Bear Market Brief

The Russian military has continued to experiment with improving its employment of uncrewed aerial systems (UAS) in support of its maneuver forces.
Both Russian and Ukrainian forces face coordination challenges and internal debates regarding the “ownership” of different depths of the battlespace and the command-and-control relationship between independent drone units and ground commanders.
While Ukraine typically leads in initial technological innovation, Russia has proven effective at copying these advancements and scaling them through systemic experiments across various military districts.
Despite narrowing the capability gap in 2025 through new employment concepts and elite units, Russian advancements have failed to produce a decisive military breakthrough.

For more from Rob and Dmytro, subscribe to Two Marines, a newsletter on Russia’s war in Ukraine, defense technology, and modern warfare.

By the numbers

5.9 trillion rubles - the federal deficit in January-April against a goal of 3.8 trillion for the whole year. The gap between federal expenditures and income grew in April despite windfall revenues triggered by the ongoing blockade of the Strait of Hormuz. The federal government shelved earlier plans to reduce expenditures and continued higher spending, including on the advance financing of procurements. Federal incomes for the first four months were lower in nominal terms than in 2025.
0.4% - the federal government’s new GDP growth forecast for 2026, which both Deputy Prime Minister Alexander Novak and Economy Minister Maxim Reshetnikov confirmed. Earlier, the government was expecting a growth of 1.3% for the current year. Novak attributed the lower growth expectations to global trade disruptions and a strengthening ruble. This will likely also negatively affect revenue expectations in the federal and regional budgets.
35% - per-capita electricity consumption growth in the Irkutsk Region between 2020 and 2024. Consumption in Irkutsk is 2.2 times the average for the Siberian Federal District and 3.8 times the national average. Energy market experts attribute the growth almost entirely to cryptocurrency mining. Cryptominers are drawn to the region by its exceedingly low tariffs. However, due to the added burden on the grid, the regional government has restricted mining and introduced a differentiated tariff system. This has also led to backlash from residential customers.
209,000 - the number of small- and medium-sized businesses that closed in Russia from January to March 2026. This is a 9% increase year-over-year compared to 2025, according to Forbes. Business analysts surveyed by Forbes reported that the industries suffering the most include the retail, beauty, and food service industries. This is due to factors such as a high key interest rate, declining purchasing power, and tax changes. These will continue to affect Russia’s remaining 6.9 million small- and medium-sized businesses this quarter as well.

— Andras Toth-Czifra & Sara Ashbaugh

Hollow Victory Day

Sara Ashbaugh — Fri, 08 May 2026 22:01:22 GMT

Here’s what you might have missed this week:

Preparations are underway for this year’s Victory Day celebrations, including a scaled-back military parade in Moscow.
Residents of Moscow and St. Petersburg experienced mobile internet blockages due to security concerns, with more restrictions expected over the weekend.
A Moscow court ordered businessman and founder Vadim Moshkovich to transfer his shares of agricultural company Rusagro to the Russian state.

— Sara Ashbaugh

Doesn’t feel like Victory Day

Russia will hold Victory Day parades in Moscow and other cities this Saturday, May 9. For years, the event has served multiple purposes for the Kremlin: it helps cement the historical narrative centering on World War II (which the USSR and Vladimir Putin both used to build a national myth), it showcases Russia’s military might, and through the visits of foreign dignitaries, it shows that Russia is not as isolated as its adversaries would want.

Plans for this year’s parade in Moscow, however, fail on most of these counts. For the first time, the parade will not feature military tech at all (after the numbers were reduced greatly in past years) and it will be attended by the record small number of foreign dignitaries due to credible fears of a Ukrainian strike on the event or its preparations. Earlier, the Russian government announced a ceasefire for May 8-9, a proposal that Putin had floated in an earlier call with U.S. President Donald Trump in order to signal goodwill. Simultaneously, however, Russia threatened Ukraine with strikes on central Kyiv if the Moscow parade was “disrupted.” The Ukrainian government also announced a ceasefire starting May 6, but Russia did not reciprocate and continued its attacks on Ukrainian cities. Finally, on May 8, the U.S. government announced that a ceasefire would be observed until May 10.

Over the past months, Ukraine has increased the frequency and reach of its drone attacks deep into Russian territory, including towards Moscow. On May 7, Russian air defenses claimed to have shot down more than 340 Ukrainian drones above 20 Russian regions. Two days earlier, Ukraine managed to hit a defense plant near Cheboksary, the capital of Chuvashia (more than 900 miles from Ukraine), with a cruise missile and then a drone attack. Shortly before this, Ukraine showcased the shortcomings of Russia’s anti-drone defenses by striking the Tuapse oil plant in the Krasnodar Territory four times in two weeks and the Kirishi refinery in the Leningrad Region near St. Petersburg. It also struck several times in the Orenburg Region and the Perm Territory, deep inside Russia. At the same time, from frontline assessments, it appears that Russia’s slow-moving expansion of territorial conquest in Ukraine may have come to a halt.

As of this writing, it appears that the only major foreign figures planning to visit Moscow during the parade are the presidents of Belarus and Laos, the sultan of Malaysia, and the prime minister of Slovakia, along with a handful of officials of unrecognized states (although it is unclear who among them will attend the parade). Similar to the past two years, the regional parades in at least a third of Russia’s regional capitals were called off entirely. To further protect the planned events from attacks, the government shut down mobile internet in Moscow and several other major cities several days in advance, which will likely exacerbate the public backlash against internet restrictions that predated the parade preparations and the already accumulating business losses stemming from these restrictions. As of Friday morning, the Agentstvo news outlet reported that the authorities banned all foreign media from the parade.

The tense preparations are happening against a backdrop of a press report released last week that quoted information from the intelligence services of an unspecified EU member state claiming there is heightened paranoia in Putin’s circles about an assassination attempt against the Russian president. Experts on Russia’s elite have raised doubts about the part of the report that suggests fears of an imminent coup. However, claims that the president is operating under tighter security and that there is blame going around within the security elite about security shortcomings seem to align with earlier reporting and analysis. It cannot be ruled out that the leaked report is meant to send a message to Putin. Facing growing frustration over the prospects of the war in Ukraine and over the increasingly direct negative effects of the war on the Russian economy, he is running out of options.

— Andras Toth-Czifra

One of Russia’s largest races, the Kazan Marathon, took place last weekend. More than 44,000 runners from across the country participated in the three-day event, which included races from a distance of 3 kilometers (1.8 miles) to 42.2 kilometers (26.2 miles). Athlete Vladimir Nikitin took home the gold during the marathon race and set a new Russian national marathon record of 2 hours, 8 minutes, and 7 seconds. He beat the previous record by only 47 seconds, which was set by Dmitry Nedelin at the Dusseldorf marathon just a week earlier. Track and field athlete Luiza Lega won the women’s marathon race with a time of 2 hours, 26 minutes, and 6 seconds. (photo: Egor Aleev / TASS / Profimedia)

Mobile internet disruptions

Cell phone users in Moscow and St. Petersburg have experienced major disruptions over the past week as the government ramps up its security measures ahead of Victory Day. Several mobile network operators warned their Moscow clients to expect mobile internet and SMS disruptions leading up to the weekend, including the “big four” telecom operators (Beeline, MTS, MegaFon, and T2). “In order to ensure security measures in Moscow, temporary restrictions on mobile internet and SMS services may be implemented during the preparation and holding of festivities from May 5 to 9,” Beeline said in a statement. On May 5, residents of Moscow and St. Petersburg reported mobile internet outages, although access was restored later that day. According to the Ministry of Digital Development, Communications, and Mass Media (Minkomsvyaz), the shutdowns are intended to address security threats, including from Ukrainian drones. “This allows us to reduce the drones’ targeting accuracy and to counter attacks,” the Ministry’s press service said. Last month, President Putin justified the ongoing widespread mobile internet disruptions as necessary to “prevent terrorist attacks.”

