The End of the Kremlin's Illusions: Russia Is Running Out of Resources for the War and Risks Losing Control Over Regions

The Russian economy is sinking deeper and deeper into crisis, and the Kremlin’s plans for new offensives are failing. There is a shortage of funds for the war, the recruitment of contract soldiers is turning into coercion, and the regions are beginning to fight over fuel and budget resources. It seems that the Russian authorities are gradually realizing that continuing the war on the same scale is becoming increasingly difficult.

Economic analyst Alexander Shiryaev explained in an interview with 24 Channel why the Kremlin is losing its strategic prospects, what is really behind the record-breaking recruitment of Russian troops in October, and why economic problems could derail Putin’s plans for a new offensive.

The End of the Kremlin’s Strategic Illusions

Russia’s top leadership is increasingly showing signs of anticipating the war’s end. Plans for summer and fall offensives have been derailed, and no bridgeheads have been established to encircle the Sloviansk-Kramatorsk metropolitan area.

Energy terrorism has proven futile and will yield no new results. Under these conditions, the motivation to recruit new personnel at any cost is rapidly declining.

Conflicts between the General Staff and the Ministry of Defense, as well as between regional elites and the Ministry of Finance, are only intensifying. An internal struggle for resources is beginning, rather than a movement toward a common goal. Russia is entering a new phase in which the leadership realizes there are no prospects.

It is becoming dangerous to increase pressure on the regions that bear the brunt of conscription. Budgetary spending is being cut in dozens of federal subjects, winter is approaching with a diesel fuel shortage, and these problems will snowball. It is no longer possible to simply throw money at them, Shiryayev said.

As a reminder following Ukrainian strikes on the oil refinery, some Russian regions have begun restricting the export of fuel beyond their borders, seeking first and foremost to meet their own needs. This intensifies competition among regions for resources and threatens the integrity of the Russian economic space.

The foreign policy situation is delivering an additional blow: oil prices are falling, and Donald Trump will likely work against Putin to demonstrate his commitment to protecting American interests.

Full interview with Shiryaev: watch the video

The Myth of a Covert Mobilization and Record Casualties

Amid economic problems, Russia is trying to catch up with its plan to recruit 410,000 contract soldiers. The record number of troops sent to the front in October (over 54,000 instead of the usual 30,000) is not a new wave of mobilization, but rather the use of unspent financial reserves from the beginning of the year, when recruitment fell short.

As a reminder, Russia has a “ are stepping up pressure on reservists ” due to problems with recruiting contract soldiers. In nine months, the military managed to recruit 263,000 people – not enough to compensate for the army’s losses. At the same time, regions are cutting signing bonuses, and elderly people, the seriously ill, and foreigners are increasingly being assigned to assault units.

There is currently no free or covert mobilization in Russia. Instead, there is harsh coercion to sign contracts through blackmail and pressure.

This pressure is mainly directed at people with very low levels of income, education, and social responsibility – marginalized segments of the population. Russia simply has no other source of recruits to replenish its combat units.

The Plundering of Businesses and the Debt Abyss

The economic crisis is forcing the Kremlin to resort to the open plundering of foreign businesses. Placing the factories of Japanese tobacco giant JTI and other international companies under external management is not a matter of supporting domestic producers, but rather a blatant seizure of foreign property to line the pockets of crony oligarchs.

The tobacco industry is perhaps the only one in Russia that remains profitable despite an average interest rate of 20–25%. No other sector of the economy can survive under such conditions.

Serious investors will no longer come to Russia; there will be no major deals or investments worth billions. Instead, Russian businesses’ debt has reached its highest level in the last 20 years. Accounts payable rose by 28% over the past year, reaching 155 trillion rubles.

Companies lack working capital and are using unpaid wages and delayed payments to suppliers as their only available source of credit. Banks are not lending money even to reliable borrowers, and investors are not buying corporate bonds due to a wave of defaults.

A similar situation is unfolding at in the alcohol market. The increase in tariffs on imported alcohol is the result of lobbying efforts by the Rotenberg brothers, who control the spirits market in Russia.

Due to a 20–30% drop in legal alcohol consumption, they are trying to protect themselves from imports and maintain at least some profitability in their business. Winemakers have also joined this effort, demanding higher tariffs on wines from European countries. This is a desperate attempt to avoid bankruptcy amid the general economic decline, as consumption of illegal alcohol in the country continues to rise rapidly.

Russia is entering a dark period. The leadership lacks strategic goals and the resources to achieve them. Putin’s main strategy for the coming months is to secure the best possible outcome in the war and then pause to regroup.

However, this pause could trigger such devastating processes within the Russian economy that the idea of a second offensive will simply vanish into thin air. Resources within the system will not increase; they will continue to dwindle, rendering any long-term military plans by the Kremlin completely unfeasible.