Russia’s wartime economy is facing a serious structural collapse caused by the strategic expansion of Ukrainian strikes deep behind the front lines. In a detailed and extensive analysis, the prestigious European publication Politico explains how the new wave of drone attacks by the Ukrainian Armed Forces has managed to paralyze key economic, industrial and energy infrastructure. According to the commander of the Ukrainian drone forces, Robert Brody, the goal of these strikes is not simply the physical destruction of objects, but the instant shattering of the illusion of security among Russian society. [1, 2]
The strikes on oil refineries and logistics centers have already caused a serious fuel shortage in Russia's domestic market and led to a record 30% collapse in the Russian stock market index. The situation is becoming dramatically more complicated on the international stage after the EU Council officially adopted the 21st package of sanctions against Moscow. The new restrictions deal a crushing blow to the banking sector, imposing a complete ban on transactions with another 33 Russian credit institutions, bringing the total number of sanctioned banks to over 100. For the first time, Brussels is also introducing a mechanism to block crypto platforms in third countries that help the Kremlin circumvent the imposed measures. [1, 2, 3]
Contrary to propaganda claims of stability, Russia’s financial reserves are melting away at a critical rate. Free liquid assets in the Russian National Welfare Fund have shrunk from 6.5% of GDP before the invasion to just 1.8% by the end of spring 2026, drastically limiting the Kremlin’s scope for fiscal maneuvering. The released economic reports show that Russia's budget deficit for the first quarter of 2026 alone has already exceeded the planned target for the entire year. [1, 2]
An additional blow to Moscow's revenues is the decision of European capitals to freeze the price ceiling on Russian crude oil at $44 per barrel for another 12 months, stopping its automatic rise to $58 and depriving the state treasury of an expected $3.5 billion. Defense and national security spending in Russia continues to grow uncontrollably, absorbing nearly 46% of the entire state budget. This leads to a brutal division of the economy – While the military sector is experiencing artificial growth, the civilian economy, labor market, and public services are literally sinking under the weight of galloping inflation and record labor shortages.