Security concerns seem to be at the forefront of preparations for this year’s Victory Day celebrations. A scaled-back parade in Moscow will not feature the usual assortment of military equipment, such as tanks and missile launchers. According to the Kremlin, this decision was made in response to the “terrorist threat” from Ukraine, although some speculate that it may also be due to the “battlefield pressures” on Russia’s military. Meanwhile, many other major cities have reduced or canceled their celebrations entirely, including Nizhny Novgorod, Perm, and Voronezh. On Thursday, Minkomsvyaz announced that mobile internet will be completely blocked in Moscow during Victory Day “to ensure the safety of the festivities.” In the past, internet restrictions have included a “whitelist” of essential websites that are still accessible, but Minkomsvyaz says there won’t be any whitelist this weekend. According to Novaya Gazeta, mobile internet restrictions are also expected in dozens of other regions as well, including St. Petersburg and Kazan.

— Sara Ashbaugh

Quickfire: Regions

The ruling United Russia party extended the registration period for its “primaries” from April 30 to May 14. Party Secretary Vladimir Yakushev said that this was necessary due to a high number of applicants—more than 4,000 people by the end of last month. Yakushev also underlined that 12% of applicants are war participants. In recent years, the ruling party has gradually increased the number of candidates with “war veteran” credentials despite pushback from established party elites, even providing these candidates a 25% bonus in the primaries. However, the main purpose of the party primaries is to serve as a mobilization exercise for the September Duma election, not as a genuinely competitive election. This is important for the ruling party, especially since United Russia’s rating fell below 30% recently, even in the surveys of state-connected pollsters. Public employees in a number of regions have reported administrative pressure to take part in the vote (e.g. in the Krasnodar and the Krasnoyarsk Territories, the Sverdlovsk and Omsk Regions, and St. Petersburg). Coerced mobilization is also facilitated by the Gosuslugi government services portal, which is connected to primary voting.

On May 6, Moscow’s Khamovnichesky Court ordered the seizure of 68% of the capital of RusAgro, one of Russia’s largest agricultural holdings, from founder and controlling shareholder Vadim Moshkovich and his family members to be transferred to the Russian state. The claim also extends to Moshkovich’s cash assets. The businessman, who is also a former member of the Federation Council representing the Belgorod Region, is accused of fraud and bribery and has been in pre-trial detention since early 2025. The independent newspaper Novaya Gazeta suggested that his arrest may be connected to federal government plans to consolidate assets in the agricultural and food sectors spearheaded by Deputy Prime Minister Dmitry Patrushev, the son of former Security Council Secretary Nikolay Patrushev. Even prior to this case, the Prosecutor’s Office helped to nationalize several major enterprises in the Russian food industry. RusAgro is one of the largest seizures.

— Andras Toth-Czifra

Russia’s Drone Line Experiment

The Russian military has continued to experiment with improving its employment of uncrewed aerial systems (UAS) in support of its maneuver forces.
Both Russian and Ukrainian forces face coordination challenges and internal debates regarding the “ownership” of different depths of the battlespace and the command-and-control relationship between independent drone units and ground commanders.
While Ukraine typically leads in initial technological innovation, Russia has proven effective at copying these advancements and scaling them through systemic experiments across various military districts.
Despite narrowing the capability gap in 2025 through new employment concepts and elite units, Russian advancements have failed to produce a decisive military breakthrough.

For more from Rob and Dmytro, subscribe to Two Marines, a newsletter on Russia’s war in Ukraine, defense technology, and modern warfare.

By the numbers

53% - the proportion of those surveyed by the state-owned FOM pollster who say that the people around them are anxious. This is compared to the 40% of survey participants who reported that those around them are calm. In February, the proportions were 38% and 56%, suggesting there has been a significant deterioration of the public mood in the months since. This is also reflected in surveys measuring citizens’ trust in Vladimir Putin and the ruling United Russia party, especially following the government’s latest internet access restrictions.
114 billion rubles - the amount of debt forgiven by the federal government for 21 regions on May 4. This is the largest debt forgiveness package so far this year. The program aims to forgive around one trillion rubles of government-held debt on regions’ balance sheets in exchange for targeted infrastructure investments. At the same time, several regions running a fiscal deficit have had to take out expensive loans from the market over the past year, pushing up debt service costs.
855.6 billion rubles - oil and gas revenues in the federal budget in April, the first month in which the windfall revenues triggered by the U.S.-Israeli war on Iran were realized. The revenues were almost 40% higher than in March (but only slightly above initial plans) as the federal government simultaneously paid out over 370 billion rubles in subsidies to oil companies to suppress domestic fuel prices and fund refinery repairs. The Ministry of Finance now expects more windfall income in May.

— Andras Toth-Czifra

Purple rain

Sara Ashbaugh — Sat, 02 May 2026 00:00:40 GMT

Here’s what you might have missed this week:

Ukrainian drone strikes continue to target Russian oil infrastructure, hitting major oil facilities in Tuapse and Perm.
Last week, the EU approved its 20th sanctions package against Russia and a $106 billion loan for Ukraine.
President Putin announced the dismissal of Dagestan Governor Sergey Melikov, which may signal the beginning of a series of regional governor replacements.

— Sara Ashbaugh

Black rain in Tuapse

On Tuesday, Vladimir Putin denied that there was serious danger to residents and the environment in Tuapse, a city in the South Russian Krasnodar Territory where Ukrainian drone strikes hit a major oil refinery and adjacent oil product storage tanks four times over the past two weeks (the last hit occurring on April 30). Putin did, however, acknowledge that there was danger of an ecological disaster. Ukrainian military intelligence stated that the facility targeted by the drones was involved in supplying Russian troops operating in Ukraine.

Putin was not the only public figure who tried to minimize the impact of the strikes. Shortly after the second attack on the storage tanks, byproducts of oil combustion rained down on the city, covering the streets in toxic chemicals. According to official estimates, the concentration of toxic chemicals in the air was two or three times above safe levels as of last week. The actual numbers could be even higher. The smoke from the blaze has been reported visible from a distance of more than 100 kilometers, and oil products have spread more than 50 kilometers from the shore, with experts calling it the worst environmental disaster that the region has seen in several years. However, local officials did not issue advice on staying indoors and wearing masks until several days after the second strike, and Governor Veniamin Kondratyev only visited Tuapse after the third strike on the refinery. As of April 26, Alexander Kurenkov, the Minister for Emergency Situations, reported that the situation was “under control,” even though the authorities were reportedly still actively evacuating residents from the area several days later and the strikes disrupted gas and water provisions to many households. Krasnodar Emergency Services are operating with roughly 60% of the required equipment, suggesting that the authorities were unprepared for the strikes (despite Tuapse’s location and the earlier targeting of the refinery). At the same time, authorities detained a journalist who was preparing a report on the environmental damage caused by the strikes for Kedr, an independent news site. Local residents interviewed by Novaya Gazeta expressed bewilderment and anger at the regional and federal authorities for “abandoning” them.

