the Luchegorsk TPP in Primorsky Krai and they protested, the prosecutor’s office immediately intervened and began resolving the payment issue. In other words, conditions may be bad, but they must remain quiet.

The government periodically throws crumbs to various groups — civil servants (whose salaries were indexed from October 1), pensioners, and other categories of poor people. The masses cling to these lifelines and endure, so open protests remain rare.

Additionally, sacrifices are occasionally made in the background to prevent privileged groups from developing negative sentiments.

The government also shows symbolic respect for special military operation participants and their families (though in reality they are often misled with promises of support).

It should be noted that neither the federal budget deficit, nor local deficits (except in a few regions), nor the scale of debt are fatal. Thus, the Kremlin projects a worried optimism.

However, due to falling oil and gas revenues and crises in most non-military sectors, resource maneuvering becomes more difficult, and the spiral of discontent begins to turn, threatening potential disruption.

Industry associations (coal, metallurgy, power plants) appeal to the government for support (grants, exemptions, deferrals, etc.), but there is not enough money for everyone. Here, another aspect of the fuel crisis emerges — the emotional one.

People are irritated. When a tangible trigger lands on this ground, the system is tested.

For example, over the past three weeks, incidents flared near Kadyrov and Chechnya.

Russia pays tribute to the Caucasus as a result of its lost war, and Dondon Kadyrov is a symbol of this shame. Recently, Chechen officials decided to rename three towns with Russian names (formally as part of a local administrative reform). This triggered criticism from General-turned-deputy Vladimir Shamanov, who once commanded a federal troop group in Chechnya.

Kadyrov retaliated with insults toward Shamanov, sparking a ripple effect that resonated with another story.

The Russian Central Bank selected the design for a 500-ruble banknote dedicated to the North Caucasus Federal District. The front featured Pyatigorsk, and voting began for the back design.

Dondon Kadyrov and his associates lobbied for an image of Grozny, while the progressive Z-set community supported Mount Elbrus. A scandal erupted over mutual accusations of fraud when the Central Bank canceled voting while Elbrus was leading.

In other words, the Central Bank yielded to Kadyrov.

Kadyrov suddenly faced renewed scrutiny — his participation in the war against Russia, the genocide of the Slavic population in Chechnya, and his exploitation of the Russian budget while other regions suffer.

Such intense tension has not been seen for a long time.

Loss of control over these emotional outbursts is the main threat to the Kremlin. Russia bombs hospitals in Kharkiv, among other things, to prevent the Russian population from realizing the reality of their “greatness.”

But since this does not solve the real problems of Russians, it is less effective. Hence the slight schizophrenia in “public opinion”: we support the war, but it must end as soon as possible.

The “sanctions” imposed by the Ukrainian Armed Forces help the “dear Russians” focus on the essentials. Beyond the economic effect, there is also a pedagogical effect. It has not reached everyone yet, but the trend is evident.

Source

About the author. Oleksii Kopytko, former advisor to the Minister of Defence of Ukraine.

The editorial team does not always share the opinions expressed by blog or column authors.