The apparent resilience of the Russian economy has confounded many strategists who expected Western sanctions to starve its war effort:
Russia continues to export vast quantities of oil, gas, and other commodities — the result of sanctions evasion and loopholes deliberately designed by Western policymakers to keep Russian resources on world markets. So far, clever macroeconomic management, particularly by Russian Central Bank Governor Elvira Nabiullina, has enabled the Kremlin to keep the Russian financial system in relative health.
At first glance, the numbers look surprisingly strong. In 2023, GDP grew by 3.6 percent and is expected to rise by 3.9 percent in 2024. Unemployment has fallen from around 4.4 percent before the war to 2.4 percent in September. Moscow has expanded its armed forces and defense production, adding more than 500,000 workers to the defense industry, approximately 180,000 to the armed forces, and many thousands more to paramilitary and private military organizations. Russia has reportedly tripled its production of artillery shells to 3 million per year and is manufacturing glide bombs and drones at scale.
On the other hand:
Already, about around half of all artillery shells used by Russia in Ukraine are from North Korean stocks. At some point in the second half of 2025, Russia will face severe shortages in several categories of weapons.
Perhaps foremost among Russia’s arms bottlenecks is its inability to replace large-caliber cannons. According to open-source researchers using video documentation, Russia has been losing more than 100 tanks and roughly 220 artillery pieces per month on average. Producing tank and artillery barrels requires rotary forges — massive pieces of engineering weighing 20 to 30 tons each — that can each produce only about 10 barrels a month. Russia only possesses two such forges.
In other words, Russia is losing around 320 tank and artillery cannon barrels a month and producing only 20.
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Open-source researchers have counted the loss of at least 4,955 infantry fighting vehicles since the war’s onset, which comes out to an average of 155 per month. Russian defense contractors can produce an estimated 200 per year, or about 17 per month, to offset these losses. Likewise, even Russia’s expanded production of 3 million artillery shells per year pales in comparison to the various estimates for current consumption at the front. While those estimates are lower than the 12 million rounds Russian forces fired in 2022, they are much higher than what Russian industry can produce.
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Defense spending has officially jumped to 7 percent of Russia’s GDP and is projected to consume more than 41 percent of the state budget next year. The true magnitude of military expenditures is significantly higher. Russia’s nearly 560,000 armed internal security troops, many of which have been deployed to occupied Ukraine, are funded outside the defense budget — as are the private military companies that have sprouted across Russia.
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Rather than demobilizing or bankrupting themselves, Russian leaders could instead use their military to obtain the economic resources needed to sustain it — in other words, using conquest and the threat thereof to pay for the military.
Plenty of precedents exist. In 1803, French Emperor Napoleon Bonaparte ended 14 months of peace in Europe because he could not afford to fund his military based on French revenues alone — and he also refused to demobilize it. In 1990, Iraqi leader Saddam Hussein similarly invaded oil-rich Kuwait because he could not afford to pay the million-man army that he refused to downsize. In both cases, the mirage of conquest seemed attractive for sustaining overly large defense establishments without having to pay for them.