The strikes on Tuapse were followed up by further successful Ukrainian drone strikes on Russia’s oil infrastructure. In the Perm Territory, drones hit oil pipeline infrastructure (although this was not confirmed by the authorities) and in the Orenburg Region city of Orsk, drones hit a refinery. Ukraine has expanded their range for drone attacks; a drone strike hit Yekaterinburg for the first time, damaging a residential building (the actual target seemed to be the Vektor defense plant). In these cases, apart from damaging Russia’s oil and oil product export capacity in order to limit Russian gains from the continuing closure of the Strait of Hormuz, the strikes also seem to further fuel Russian citizens’ distrust in the capacity of local and federal authorities to protect them from the direct effects of the war. This may even contribute to the shifting of public opinion in favor of pausing or ending the war.

— Andras Toth-Czifra

The sky over Russia’s Perm Territory was black with smoke after a Ukrainian drone strike on Wednesday morning. Perm Governor Dmitry Makhonin confirmed the strike in a Telegram post, announcing that a fire had broken out at an “industrial site” in the region. According to Ukrainian media, the drones struck an oil pumping station known as the Perm Linear Production Dispatch Station and, the next day, the Lukoil-Permnefteorgsintez oil refinery. Russia’s Rospotrebnadzor (the Federal Service for the Oversight of Consumer Protection and Welfare) said that the situation is “under control” and advised Perm residents to stay indoors if they begin to feel unwell. (photo: @exilenova_plus / Telegram)

New EU sanctions

The EU adopted its 20th sanctions package against Russia last Thursday, targeting Russian oil revenue and shadow fleet tankers. The package was originally intended for February to mark the anniversary of Russia’s invasion of Ukraine, but it was blocked by vetoes from member states Hungary and Slovakia. The two countries accused Ukraine of intentionally delaying repairs to the Druzhba pipeline—a major Russian oil pipeline running through Ukraine—and refused to approve the new sanctions package until the flow of oil was resumed. The pipeline, which Ukrainian officials claim was damaged during a Russian attack (halting its flow of roughly 1.4 million barrels of oil per day), is an important source of fuel for Hungary and Slovakia. On April 21, Ukrainian President Zelenskyy announced that repairs to the pipeline were officially complete. “The pipeline can resume operation,” he posted on X, restoring its supply to Hungary and Slovakia for the first time in three months.

The new sanctions package builds on the EU’s ongoing efforts to restrict Russian oil revenue, which helps to fund its war in Ukraine. The package adds another 46 ships to the list of blacklisted shadow fleet tankers, bringing the total number of ships to 632. It also sanctions a further 36 companies across the oil supply chain and dozens of foreign companies accused of supplying Russia with “dual-use” goods. Transactions have been prohibited with an additional 20 Russian banks, and the new sanctions package also bans the import of certain Russian metals and industrial materials. Additionally, the EU also approved a 90 billion euro ($106 billion) loan for Ukraine. The loan is expected to cover two-thirds of Ukraine’s funding needs for 2026-2027, with the money going toward budgetary support, weapons procurement, and domestic arms manufacturing. Zelenskyy thanked the bloc for their support, saying, “This will strengthen, of course first of all our army, Ukrainian forces, and allow us to boost production.” Ukraine is not expected to repay the loan until Russia pays reparations for the war.

The Russian diplomatic mission to the EU protested the new sanctions, calling them “economic coercion” and a “complete disregard for international law.” Only sanctions approved by the UN Security Council are legitimate, the diplomatic mission said, and “all unlawful actions by the European Union against our country will undoubtedly receive an appropriate and timely response.”

— Sara Ashbaugh

Quickfire: Regions

In a move that may signal the beginning of a series of dismissals of regional governors, President Putin announced on April 30 that Dagestan Governor Sergey Melikov will be leaving office in September and the regional legislature will vote on a successor. Melikov will reportedly be succeeded by Fyodor Shchukin, the head of the republic’s Supreme Court. Shchukin has no prior experience in politics or public administration, and Magomed Ramazanov, so far a deputy presidential plenipotentiary in the Far Eastern Federal District, is expected to be his Prime Minister. Earlier in April, Ramazanov was tasked by Putin to take charge of the disaster response in Dagestan after the region was hit by a “once-in-a-century” flood. Melikov was dismissed rather unceremoniously, with the president announcing it at a meeting with Dagestani representatives where the governor was not present. His position has been shaky for a while due to a series of governance failures in the region, of which the flood response was only the latest. However, due to his security background, Melikov was also trusted with keeping the often-restive region stable. If the president is going to dismiss any further regional governors this spring, he will likely do so in the coming couple of weeks. Another official who faced rumors of dismissal is Belgorod Governor Vyacheslav Gladkov. The Vedomosti weekly speculated that Gladkov could be demoted to an envoy to Abkhazia, with Alexander Shuvaev, a former soldier and current deputy governor in the Irkutsk Region, replacing him. This has not been confirmed as of this writing.

Denis Butsaev, a recently-resigned Deputy Environment Minister and former head of the Russian Ecological Operator (the federal organization tasked to carry out the Kremlin’s largely failed waste management reform), has fled the country. He is likely trying to avoid corruption charges linked to several former directors of the Russian Ecological Operator, according to the Vedomosti weekly. Journalist Farida Rustamova confirmed that, according to her sources, Butsaev fled via Minsk and Tbilisi to the United States, helped by the fact that he had not been sanctioned by the U.S. or the EU. If Vedomosti’s information is correct, Butsaev is the first high official who has been able and willing to flee the country to the West as a result of the current domestic crackdown on federal and regional public officials accused of corruption. Notably, just a few days ago, he was rumored to be a potential successor to Belgorod Governor Vyacheslav Gladkov (see above) given his prior work in the region.

In a rare public clash, Federation Council Speaker Valentina Matvienko called on Alexei Mordashov, the majority owner of the Severstal company, to return part of his offshore assets to Russia, framing it as assistance to the struggling Vologda Region where Severstal is based. Severstal’s press service denied the existence of offshore assets, pointing to Western sanctions and the construction sector crisis as the cause of the company’s declining tax payments to the regional budget. Matvienko’s suggestion marks an escalation of the existing conflict over Severstal; Vologda Governor Georgy Filimonov has been engaged in a dispute with the company and its officials for several years. The regional budget did experience a sharp drop in corporate income tax receipts in 2025-2026, leading to a deficit worth 35% of its own revenues in 2025. However, the metallurgy sector as a whole is experiencing a worsening crisis; collapsing domestic demand and difficulties with exports are significantly reducing profitability.

— Andras Toth-Czifra

Russia’s Drone Line Experiment

The Russian military has continued to experiment with improving its employment of uncrewed aerial systems (UAS) in support of its maneuver forces.
Both Russian and Ukrainian forces face coordination challenges and internal debates regarding the “ownership” of different depths of the battlespace and the command-and-control relationship between independent drone units and ground commanders.
While Ukraine typically leads in initial technological innovation, Russia has proven effective at copying these advancements and scaling them through systemic experiments across various military districts.
Despite narrowing the capability gap in 2025 through new employment concepts and elite units, Russian advancements have failed to produce a decisive military breakthrough.

