Putin vows military boost amidst economic strains at home
Vladimir Putin published a message on the occasion of Defender of the Fatherland Day, stating, "We will continue to enhance the combat capabilities of the army and navy, as their readiness is a crucial element in ensuring Russia's security," said the Russian leader.
"Today, amidst rapid global changes, our strategy for strengthening and developing the armed forces remains unchanged. We will continue to enhance the combat capabilities of the army, which serves as a guarantor of our sovereignty, now and in the future," he declared.
He further added that he plans to equip the armed forces with new models of weapons and equipment.
On Thursday at 11:00 GMT in Riyadh, the first high-level meeting between U.S. and Russian delegations took place since the onset of the war in Ukraine. This occurred a week after Putin's phone conversation with U.S. President Donald Trump. Neither Kyiv nor the EU were invited to the discussions in Saudi Arabia, which focused on the war in Ukraine.
Lavrov reiterated after the talks that Ukraine's membership in NATO is unacceptable for Russia because, as he stated, it poses a "direct threat to Russia's interests and its sovereignty."
He added that Russia will not agree to the presence of NATO troops in Ukraine, which is a key component of the discussed security guarantees following a possible ceasefire in Ukraine. European allies of Ukraine maintain that only Ukraine will decide on the deployment of a potential peacekeeping mission.
The Kremlin asserts that the Russian economy, despite the ongoing war with Ukraine, demonstrates resilience. However, experts caution that this resilience may be illusory, warning of the hidden costs of the war that Russia may not be able to ignore for much longer.
According to "CNN," in 2024, Russia's GDP growth was expected to reach 3.8%, surpassing that of the United States and Europe. Unemployment was projected to hit a record low, while defence spending, although constraining other sectors, was regarded as temporary.
CNN: Image of Russia's economy controlled by the Kremlin
However, not everyone is convinced of the sustainability of this growth. Elina Ribakova from the Peterson Institute for International Economics believes that the Kremlin meticulously crafts the image of Russia's economy. Economic growth is compared to the effect of "steroids" – rapid, but not enduring. Russia may soon face the consequences of this policy, writes "CNN".
Craig Kennedy from the Davis Center for Russian and Eurasian Studies warns of the hidden costs of the war. Russia employs an "off-budget financing scheme," which could lead to a credit crisis. The burgeoning debt of war-related companies may burden banks with toxic debt. Experts stress that Western sanctions are beginning to take effect, and Russia may not be able to ignore them for much longer.
The Russian economy is grappling with an expanding budget deficit, which amounted to approximately £29 billion in 2024, primarily due to the costs of the war in Ukraine. Defence spending increased by 30% and accounts for 6.31% of GDP. Russia plans to allocate at least 40% of its budget to defence and national security from 2025 to 2027.
