Putin's War Is TEARING Russia Apart... NO ONE Can Stop What's Coming

The Military Show

Play Supremacy World War 3 for FREE on PC, iOS, or Android: 💥 https://con.onelink.me/kZW6/MilitaryShow Receive a Unique Starter Pack with a free Seasonal Unit the Elite Railgun and value of USD 40, available only for the next 30 days!  Russia’s wartime economy is under unprecedented strain. Drawing on analysis from leading economists and the Kiel Institute for the World Economy, this video examines the mounting pressures facing Russia, including shrinking reserves, falling energy revenues, rising debt, labor shortages, sanctions, and growing dependence on China. Is the Kremlin approaching an economic breaking point, or can it keep funding the war? Watch for a data-driven breakdown of the challenges shaping Russia’s future and the wider conflict in Ukraine.  ⏱️ CHAPTERS: 00:00 - Russian Economy Faces Collapse Kiel Institute Report 03:04 - Russia National Wealth Fund Shrinks to 1.8 Percent 07:43 - Russia Inflation Rate Hidden by Kremlin Propaganda 09:38 - Russia Labor Shortage and Ukraine Drone Strikes 12:25 - China Controls 35 Percent of Russia Trade 15:16 - Will Western Sanctions Cause Russian Economy Collapse?  Support us directly as we bring you independent, up-to-date reporting on military news and global conflicts by clicking here: https://www.youtube.com/@TheMilitaryShow/join  #militarystrategy #militarydevelopments #militaryanalysis #themilitaryshow  SOURCES / ATTRIBUTIONS: https://pastebin.com/iCT3vYcN

Transcript

00:00The Russian Federation is reaching its limit.

00:03Vladimir Putin's long-running war with Ukraine is not just putting strain on his country anymore.

00:08It's tearing it apart at the seams, and there are reams of data to prove it.

00:12Some of the world's leading economic experts have analysed that data.

00:16They've crunched the numbers and come to a clear, inescapable conclusion.

00:21Russia is on a knife edge.

00:22Its economy is one bad day away from unprecedented crisis,

00:26and there's nothing that the central bank, the government, or even Putin himself can do about it.

00:32We knew that this was coming.

00:34The alarm bells have been ringing for several years.

00:36They were quiet to start with, as Russia was able to withstand the pressures of Western sanctions

00:41and the rising costs of the war for the very first few years.

00:45Now, however, the alarms are deafening.

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01:44Almost every expert voice, both outside of Russia and even within,

01:49is saying the same thing.

01:50The longer the conflict continues,

01:52the closer the Kremlin's economy comes to complete collapse.

01:56The grisly details of the country situation

01:58were laid bare in a report entitled

02:00Endgame, the State of the Russian Economy,

02:03which was published by the Kiel Institute for the World Economy,

02:06a leading research center and think tank based in the city of Kiel, Germany.

02:10Some of the world's most trusted voices in matters of finance and the economy

02:14contributed to this report, including Torbjörn Becker,

02:18the director of the Stockholm Institute of Transition Economics,

02:22Moritz Schulerich, professor of economics and president of the Kiel Institute,

02:26and Matthew C. Klein, an esteemed economic journalist, author, and publisher.

02:31These aren't mere commentators sharing their political or biased opinions.

02:34They're some of the leading names in their field.

02:37They're the kinds of people that governments and world leaders go to

02:40when they need real data-backed assessments of economic situations.

02:44And they all agree that more than four years into its war with Ukraine,

02:48Russia's economy is showing all the signs of structural exhaustion,

02:51with the report itself stating,

02:53the contours of a genuine economic endgame are coming into view for Russia.

02:58In simpler terms, the economy hasn't quite collapsed yet,

03:01but it's well and truly on its last legs.

03:04The experts gave a long list of reasons and data points to prove this.

03:08They explained, for example, that as the years have passed,

03:11Russia's economy has effectively turned into a war economy,

03:15meaning that any prospect of economic growth is almost entirely dependent on the defense sector.