For more from Rob and Dmytro, subscribe to Two Marines, a newsletter on Russia’s war in Ukraine, defense technology, and modern warfare.

By the numbers

-2.2% - the fall of business turnover in nominal terms in the first three months of 2026, according to a Sberbank analysis. This is the first such drop since 2022. The bank attributed this deterioration to the Central Bank’s tight monetary policy. Even though the Central Bank cut the key rate to 14.5% last week, it widened its 2027 rate corridor to 8-10%, suggesting that the inflation risks stemming from the current oil crisis warrant a more cautious rate cutting policy. The Central Bank’s GDP growth forecast for 2026 is now 0.5-1.5%.
1% - the veteran employment quota that Tatarstan is introducing starting in September for companies with more than 200 employees in order to help with the reintegration of returning soldiers. Tatarstan’s quota is less intrusive than what has been introduced in other regions (roughly half of Russian regions now have quotas like this), many of which require companies with more than 100 employees to employ a certain number of war participants. This signals that the authorities are keen to pass on at least part of the reintegration costs to the private sector.
76,000 people - the number of people left without power after unusually severe weather this week. Extreme winds downed trees and power lines across Russia on Monday, and at least 32 people were injured and several were killed according to the Emergency Situations Ministry. Moscow and the surrounding regions experienced unprecedented snowfall for this time of year. Roughly 21 centimeters (8.3 inches) accumulated during the rare spring snowstorm in the capital city on Monday morning.
90 minutes - the length of the telephone call between President Putin and his U.S. counterpart Donald Trump this week. The tone of the call was “frank and businesslike” Kremlin aide Yuri Ushakov told reporters on Wednesday. According to Ushakov, the pair discussed the war in Iran and the conflict in Ukraine, with President Trump supporting Putin’s initiative to declare a temporary ceasefire for the Victory Day holiday next week. Trump called the phone call a “very good conversation” and added that Putin had offered Russia’s diplomatic “help” end the war in Iran.

— Andras Toth-Czifra & Sara Ashbaugh

Vladimir Putin Network

Sara Ashbaugh — Sat, 25 Apr 2026 03:45:18 GMT

Here’s what you might have missed this week:

Russian authorities may soon prohibit the use of virtual private networks (VPNs) in addition to ramping up other internet restrictions.
The governor of Novosibirsk dismissed the region’s Minister of Agriculture in response to recent protests.
Steelmaker Severstal reported extremely low profits for the first quarter of 2026 compared to previous years, signaling problems for the industry.

— Sara Ashbaugh

Online and offline pressure

The Kremlin’s crackdown on providers that help Russians bypass internet restrictions is continuing at full pace. Authorities are preparing to prohibit hosting providers from offering server capacities to VPN services. There are also plans to block payments for VPN services when using Russian bank cards. Additionally, the authorities are using communication and intimidation tactics to discourage VPN use. Russian schools have initiated mandatory lessons for students regarding the “harm” of VPN services. Last week, a court issued the first sentences in which the use of a VPN was officially cited as an “aggravating circumstance” in a criminal case. Under new legal formulations, border guards now have the authority to inspect phones and other electronic devices, and refusing to grant them access can result in 15 days of detention. The authorities have also continued their controversial attempts to fully block access to the Telegram messaging and information sharing app. However, last week, Telegram reportedly enabled a feature allowing premium (paid) users in Russia to bypass the blocks using traffic masking. As of the latest reports, this bypass feature was functioning without a proxy or VPN on Android, but not on desktop or iPhones.

Along with the acceleration of internet restrictions, the Kremlin has also reportedly communicated to all of the so-called “systemic opposition” parties that any criticism of the restrictions must be coordinated with the Presidential Administration and told them not to mention specific government officials or agencies in their rhetoric. This suggests growing unease over the political ruptures that the internet restrictions seem to have exposed or widened over the past weeks. For example, pollsters measured a visible drop in Putin’s approval ratings after the newest internet restrictions, and the popularity of the “New People” party started to increase. Last week, influencer Viktoria Bonya posted a video that went viral in which she criticized the restrictions, along with several other recent issues that triggered localized protests. The video also caused verbal clashes between Bonya and Kremlin propagandists and politicians, even though Bonya hastily signaled that she was not criticizing the Kremlin. Representatives of the Russian IT industry have stated that the industry has lost “investment certainty” at a time when the government is expecting to build digital sovereignty. IT workers talking to Meduza also pointed out that RKN, Russia’s communications watchdog, has become gradually more competent at monitoring and blocking traffic over the years, which has made standard IT work very difficult.

Commenting on the restrictions this week at a meeting with the federal government, President Putin held the authorities’ line, stressing that the restrictions are important to “prevent terrorist attacks” but noting that they should be better communicated to citizens. The president thus devolved political responsibility to lower-level authorities—a central feature of Russia’s federal crisis-management system. He also signaled that the policy itself is non-negotiable, at least from the part of the general public, and that the Kremlin either does not see or does not fear the elevated political risks associated with it.

The authorities’ moves underline the ongoing creation of an “information aristocracy,” which has been in development for several years. They are gradually establishing stricter control over online communications and restricting access to data produced or collected by government entities, spearheaded by the security services. Over the past months, however, major and unusually public disputes have emerged, with several public officials and members of the business elite pushing back against further restrictions that could disrupt their own operations.

— Andras Toth-Czifra

A Ukrainian drone strike on an oil refinery near the city of Tuapse started a massive fire on Monday. The attack hit the Tuapse Oil Refinery located on the coast of the Black Sea, setting the refinery ablaze and spilling petroleum products into the Black Sea and the Tuapse River. The city of Tuapse was blanketed in smoke, and since then residents have complained of poor air quality and polluted black rain. The fire burned for nearly five days; Krasnodar Governor Veniamin Kondratyev announced that it had been fully extinguished on April 24. (photo: Boris Morozov / RIA Novosti / Sputnik / Profimedia)

Quickfire: Regions

Novosibirsk Governor Andrey Travnikov dismissed the region’s Minister of Agriculture, Andrey Shindelov, this week. The dismissal was ultimately a consequence of last month’s unrest in the region. Residents protested the mass culling of livestock after an outbreak of pasteurellosis (according to the authorities), which many suspected was actually foot-and-mouth disease. During the protests, Shindelov was filmed literally running away from a local resident, Svetlana Panina, who wanted to question him about the culling of her livestock. It is likely that it was this public ridicule, and not the wider failures of Shindelov’s Ministry in handling the outbreak, that led to his dismissal. Given that there are growing problems with the region’s fiscal stability, public services (e.g. waste collection), and a series of corruption cases, it is unclear whether the dismissal of one minister will be considered satisfactory by the Kremlin as a stabilizing factor. Travnikov otherwise will not face an election before September 2027.

