The Financial Times (FT) reported on April 20 that the head of the Swedish military intelligence and security service, Lieutenant General Thomas Nilsson, said that the Russian economy had failed to recover despite rising oil prices due to the war in the Middle East.
The assessment is in line with ISW's long-standing observations of the significant challenges facing the Russian economy and the Kremlin's efforts to cover up these problems indefinitely.
This is according to the "Institute for the Study of War" (ISW).
Nilsson said Russia wants Urals crude prices to remain above $100 a barrel for at least a year to close its budget deficit, but they will rise to alleviate other economic problems. Nilsson said Russia would likely find it harder to finance its war in Ukraine if oil prices stabilize and the ceasefire in the Middle East holds. Nilsson stressed that an unsustainable growth model that cannot replace Russia's material losses on the battlefield is contributing to Russia's economic problems.
Nilsson noted that defense industry sectors outside the drone industry are loss-making, plagued by corruption and dependent on loans from state-owned banks. The Swedish military intelligence analysis of Russia's economic problems is consistent with ISW's current assessment that Russia's prioritization of the defense industry is harming civilian sectors of the economy and that high battlefield casualties are taking a toll on the Russian economy.
The Kremlin has systematically manipulated data to convince the West that the Russian economy is withstanding the pressure of sanctions and excessive military spending.
Nilsson said Russian inflation is likely closer to 15%, although the Kremlin claims it is 5.86%. Nilsson said Russia has underestimated its budget deficit by $30 billion. ISW has long estimated that Russia’s true inflation rate is higher than the Kremlin publicly claims, and that the Kremlin is spreading narratives that exaggerate Russia’s power to bolster its demands at the negotiating table.
Russian forces continue to struggle to protect Russian infrastructure from repeated Ukrainian strikes. The Ukrainian General Staff reported that Ukrainian forces struck an oil tank at the Tuapse oil refinery in Krasnodar Krai on the night of April 19-20, causing a fire.
Krasnodar Krai authorities have acknowledged the Ukrainian strike and the subsequent fires.
Ukrainian forces have recently launched a wave of strikes against Russian military, energy, and port infrastructure in Krasnodar Krai, including the "Shekharis" oil terminal and the "Admiral Grigorovich" class frigate near the port of Novorossiysk on April 5-6, the Krymsk oil pumping station on April 8-9 and on April 10-11, the Naftoexport port and oil depot in Tuapse on April 15-16, the Tikhoretsk oil pumping station on April 17-18, and the Eisk seaport on April 18-19.
Russian forces attempted to use long-range drones for a one-way attack to kill Sergei "The Lightning" Beskrestnov, a defense technology adviser to the Ukrainian Defense Ministry and an expert on drones and electronic warfare.
Beskrestnov said on April 20 that Russian forces attempted to strike his house with four "Shahed" drones, wounding him and destroying his house.
Ukraine continues to expand its cooperation with Gulf states. Ukrainian President Volodymyr Zelensky said that Ukraine has signed 10-year contracts with Saudi Arabia, the United Arab Emirates and Qatar and has received requests for cooperation from 11 countries in the Middle East.
Zelensky said that Ukraine has signed drone deals, with at least 10 contracts for the export of Ukrainian weapons.