03:20In other words, even though Russia managed to maintain reasonable levels of GDP growth in 2023 and 2024,

03:28more, with lower levels of growth also recorded in 2025,

03:32that was primarily because the government was buying weapons and funding defense firms to such an enormous extent.

03:38It wasn't because of healthy levels of private sector expansion.

03:41It wasn't because a diverse range of businesses were booming across the country.

03:45It was because the Kremlin was handing out huge wads of cash for more tanks, shells, and ammo to keep

03:51its war machine chugging along.

03:53And as the defense sector has become larger, richer, and more influential,

03:58everything else has been condensed and constrained.

04:00The Kremlin has increasingly relied on off-budget financing, rapid credit expansion,

04:06and indirect support through the banking system to keep funding the war.

04:09This leads to one of the report's most important points.

04:12Russia doesn't have an infinite pool of money to pull from and use to fund its war indefinitely.

04:18In the early years, it was able to rely on two relatively easy and accessible forms of funding,

04:23which served as buffers for the economy.

04:25The first was Russia's National Wealth Fund savings, often described as Putin's war chest,

04:31which would help the country cope if the so-called special military operation

04:34turned out to be a little trickier and longer-lasting than initially expected.

04:39The second was the colossal amount of revenue brought in by Russia's oil industry.

04:44Both of those buffers have since been worn down by the wall.

04:47And it's partly because, even in his worst nightmares,

04:50Putin never expected his invasion to become the largest and bloodiest war in modern history,

04:54nor did he ever anticipate it would last this long.

04:57No war chest would ever be big enough to keep this conflict going.

05:01And it's no surprise that the National Wealth Fund has dramatically diminished as the years have passed.

05:06As the report notes,

05:08At the beginning of the war, it, the National Wealth Fund, was equivalent to 6.5% of GDP.

05:14By April 2026, the liquid assets of that fund has shrunk to 1.8% of GDP,

05:21less than one-third of the pre-2022 level.

05:23What was once a meaningful fiscal cushion is now barely adequate as a contingency reserve

05:28for a country that has no access to international capital markets.

05:33Oil and gas revenues have plummeted as well,

05:35as a direct result of Western sanctions, Ukrainian attacks,

05:39and many countries simply refusing to do business with Moscow.

05:42Again, the report cites clear evidence to demonstrate this.

05:46Oil and gas revenues, which underpin Russia's fiscal arithmetic,

05:50collapsed by 45% year-on-year in the first quarter of 2026

05:54and by 38% in the first four months,

05:57partly reflecting the effects of tighter sanctions on major Russian energy producers

06:02and Ukrainian drone strikes that disrupted export infrastructure,

06:06with up to 40% of export refining capacity reportedly offline at certain points in March.

06:11With the buffers depleted, Russia's budget deficit in the first quarter of 2026 alone

06:17reached a staggering 4.6 trillion rubles, or $59.5 billion.

06:23That's already more than a full-year target of 3.8 trillion rubles, or $49 billion.

06:29In effect, what the experts are saying here

06:31is that Russia has effectively used up its easy options for funding the war.

06:35Now, it has to rely on the more problematic ones,

06:39the ones that make people's lives worse,

06:41drag the economy closer to the edge of a cliff,

06:44and risk ruining the Russian Federation for generations to come.

06:47Like increasing taxes to record levels,

06:50borrowing massive amounts of money,

06:52and either freezing or outright cutting large parts of civilian spending

06:55in order to divert even more resources towards military production.

06:59The Kremlin is even resorting to more underhanded, off-the-books tactics,

07:04exploiting Russia's banking system to indirectly finance its war machine.

07:08As a direct result, the report notes that corporate debt has surged

07:12by 34 trillion rubles, roughly $438 billion, since the war began,

07:18leaving many Russian businesses under mounting financial strain

07:21as borrowing costs continue to rise.

07:23Now, before the conflict started, that number was close to zero.