Severstal, Russia’s biggest steelmaker, reported a catastrophic decline in its financial performance for the first quarter of 2026, with net profit falling 370 times compared to the same period in 2025. The company’s profit in this period plummeted from over 21 billion rubles to just 57 million rubles. Management attributed the lower profits to declining global steel prices, the unviability of exports, and the collapse of domestic demand due to falling construction inside Russia. The company is suspending dividend payments. Severstal’s troubles will likely lead to the further deterioration of the fiscal position of the Vologda Region, which is where the company is based and where it is the biggest taxpayer. The region already faced an almost 19% drop in corporate income tax receipts in 2025, which seems to have worsened in 2026 based on the data available about the first two months of the year. Vologda Governor Georgy Filimonov was engaged in a feud with the company, having accused its owner, Alexey Mordashov, of trying to undermine him. However, if Severstal’s troubles are as large as the company’s report makes them seem, this spells problems for other regions that depend on metallurgy too.

— Andras Toth-Czifra

Russia’s Drone Line Experiment

The Russian military has continued to experiment with improving its employment of uncrewed aerial systems (UAS) in support of its maneuver forces.
Both Russian and Ukrainian forces face coordination challenges and internal debates regarding the “ownership” of different depths of the battlespace and the command-and-control relationship between independent drone units and ground commanders.
While Ukraine typically leads in initial technological innovation, Russia has proven effective at copying these advancements and scaling them through systemic experiments across various military districts.
Despite narrowing the capability gap in 2025 through new employment concepts and elite units, Russian advancements have failed to produce a decisive military breakthrough.

For more from Rob and Dmytro, subscribe to Two Marines, a newsletter on Russia’s war in Ukraine, defense technology, and modern warfare.

By the numbers

5 - the number of oil production and transportation sites that reportedly had to pause their operations due to Ukrainian drone strikes over the past week in the Samara Region and the Krasnodar Territory. While it is unclear whether most of these strikes have caused major disruptions, a double strike on the Tuapse Oil Refinery on Russia’s Black Sea coast caused fires in the port infrastructure and oil reservoirs, with smoke reaching hundreds of kilometers and residents experiencing toxic black rain.
10 million rubles - the maximum possible amount of debt relief offered to new military recruits who sign a contract starting May 1, 2026 in a bill introduced to the State Duma over the past week. A similar bill has been in force already, but it only covers debtors who accumulated debt before December 1, 2024. The current initiative underlines that recruitment using direct financial incentives, mostly from regional budgets, has become more difficult over the past months. The authorities are keen to access further, thus far unwilling, pockets of the population.
8.2 trillion rubles - The amount of overdue corporate debt as of late January 2026—a 21% growth over 2025 in nominal terms. The largest parts of this debt are concentrated in manufacturing (2.9 trillion rubles) and trade (1.9 trillion rubles). According to a report reviewed by Forbes, the number of companies with tax arrears grew by 12% in the first quarter of 2026, further signaling a negative trend and a growing liquidity squeeze in the real economy.
50 bps - the amount by which the Central Bank of Russia (CBR) cut the key interest rate at their Board of Directors meeting on Friday. This is the Bank’s eighth consecutive key rate cut, bringing the rate down to 14.5%. According to the CBR’s press release, annual inflation was at 5.7% as of April 20, 2026. However, “proinflationary risks still prevail over disinflationary ones on the mid-term horizon,” the Bank warned, including “a deterioration in the global economic outlook and rising global price pressures amid increased geopolitical tensions.” The energy crisis caused by the war in Iran has created uncertainty in global markets. Nevertheless, the Bank is expected to continue to cut the key rate as inflation nears its 4% target. The next key rate meeting is scheduled for June 19.
150 million - the number of barrels of oil that Russia has agreed to sell to Indonesia after Indonesian President Prabowo Subianto’s visit to Moscow last week. The Indonesian Special Envoy for Energy and Environment, Hashim Djojohadikusumo, announced the deal on Thursday, celebrating its potential to “address economic volatility issues.” Usually, Indonesia receives up to a quarter of its crude oil imports from the Middle East, but these shipments have been disrupted due to the closure of the Strait of Hormuz. Russia has agreed to provide Indonesia with 100 million barrels at a special price, with 50 million more to follow if necessary.

— Andras Toth-Czifra & Sara Ashbaugh

More profit, more problems

Sara Ashbaugh — Fri, 17 Apr 2026 22:32:26 GMT

Here’s what you might have missed this week:

The Russian government will likely impose a new 20% excess profit tax on businesses to address the growing federal budget deficit.
Police raided Novaya Gazeta’s editorial office in Moscow last Thursday and arrested investigative journalist Oleg Roldugin.
Hundreds of workers in the Far Eastern Khabarovsk Territory staged multi-day protests over unpaid wages.

— Sara Ashbaugh

Taxing more and more

The federal government is reportedly moving ahead with a proposal to collect a new 20% excess profit tax from businesses in order to reduce the growing deficit in the federal budget. According to sources quoted by Interfax, the government will calculate the difference between the companies’ profits last year versus their average profits from 2018 and 2019. The details have not been finalized yet, but, in its current form, the surtax would be higher than a previous tax on extra profits from 2021-2022 that the government levied in 2023 when the federal budget was, as it is today, suffering from a shortage of revenue amidst rapidly growing military expenditures. Previously, companies in the metals, mining, and trading sectors that were targeted by the tax were able to reduce the 10% tax burden by half if they chose to pay it early.

It is unclear which sectors will be taxed this time given that both coal mining and metallurgy have been going through a crisis over the past year. It is also unclear whether the government will allow companies to reduce their tax burden. The Finance Ministry has not commented publicly on the decision, but President Vladimir Putin tasked the government with presenting a proposal by April 10. The Kremlin is also expecting oil and gas revenues to grow (by around $9 billion, according to Reuters) in April when the first gains from the closure of the Strait of Hormuz are realized. Meanwhile, the president reportedly instructed business leaders to make voluntary contributions to the federal budget in order to allow the Kremlin to spend more money on the war in Ukraine. This indicates, as the World Bank pointed out, that even the expected extra income will not be able to completely make up for the losses of earlier months and the government’s increased spending in the first quarter of 2026. The Kremlin is finding the economy’s performance alarming enough for Putin to demand urgent action from the Central Bank and the federal government for the second time this month.

The situation is also different from 2023 in the sense that the Kremlin has pushed through two rounds of tax hikes since then. In 2024, corporate income and personal income taxes were raised, and in 2025, the government adopted a VAT hike and tax hikes for small businesses. The explicit promise was that the tax system would be stable until at least 2030. Therefore, the introduction of a new tax could exacerbate tensions between the authorities and the business elite.

— Andras Toth-Czifra

St. Petersburg authorities recently approved a plan to renovate the historic imperial stable house in the city center. The complex, known as Konnyushennoye Vedomstvo, was established in the 18th century under Peter the Great. Now, the architecture firm Studio 44 has been approved to restore the structure, eventually converting it into 60% public spaces and 40% dining areas. The rendering of the courtyard pictured here shows Studio 44’s vision for the project. Work is expected to begin by the end of this month, initially focused on demolition and structural reinforcement. (photo: gov.spb.ru)

Novaya Gazeta office raided

Russian security forces raided the Moscow editorial office of the independent news outlet Novaya Gazeta last Thursday, culminating in the arrest of investigative journalist Oleg Roldugin. According to Novaya Gazeta, masked officers began the raid at noon on April 9, and it lasted more than 13 hours in total. Roldugin’s home was also searched before he was detained, with a court later formally authorizing his arrest. He stands accused of the illegal use, transfer, or storage of personal information—part of a larger case initiated by the Ministry of Internal Affairs. According to the Ministry, Roldugin allegedly belonged to a group that illegally accessed personal data in order to publish “negative content regarding Russian citizens.” Reporting by the BBC Russian Service suggests that Roldugin may have been part of an anonymous Telegram channel called “More Than a Fact.” This channel has almost 35,000 followers and has posted, among other things, information about the private flights of individuals like Dmitry Medvedev, Alexei Mordashov, and Vladimir Yevtushenkov.

