Putin's perceived stability faces test as Russia approaches critical election date

Before the presidential election, the Kremlin tried to keep the currency exchange rate below 100 rubles per dollar, but after March 17, the situation may revert to reality. Former Russian Minister of Energy Vladimir Milov mentioned this on Ukrainian Channel 24. He noted that the Kremlin is doing everything possible to maintain prices at a low level.

In Russia, among other challenges, gasoline production at local refineries has significantly decreased, causing wholesale prices to soar by about 35 per cent since the start of the year. Nonetheless, this increase is not yet evident in retail prices, which Putin's regime artificially kept low until the "elections."

Vladimir Milov predicts a considerable price hike for a wide range of goods in Russia after March 17. Subsequently, the central bank will likely be compelled to increase interest rates, which might severely impact the Russian economy and its recovery efforts.

Despite numerous sanctions imposed on Russia since the start of the invasion of Ukraine, the country continues to reap significant benefits, especially from oil sales. In 2023 alone, it earned at least £860 million. Lithuanian intelligence has estimated that Putin's regime could continue waging war at the current level for another two years. However, as this period progresses, internal tension will increase, culminating in the Kremlin facing a substantial dilemma.

According to Milov, Russia's financial resources are depleting rapidly. Within two months, the budget deficit reached the level forecasted for the entire year of 2024.

Another issue for Russia is the dwindling options for enhancing the production of weapons, equipment, and ammunition. This limitation is apparent at the front, where old and outdated tanks are frequently used. Moreover, the national social welfare fund has approximately £68 billion remaining, less than half of the annual military budget.

“We are nearing a moment when only emergency reserves will be left in their financial assets. In a year or two, Russia will not be able to continue fighting with such intensity. While we cannot be certain, it is clear that a limit is being reached. Putin may persist with military operations for now, but not for much longer. This process is already underway," said Milov.

The Pentagon reported that the war in Ukraine has already cost Russia £172 billion. Additionally, the Kremlin has lost £8.1 billion due to the cancellation or postponement of arms sales. Bloomberg pointed out that the Kremlin's revenue from oil and gas sales surged by 80 per cent in February compared to the previous year, reaching nearly £8.1 billion. This surge is partly attributed to decisions made by China.