07:27All of the statistics, all of the metrics and macroeconomic factors

07:31that truly matter are moving in the wrong direction.

07:34Some are drifting slowly, others are positively sprinting,

07:38but they're all combining to create a very grim picture for Russia and its people.

07:42As a result, the Kremlin is doing what it always does.

07:45It's lying.

07:46It obviously realizes the negative impacts of its actions,

07:49but it doesn't care enough to stop them,

07:51because that would involve ending the war, which Putin refuses to do.

07:55So, Russia's leadership is using its classic playbook of deceit and propaganda

07:59in an attempt to cover up and play down the problems it faces.

08:03The Kiel report notes, for example,

08:06that many economic indicators are no longer published,

08:09and experts question the reliability of the remaining official macroeconomic statistics.

08:14Even when figures are shared with the public,

08:16the report's authors note that they're likely to be adjusted or manipulated

08:19in ways that make them unreliable.

08:21Regarding inflation, for example,

08:24Russia claims to have started 2026 with inflation of 6%,

08:27which has gradually decreased as the months have passed.

08:30Yet there are swathes of evidence to suggest it's actually much higher,

08:34like the fact that the interest rate at the start of 2026 was a whopping 16%

08:39and has barely gone down at all since then.

08:42Experts also point to obvious inconsistencies

08:44between the alleged level of inflation and the country's monetary policy,

08:48or the fact that the central bank is basically behaving as though inflation is way higher than it claims.

08:54Why does the central bank keep its interest rate at a level

08:57that implies real interest rates in double digits

08:59when the real interest rate was barely positive before the war?

09:02Although we will not know for sure,

09:04these matters suggest that the official inflation numbers are highly questionable.

09:08In short, nothing adds up,

09:10and the bad news doesn't end there for Russia.

09:13But before we get into the rest of the report

09:15and what it all means moving forward,

09:17if this is the kind of insight you want more of,

09:20make sure you're subscribed to the military show.

09:22We break it down like this every week.

09:25Now, the Kiel report notes that even if Russia can carry on using every trick in the book

09:29to find funds to keep the war going,

09:32it still faces challenges that are effectively unsolvable.

09:35Matthew C. Klein notes, for example,

09:38The fundamental constraint facing Russia today is not access to money,

09:42but access to people, technology, and productive capacity.

09:46No amount of credit, taxation, or borrowing will magically produce the workers

09:50that Russia needs to survive the coming years.

09:52No trickery can simply restore its neglected industries

09:55or undo the damage that the war economy has caused

09:58and continues to cause to wider society.

10:01As Klein puts it,

10:02The government can mobilize additional financial resources,

10:06but with labor shortages at record levels

10:08and sanctions restricting access to critical imports,

10:11higher spending increasingly risks generating inflation

10:14rather than greater military output.

10:17And this leads to another point,

10:19sanctions.

10:20These come in two forms.

10:22There are the conventional Western sanctions,

10:24which include asset freezes,

10:26banking bans,

10:27price caps,

10:27and export controls.

10:28Then, there are Ukraine's long-range sanctions,

10:32which involve direct drone and missile strikes on Russian infrastructure,

10:36particularly oil refineries, pipelines, fuel depots,

10:39and other key nodes of the Kremlin's energy empire.

10:42Both have proven effective,

10:44albeit in different ways.

10:45It took time for the West's financial sanctions

10:47to take their toll, for example.

10:50Fortunately, as the years have gone by,

10:52the impact has been clearer to see.

10:54The report notes that these economic punishments

10:56have effectively tightened Russia's budget constraints

10:59and made it more difficult for the country

11:01to bring in the revenue it needs to fund the war effort.

11:04They've helped to reduce energy revenue,

11:06increase import costs,

11:08weaken the Kremlin's own finances,

11:10and made military production much harder,

11:12since Moscow can no longer easily import the components

11:15and materials it wants from around the world.