During a hearing last week, Moscow’s Tverskoy District Court ordered that Roldugin be held in pretrial detention until May 10. He pleaded not guilty to the charges, and his lawyer, Marina Andreyeva, said she has not yet been told whose personal information he allegedly obtained. If convicted, Roldugin could face up to four years in prison. Meanwhile, Novaya Gazeta confirmed that its other editorial staff are continuing their work. “We will keep you updated on the case against Oleg Roldugin as much as possible,” the outlet posted on Telegram.

The same day that Novaya Gazeta’s offices were searched, the Russian Supreme Court designated the human rights group Memorial as an “extremist organization,” banning it from operating in Russia. The move was widely criticized by activists and journalists, including freelance journalist Vladimir Sevrinovsky. “Having driven all influential opposition media out of the country, the authorities have clearly set a course in recent months to silencing the few remaining voices, who are almost inaudible,” he said.

— Sara Ashbaugh

Quickfire: Regions

Hundreds of workers from the Chinese contractor Petro-Hehua staged multi-day protests over unpaid wages in Komsomolsk-on-Amur, a city in the Far Eastern Khabarovsk Territory. The workers marched through the city and held sit-ins, appealing to both Vladimir Putin and Rosneft CEO Igor Sechin; Petro-Hehua had been working on a unit of a Rosneft-affiliated refinery before the contract was cancelled over delays. The authorities deployed Rosgvardiya and OMON riot control troops against the protesters, while China’s consulate in the city was involved in negotiations. As the incident highlights, the issue of wage arrears—which has become more prominent and widespread over the past months in sectors such as road construction, mining, and the public sector—may be spreading even into companies adjacent to the oil sector. It also shows the increasing footprint that Chinese businesses have in the Russian Far East. Additionally, it is worth noting that there have been speculations that it was Sechin’s idea for large Russian employers to make voluntary contributions to the federal budget.

Amidst rumors of his imminent dismissal, the governor of the Belgorod Region, Vyacheslav Gladkov, went on a two-week leave this week. The governor is likely staying under the radar until the Kremlin makes a decision about his future. Gladkov has been one of Russia’s most media-savvy governors over the past years. He also used to have a good working relationship with the security services, important for his ongoing project of dismantling the power structures solidified under his predecessor, Yevgeny Savchenko. More recently, however, he has spoken out against internet restrictions and attempts to ban the Telegram messaging service, which he argued complicates the defense of his region bordering Ukraine. For the past month, several news reports speculated about Gladkov’s dismissal or promotion to a federal position—usually a sign of active lobbying in Moscow—and suggested that his potential successor could be Alexander Shuvaev, a major general and Ukraine war participant from the region.

— Andras Toth-Czifra

Russia’s Drone Line Experiment

The Russian military has continued to experiment with improving its employment of uncrewed aerial systems (UAS) in support of its maneuver forces.
Both Russian and Ukrainian forces face coordination challenges and internal debates regarding the “ownership” of different depths of the battlespace and the command-and-control relationship between independent drone units and ground commanders.
While Ukraine typically leads in initial technological innovation, Russia has proven effective at copying these advancements and scaling them through systemic experiments across various military districts.
Despite narrowing the capability gap in 2025 through new employment concepts and elite units, Russian advancements have failed to produce a decisive military breakthrough.

For more from Rob and Dmytro, subscribe to Two Marines, a newsletter on Russia’s war in Ukraine, defense technology, and modern warfare.

By the numbers

39.1% - the proportion of their personal income that Russians are spending on food, according to the state statistical agency Rosstat. This is the highest indicator for the past 18 years, and it suggests that the growth in real incomes triggered by the wartime economic conjuncture has ended. In general, the lowest-income segments of the population spend the largest proportion of their income on food. High food spending is part of a wider social crisis, as households are also facing rising costs for utilities.

20% - the drop in military contract signings in Q1 2026 compared to the same period last year, according to Janis Kluge, a researcher at SWP Berlin specializing in budgetary issues. Kluge estimated, based on regional budget data, that recruitment was down to roughly 70,500 recruits for the quarter, despite signing bonuses reaching a record 1.5 million rubles per contract on average. This suggests that the pool of willing recruits is genuinely shrinking.

3.9 trillion rubles - Russian Railways’s (RZhD) debt as of the end of 2025, according to the company’s own financial records. Cargo volumes have declined since 2022, reflecting a broader crisis in the Russian economy, but also ineffective upkeep and management. Over the past months, RZhD has been engaged in debt restructuring negotiations, announced massive layoffs, and sold several of its real estate assets.

2% - Russia’s current unemployment rate, according to Central Bank Governor Elviria Nabiullina. Speaking at the Moscow Exchange Forum, Nabiullina warned that the country is facing a labor shortage for the first time in modern history. “This is a new reality for the government and for business alike,” she said, “We are facing a persistent downturn in external conditions affecting both exports and imports.” The Russian Central Bank cut its key rate by 50 bps to 15% at its last Board of Directors meeting, following a recent trend of rate cuts. The next rate decision meeting is scheduled for April 24.

175 for 175 - the number of Russian and Ukrainian POWs exchanged during an Easter prisoner swap mediated by the United Arab Emirates last weekend. According to Russian Human Rights Commissioner Tatiana Moskalkova, this included several civilians who were captured during Ukraine’s 2024 incursion into Kursk. Ukrainian President Volodymyr Zelenskyy also posted about the exchange on X. “Most have been in captivity since 2022. And finally—they are home,” he said.

— Andras Toth-Czifra & Sara Ashbaugh

Hungary for change?

Sara Ashbaugh — Sat, 11 Apr 2026 01:45:37 GMT

Here’s what you might have missed this week:

Pollsters predict major wins for the Respect and Freedom Party (TISZA) during Hungary’s legislative elections this weekend.
Major flooding has continued in the Republic of Dagestan, causing the Russian government to declare a state of emergency in the region.
Russia and Ukraine agreed to a temporary ceasefire for the Orthodox Easter holiday on Sunday.

— Sara Ashbaugh

Losing Hungary?

Hungary will hold a legislative election on Sunday, April 12. According to independent pollsters, this seems likely to result in the victory of the opposition Respect and Freedom Party (TISZA), ending the 16-year governance of the illiberal Fidesz party and its leader, Viktor Orbán. One pollster predicted a two-thirds supermajority for TISZA, which would allow the new government to change Hungary’s constitution and dismiss most high officials appointed by the current government. However, due to Hungary’s mixed and heavily gerrymandered electoral system, predictions remain difficult to make.

