Is Russia's Economy Finally Breaking Down? - Silicon Curtain

[TexasTowelie]

Edition No170 | 27-06-2025 - Today we're diving deep into growing trouble inside Russia’s war economy. Kremlin officials still speak of resilience and momentum. The war machine continues to crank out lethal munitions to add to the pile of trauma and scrap metal in Ukraine. But scratch the surface, and the cracks are hard to ignore. Let’s dive in.

Since Russia launched its full-scale invasion of Ukraine in 2022, it’s become the most sanctioned nation on Earth. Yet, against all odds, its economy has shown a defiant resilience, based on certain metrics. According to official Russian figures, growth in 2024 outpaced all G7 nations. The economy expanded 4.3%, compared with just 1.1% in the UK and 2.8% in the US. But firstly. Official Russian bank figures have become increasingly questionable through the course of the war, and that growth is driven almost entirely by record-breaking military spending. There is the potential that this spending has also built up a huge off-books financial risk, or debt bubble. Just as the war is not politically or militarily rational, in a classical Western analysis, it turns out to neither be economically rational. Since Russia's full-scale invasion of Ukraine in February 2022, the state of the economy has been secondary to the goal of winning the war against Ukraine. That is the Kremlin's overarching priority.

[LetMyPeopleVote]

1. The Russian economy is heading for a disaster.

Link to tweet

[DFW]

2. I haven't been there for 25 years, so I'm relying on reports from those who have

It was already completely patchwork even at the turn of the century. Very few things were negotiated in Rubles. Mostly US dollars, cash. The few real people we had a chance to interact with were working two to three jobs to survive. Younger people who we assumed were university students sometimes approached those who were obvious tourists in Red Square, offering guided tours in English or German for a few dollars. It must have been 20° below zero out there (mid-December). Taxi rides were negotiated in advance, sometimes in dollars, sometimes in rubles. I can't imagine what it would have been like for someone with no knowledge of Russian.

The friend we were visiting had a local girlfriend, who was one of those holding down three jobs to get by. She spoke only Russian, and my wife speaks none, so she and my wife could only smile at each other. She is still stuck there, and they have only been able to talk on the phone for the last couple of years. From her, he gets a vague picture of the local state of affairs, although phone lines to the West are again closely monitored by the FSB (today's KGB), and she could easily disappear if the wrong thing is said, so they keep to generalities when the subject becomes "dangerous."

One thing of which I am rather confident--the rosy picture of Moscow painted by Tucker Carlson depicts Russian reality about as much as Hogwarts depicts a typical English boarding school.