11:17With that said,

11:18the report reveals that Russia still brought in

11:21approximately $160 billion from oil exports

11:24and $39 billion from gas exports in 2025,

11:29suggesting, while sanctions are working to an extent,

11:32they haven't entirely stifled the Kremlin's revenue streams.

11:35Ukraine's long-range sanctions

11:37are not only more dramatic and quite literally explosive,

11:40but potentially much more impactful

11:42in terms of generating immediate benefits.

11:44Kiev's attacks on numerous critical refineries

11:47across Russia's regions

11:48bypass the bureaucracy associated with financial

11:51and political punishment,

11:53smashing the very infrastructure Russia relies on

11:56to store oil, process it, and ship it.

11:59These attacks have drastically dented

12:00the country's overall production capacity,

12:03which naturally has a direct impact on its revenue too.

12:06The more these attacks occur,

12:08and the longer they continue,

12:10the more devastating they're likely to become.

12:12And when we add up all of these different factors,

12:14from the diminished national wealth fund

12:16to rising war expenditures

12:18and plummeting oil revenues,

12:20it's clear to see the magnitude of the crisis

12:22that Russia's economy is hurtling towards.

12:25The Kremlin has only a couple of slim hopes to hold on to.

12:28The first is the volatility of oil.

12:30The Kiel report notes that Russia's overall economic outlook

12:33can change in accordance with oil prices.

12:36To be more precise, if oil goes up,

12:39then that's obviously good news for Russia,

12:41as it means they can bring in more money for every barrel it ships out.

12:44If it goes down, however, the country's woes will compound.

12:48As the report itself notes,

12:50this idea was demonstrated during the war in Iran.

12:52The situation changed when the US and Israel

12:55launched a full-scale attack on Iran,

12:57causing oil prices to surge.

12:59The experts add,

13:01Even a short-lived oil price spike

13:03could generate substantial revenue gains,

13:05while a prolonged period of high prices

13:07could effectively remove current constraints

13:09on Russia's war financing.

13:11With that said,

13:12even high oil prices don't solve

13:14the many other issues the Kremlin has,

13:16like its labor shortage,

13:18its limited production capacities,

13:20and the effects of import and export bans.

13:22To go some ways towards fixing those problems,

13:25Moscow has to rely on its second saving grace,

13:28China.

13:29As many countries turned their backs on Russia,

13:32China was one of the few major nations

13:34to continue dealing with the Kremlin,

13:35and the relationship between the two nations

13:37has proven to be of paramount importance

13:40in terms of keeping the war going.

13:42The report notes, for example,

13:44that China now accounts for more than a third,

13:4635% to be exact,

13:48of all Russia's foreign trade.

13:50It also supplies the vast majority

13:52of the dual-use goods and military components

13:54that continue to flood into Russia

13:56for use in drone and missile production plants.

13:59But this deal isn't a one-way street.

14:01China gets plenty out of it as well.

14:03It pays an incredible 40% less for Russian gas

14:07compared to other clients, for example.

14:09It has also extended its leverage

14:11over Russian trade, finance,

14:13and industrial supply chains too.

14:15And as time has passed,

14:16Russia's reliance on China has only increased

14:19to the point where Beijing is now

14:20Moscow's biggest customer, biggest supplier,

14:23biggest technology provider,

14:25and most critical financial lifeline.

14:27That's not a partnership, the report argues.

14:30It's an increasingly asymmetric dependency.

14:33While both countries have derived tangible benefits

14:35from the partnership,

14:37it's not a coalition of equals,

14:38but an increasingly unbalanced arrangement

14:41in which one party's accumulating structural advantages

14:44at the expense of the other.

14:45So, not only is Russia getting weaker economically,

14:49but politically too.

14:51China is squeezing every advantage it can

14:53out of the country's relationship,

14:55and Moscow has no other choice

14:57but to nod along and agree to Beijing's demands.

15:00The report's authors are keen to stress

15:02that none of this necessarily means

15:03that Russia's economy is mere days from falling apart.

