Putin is running out of time: the war is becoming too expensive for the Russian budget
The Russian government is facing increasingly serious financial problems amid the protracted war. According to Bloomberg, Kremlin officials are already forced to urgently seek about 1.2 trillion rubles (approximately $16 billion) to cover the budget deficit.
The situation could worsen if the price of crude oil Urals will remain at the level of $55 per barrel, while the budget provides for $59. In this case, the «hole» in Russia's public finances could grow to RUB 2.2 trillion, This creates additional risks for the financing of the war.
Context.
Despite the growing financial pressure, Vladimir Putin has not shown any willingness to give up its maximalist demands regarding the occupied territories in eastern Ukraine. According to Bloomberg, Moscow currently sees no real chance of a breakthrough in the talks.
Analysts also draw attention to the United States factor. In their opinion, the conditions offered by the US Donald Trump, can be the best possible for the Kremlin. At the same time, if Trump loses the midterm congressional elections in November, his influence and ability to negotiate foreign policy could be significantly reduced.
What it means
The growing costs of the war, falling oil revenues and limited access to external financing are gradually narrowing the Russian government's room for manoeuvre. According to experts, it is the financial factor that may be key in determining the Kremlin's next steps in the war against Ukraine.
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