Russian economy burnout will force Putin to reassess war strategy against Ukraine - ISW

The U.S. Institute for the Study of War (ISW) reported the information.

The analysts cite a Washington Post article that said Russian companies are forced to artificially raise salaries for their employees to compete with the high salaries in the Russian military.

This high military spending is putting pressure on the Russian economy, which is “in danger of overheating.” For example, in July 2024, the head of the Russian Central Bank, Elvira Nabiullina, noted that Russia's labor force and production capacity were “almost exhausted.”

The Washington Post notes that private Russian companies are finding it difficult to keep up with the salaries of the Russian military and are increasingly having to offer salaries that are several times higher than the industry average. 

ISW reminds that Russian regions have increased one-time bonuses for contract soldiers to keep up with the pace of armed forces recruitment.

According to analysts, this proves that Russia does not have an unlimited reserve of manpower and must take into account the ever-increasing costs to replenish its losses on the front line.

The report also emphasizes that Putin needs migrants both to work in Russia and to serve in the military. In return, he has to take into account his anti-migrant electorate.

Since the Russian leader avoids calling for mobilization, he attracts people to the army with high salaries, which increases pressure on the Russian economy.

Analysts emphasize that Russia's resources are limited, so its economy will reach a burnout point, forcing Putin to figure out how to provide for his army in a different way or change his way of waging war.

• Earlier it was reported that in 2025, Russia plans to increase defense spending to a “historic high” and allocate a record 13.2 trillion rubles ($142 billion), which is 6.2% of its gross domestic product.