15:07Instead, they argue,

15:08that all the data suggests

15:09that the country is walking an increasingly fine line

15:12and would take very little to tip it over the edge.

15:14And the economic experts featured in the Kiel report

15:17aren't the only ones expressing serious doubts

15:20about Russia's financial future.

15:22Many of Europe's leading intelligence services

15:24feel the exact same way.

15:26Indeed, in a report published in the German newspaper FAS,

15:30intelligence sources were cited as saying

15:32that Russia has reached an explosive state

15:34due to its ludicrous levels of wartime spending,

15:37combined with the impact of sanctions, isolation,

15:39and Ukraine's attacks on oil infrastructure.

15:42The report highlights many of the exact same vulnerabilities

15:45and risks previously mentioned.

15:47Intelligence analysts argue, for example,

15:50that Russia's banking sector is being placed

15:52under unsustainable levels of strain.

15:55They share their belief that the Kremlin

15:56is artificially inflating its balance sheets

15:59to hide its reckless tendencies.

16:00And they speak of the spiraling hidden debts

16:03that Russia is racking up,

16:04in the form of preferential loans and lines of credit

16:07that banks have been handing out to defense firms

16:09under the command of their Kremlin overlords.

16:12According to these same agencies, even within Russia,

16:15numerous officials are now openly expressing clear fears

16:18of an imminent recession.

16:20The mask, they argue, is slipping.

16:22Russia is desperately attempting to paint the picture

16:25that its economy is dynamic, vibrant, and resilient.

16:28But the reality no longer corresponds to that picture.

16:31Banks' loan portfolios are deteriorating.

16:34Businesses are defaulting on their debts.

16:37Economic growth slipped into negative territory

16:39in the first quarter of 2026.

16:42Civilian sector enterprises are being abandoned.

16:45And even the central bank's most desperate measures

16:47aren't proving sufficient to control the crisis.

16:50Added to this is the fact that the war is reportedly

16:53becoming even more expensive by the day,

16:55with recent estimates suggesting that the Kremlin

16:57may spend at least $27 billion more on its military this year

17:01than it originally planned.

17:03Because of this, both the intelligence agencies

17:05and economic experts agree that power is shifting away

17:09from Russia and into the hands of its opponents.

17:11And it's up to them to take advantage of that fact.

17:14A fresh sanctions package targeting Russian banks

17:17could be enough to send the Kremlin's economy

17:19into a tailspin.

17:20A sustained drop in oil prices may have a similar effect.

17:24The Kiel Report authors recommend that Western policy makers

17:28think very carefully about how to make the most

17:30of this situation.

17:31They recommend enforcing even stricter price caps on oil

17:35and renew their efforts to limit the movements

17:37of Russia's shadow fleet.

17:38They also argue that exercising tighter controls on trade

17:42between Russia and China could also make it far harder

17:44for Moscow to maintain the war much longer.

17:47Some even advocate for a Ukraine support tariff

17:50on any remaining trade with Russia.

17:52For example, any country still buying the likes

17:55of Russian LNG, chemicals and fertilizers would have

17:58to pay an additional fee that would go towards Ukraine's

18:01defense and reconstruction.

18:03As Moritz Shulerik puts it,

18:05the past months have shown that enforcement of the sanctioned

18:08regime makes a real difference and more must be done

18:10with respect to monitoring.

18:12In other words, Russia's growing economic vulnerabilities

18:15only matter if they can be turned into a lasting strategic leverage.

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18:36Now, to learn more about the problems that are mounting up

18:39for Vladimir Putin, check out this video, which explores how

18:42the Russian president is losing his grip on Chechnya.

18:45Or watch this video to discover how Ukraine pulled off the impossible,

18:49achieving something that even NATO couldn't.

18:52And finally, don't forget to subscribe for more breaking news reports

18:55and in-depth analysis of this war and other major conflicts

18:58around the world.

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