The race commands high interest for the Kremlin, as Orbán has long commandeered a foreign policy aligned with the Kremlin’s strategic interests. For example, Orbán has acted as a spoiler in the EU Council on matters related to sanctions and Ukraine and has served as one of the unofficial leaders of Kremlin-linked or Kremlin-aligned illiberal parties in Europe. His government also refused to expel Russian diplomats after the start of Russia’s full-scale invasion and denied a Russian intel op targeting the servers of the Hungarian Ministry of Foreign Affairs in 2021. According to wiretapped conversations between Foreign Minister Péter Szíjjártó and his Russian counterpart (and “friend”) Sergey Lavrov, as well as between Orbán and Vladimir Putin himself, the government regularly informed and coordinated with the Kremlin and the Russian Ministry of Foreign Affairs about EU discussions regarding sanctions and the war in Ukraine.

Prior to this year’s election, Orbán’s government built a propaganda campaign demonizing Ukrainians and accusing the Ukrainian government of meddling in favor of the opposition. To this end, they used secret service methods and also refused to repair the Druzhba oil pipeline, which was bombed by the Russian military. Meanwhile, recent reporting suggests that the GRU, Russia’s military intelligence, deployed a task force to help Orbán win the election and even suggested staging an assassination attempt (which was eventually rejected). On April 5, Orbán and the Serbian government announced that explosives were found south of the border of the two countries near the TurkStream gas pipeline carrying Russian gas to Hungary. The Hungarian Prime Minister hinted at Ukrainian involvement, while the opposition, along with Hungarian analysts, suggested that it was a false-flag operation. Other potential false flag operations may still be planned, especially given the several weeks-long transitory period between the election and the earliest date when the new government can be voted in by the new parliament.

Orbán’s defeat, which, according to Meduza’s Kremlin sources, is now considered a likely outcome in Moscow, would be a major loss for the Kremlin in European politics. However, its full significance will ultimately depend on two factors. First, it will depend on whether Fidesz loses in a way that leaves either Orbán (or a similarly Kremlin-friendly successor) with a relatively easy path back to power—as was the case with other Central European illiberal leaders who lost elections, such as Slovak Prime Minister Robert Fico or Czech Prime Minister Andrej Babiš—due, for instance, to a slim parliamentary majority for the incoming government and its resulting inability to remove Fidesz-appointed cadres and govern in a stable manner. Second, it will depend on how quickly and decisively a new government moves on issues of direct concern to the Kremlin, such as cracking down on Russian intelligence infrastructure in Hungary and opening investigations into corruption networks and cyber intrusions.

Péter Magyar, the leader of TISZA, campaigned on bread-and-butter issues and fighting corruption. He has only recently shown bolder opposition to the Russian government publicly, focusing on the alleged GRU involvement and the servility of the current government exposed by the leaked calls. Even so, TISZA’s program does not foresee Hungary giving up on Russian energy imports, only a diversification over the next decade and an audit of the Paks 2 nuclear power plant project led by Rosatom. Magyar has also carefully avoided centering the war in Ukraine in his public statements, and there is no indication that the new government would take a complete U-turn on the issue, even if it were to be altogether less disruptive in the EU Council and stricter on corruption (which is to be expected, given that much of the party’s promises rely on a new government being able to unblock EU development funds).

It is also worth noting that even without Orbán in office, Russia would retain other, albeit less direct, leverage points in the EU: illiberal parties across Europe nearing governance mandates, an ongoing sabotage campaign designed to exploit disillusionment with the state of public infrastructure, and centrist governments.

— Andras Toth-Czifra

Two weeks of heavy rainfall have led to massive flooding in the Republic of Dagestan, with six people reported dead and thousands evacuated. On Thursday, the federal government introduced a state of emergency in the region, and rescue crews have been working tirelessly to help those trapped by the floods. More on this story below. (photo: Russian Emergency Situations Ministry)

Quickfire: Regions

Floods in the Republic of Dagestan intensified over the past week, triggering the introduction of a federal state of emergency. The disaster has officially claimed the lives of six people and affected tens of thousands, with more than 3,000 evacuated. The damage to agricultural land is still being assessed, especially with further torrential rain forecasted to hit the region in April and with a dam failure affecting a major irrigation canal in the region. The regional government’s initial damage estimate is 10 billion rubles. Funds for reconstruction will have to come from federal sources given that Dagestan is a highly subsidized region, relying on the federal budget for roughly two-thirds of its revenues. On the orders of Vladimir Putin, the disaster response is being led by Alexander Kurenkov, the federal Minister of Emergency Situations. Additionally, the floods have led to rumors about the imminent dismissal of Governor Sergey Melikov, who blamed the situation on property owners. The floods have also caused growing damage in other regions, including Chechnya, a neighbor of Dagestan, and the Siberian regions of Kemerovo, Omsk, Novosibirsk, and the Altai Territory.

Reports from several regions suggest reduced or delayed wages for public employees after the first months of the year saw the continuation of severe fiscal shortages in many Russian regions. Tuva Governor Vladislav Khovalyg acknowledged systematic problems with salary payments to teachers in the Republic, becoming at least the eleventh region in the past months to experience such delays. In the Kemerovo Region, which is entering its third year of severe fiscal problems, schools are reportedly planning to cut premiums paid to teachers from next month on, after the region’s budget registered a deficit widening beyond fiscal plans in the first three months of the year. The region previously cut its expenditures on education by a fifth in its 2026 budget. Wage arrears and staff cuts affecting state-owned organizations and public institutions have also been reported from the Altai Territory and the Novosibirsk Region.

— Andras Toth-Czifra

Easter ceasefire

Russia and Ukraine agreed to a temporary ceasefire for the Orthodox Easter holiday this weekend. On Thursday, the Kremlin announced that there will be a pause in fighting from Saturday afternoon through Sunday evening, adding, “We assume that the Ukrainian side will follow the example of the Russian Federation.” Ukrainian President Zelenskyy also confirmed the ceasefire, posting on X, “People need an Easter free from threats and real progress toward peace, and Russia has a chance to avoid returning to hostilities after Easter.”

Zelenskyy was the first to propose the idea of a ceasefire during Easter. He suggested a moratorium on strikes against energy infrastructure for the holiday weekend, saying, “If Russia is ready to stop strikes on our energy infrastructure, we will be ready to respond in kind.” The Kremlin initially dismissed this proposal, claiming it was too vague. “We don’t see any clearly articulated initiative for an Easter ceasefire based on Zelenskyy’s statements,” Kremlin spokesperson Dmitry Peskov said. Now, however, Russia has assented to the temporary truce, although it still maintains that its troops are “prepared to counter any possible provocations by the enemy.”

Russia unilaterally declared a ceasefire during the Easter holiday last year, which both sides accused each other of violating. Ukrainian soldiers interviewed by the BBC remained skeptical that this year’s ceasefire will be any different.

— Sara Ashbaugh

Russia’s Drone Line Experiment

The Russian military has continued to experiment with improving its employment of uncrewed aerial systems (UAS) in support of its maneuver forces.
Both Russian and Ukrainian forces face coordination challenges and internal debates regarding the “ownership” of different depths of the battlespace and the command-and-control relationship between independent drone units and ground commanders.
While Ukraine typically leads in initial technological innovation, Russia has proven effective at copying these advancements and scaling them through systemic experiments across various military districts.
Despite narrowing the capability gap in 2025 through new employment concepts and elite units, Russian advancements have failed to produce a decisive military breakthrough.

