June 17, 2026:
Now in its fifth year, the Russian war in Ukraine is stumbling towards peace. This is happening despite Russian claims that their economy, now a wartime economy, is strong and the economic sanctions imposed by the West are a minor nuisance. The Russian claims are illusions because the Russian economy was transformed, distorted and weakened by the war and the American and European sanctions, which cost the economy about half a trillion dollars. Despite all that Russia still has the fifth largest economy in the world, behind the Americans, China, India and Japan.
Because of the war, government spending went from 34 percent of GDP in 2021 to 40 percent last year. Another financial problem was Russian banks could no longer use the international fund transfer SWIFT system. Russia had to cobble together a smaller system with countries it still traded with. Manufacturing became more expensive because the sanctions prevented Russia from getting the electronic components it needed for many of its products. Substitutes could usually be obtained via smuggling or special arrangements with China that enabled them to plausibly deny providing sanctioned goods. If the Chinese were caught aiding Russia, they would be subject to sanctions.
There were other deceptions. Russia claimed that its economy grew by 12-14 percent between 2020 and 2024 when it actually shrank by eight percent. Russia also claimed its merchant shipping was still operational. What Russia was reluctant to dwell on were the additional sanction costs of insurance, ships seized and oil lost.
In Ukraine Russia could no longer provide enough new recruits to replace heavier losses. By 2026 the Ukrainians were unquestionably on the offensive. Russia has lost 1.4 million soldiers killed, disabled and missing. Russia lost most of its modern armored vehicles and it will take four or more years to rebuild. Casualties are a more serious problem, with badly wounded soldiers sent back into combat. Military police will go to the homes of wounded soldiers and take these men back to the combat zone.
Wounded and disabled troops cannot launch attacks, or provide an effective defense. Russian commanders thought that drones were still an effective weapon but the Ukrainians came up with more defensive drone interceptors and superior attack drones. Long-range Ukrainian drones attacked Moscow and St Petersburg as well as the oil storage and refining infrastructure between the Ukrainian border and those two Russian cities. Also hit were factories building components for drones, missiles and air defense systems. The last few years of Ukrainian attacks on Russian air defenses made it easier for Ukrainian attacks to be made unopposed. The Ukrainians refrained from attacking Moscow on May 9th during the World War II victory day parade. The Russians reduced the size of that parade and no combat vehicles were present, an unprecedented decision.
The personnel, equipment and capability losses have eliminated any chance of Russia defeating the Ukrainians. Russian leader Vladimir is left with one major decision, how to explain this failure to the Russian people. He’ll come up with something to say and it will be a painful speech to deliver.