For more from Rob and Dmytro, subscribe to Two Marines, a newsletter on Russia’s war in Ukraine, defense technology, and modern warfare.

By the numbers

4.576 trillion rubles - Russia’s federal budget deficit in the first three months of the year. This is significantly higher than the deficit foreseen for the whole of 2026 (3.78 trillion). According to the Finance Ministry, the deficit, which is also 2.6 trillion rubles bigger than at the same point last year, reflects the advance financing of certain contracts. However, the federal budget has not yet registered its windfalls from the oil price boom triggered by the U.S.-Israeli war on Iran. These windfalls should lead to a narrowing of the budget gap in April despite increased spending, even as Russia’s main oil exporting ports continue operating below capacity.
95% - the blocking rate of the Telegram messaging and information sharing app across Russia as of April 10, according to the OONI international monitoring project. Over the past week, the Russian authorities have ramped up restrictions on the app as an initial cohort of regional leaders moved their communication over to the government-controlled MAX messenger. The Telegram ban has led to protests and rare public criticism, even from the administrative elite.
14 years - the prison sentence of former Kursk Governor Alexey Smirnov in a corruption case regarding kickbacks he received during the construction of defensive fortifications in Kursk prior to Ukraine’s 2024 incursion. Smirnov’s deputy, Alexey Dedov, was sentenced to 17 years. Smirnov previously stated that his predecessor, Roman Starovoit (who committed suicide last year), was at the top of the corruption chain.
$116 - the price per barrel of Urals crude oil last week, the highest it has been in more than 10 years, according to reporting by Bloomberg. This is a 230% increase over the past four months—the price was only $40 per barrel in December. The war in Iran has affected global oil supply, resulting in higher overall oil prices. Additionally, in March, the U.S. issued a temporary sanctions waiver on the purchase of Russian oil and petroleum products. Russia has benefited from the higher global oil prices and will use the windfall revenue to shore up its federal budget.

— Andras Toth-Czifra & Sara Ashbaugh

A slow ban

Sara Ashbaugh — Sat, 04 Apr 2026 02:45:10 GMT

Here’s what you might have missed this week:

Russian authorities have continued to restrict internet freedoms across the country, although the messaging app Telegram has not yet been fully blocked.
A shipment of 100,000 tons of Russian crude oil reached Cuba on Tuesday after the U.S. loosened its blockade.
Recent Ukrainian drone attacks on Russia’s Baltic ports have significantly reduced current oil export capacity.

— Sara Ashbaugh

Caution to the wind?

According to earlier reporting, Russian authorities were going to implement a complete ban of the Telegram messaging and news-sharing service in early April. However, as of April 3, the messenger is still working in the country, albeit with outages and disruptions. Government-linked Telegram channels are also still operating. It is unclear whether the authorities are unable or unwilling to completely block access to the application. The planned ban, part of broader measures to restrict digital freedoms before this year’s Duma elections in September, triggered criticism even from government officials and Kremlin-aligned public personalities and led to protests in several regions. Crucially, the Federal Anti-Monopoly Service (FAS) issued a temporary ruling that companies would not face penalties for advertising on Telegram and YouTube until the end of this year—a tacit acknowledgement that forcing an immediate advertising exodus is impractical and risky.

The authorities seem to mostly disregard the negative effects of the proposed ban on public mood, relying primarily on repressive measures and the lack of an effective political alternative to limit public dissatisfaction. Over the past weeks, at least 46 applications to hold protest rallies were rejected by authorities across Russia, mostly on technicalities. In Tomsk, Kaluga, Moscow, Novosibirsk, Sochi, and Murmansk, activists and protest organizers were detained, fined, or threatened by the authorities. Some smaller protests went ahead nonetheless. The government’s heavy-handed approach seems to have worsened public mood enough to damage the approval ratings of both the governing United Russia party and Vladimir Putin himself, as measured by Kremlin-aligned pollsters.

At the same time, the government has continued to implement its legislative agenda to restrict access to information online. The Ministry of Digital Development proposed that telecom operators charge users for international traffic exceeding 15GB per month (effectively limiting VPN traffic). The Ministry is also reportedly exploring administrative liability for VPN use and has asked platforms to restrict access to users connecting via these tools. There is a plan to empower the Federal Security Service (FSB) to identify IT companies that allow VPN traffic and subject them to restrictions and the suspension of certain privileges. These legislative proposals were announced in such quick succession that the First Deputy Chair of the Committee on Information Policy, Anton Gorelkin, had to publicly deny that any full VPN ban or criminal liability for VPN use had been discussed in the Duma.

Internet restrictions have been front and center in public politics recently, but they are not the only source of simmering discontent that the federal government may be worried about. Protests by farmers across the country, prompted last month by a massive culling related to a still-unspecified disease outbreak, continued over the past week. Farmers from at least six regions—Novosibirsk, Moscow, Arkhangelsk, Omsk, Penza, and Udmurtia—submitted formal appeals to the Presidential Administration and the Russian legislature, while a delegation brought 31,000 signatures to Moscow demanding an end to the “punitive veterinary measures.” The protests have attracted supporters outside of the regions where they started, with protesters actively seeking support on online platforms. This makes the issue one of the smaller, but accumulating, sources of political risk for the Kremlin ahead of the September vote, especially as the federal government reportedly also prepares to reduce farming subsidies.

— Andras Toth-Cizfra

Russia’s Federal Security Service (FSB) found an explosive device hidden in an electric scooter outside of a Moscow business center on Friday. According to the FSB, the scooter bomb was part of a “high profile terrorist attack” planned by the Ukrainian Security Service (SBU) to target an unnamed law enforcement official. The SBU has not responded to these allegations. A video released by the Russian state media agency TASS shows an FSB bomb squad dismantling the scooter, which reportedly contained 1.5 kg of plastic explosives and a remote detonation system. The planned attack was similar to the one that killed Lieutenant General Igor Kirillov and Major Ilya Polikarpov in December 2024, which also involved explosives planted in an electric scooter. (photo: FSB)

Updates: Russian oil tankers

A little over a week after the Libyan National Oil Corporation (NOC) announced that it would tow Russia’s Arctic Metagaz LNG tanker to port, the company reported that its towing operation had failed. The Arctic Metagaz was severely damaged in an alleged Ukrainian attack over a month ago, and it has been drifting aimlessly in the Mediterranean Sea ever since. The abandoned ship’s fuel and cargo pose a serious environmental threat; the Arctic Metagaz contained 700 tons of fuel and “a significant amount” of natural gas at the time it was damaged, according to Russian authorities. Libya’s Ports and Maritime Transport Authority reported that the NOC’s towing operation failed due to inclement weather. “The tanker is out of control, and the tugboat is unable to return to re-tie it under these hazardous ⁠weather conditions,” the Authority said on Thursday. It is unclear if or when the towing operation will resume.

A shipment of Russian crude oil reached Cuba this week—the first significant fuel delivery to the island since a U.S. blockade cut off its supply nearly three months ago. The Anatoly Kolodkin, a Russian tanker carrying approximately 100,000 tons of crude oil, docked at Cuba’s Matanzas terminal on Tuesday. President Trump walked back the U.S. blockade against Cuba only a few days earlier, telling reporters on Sunday, “If a country wants to send some oil into Cuba right now, I have no problem with that.” The Trump administration will review future shipments on a “case-by-case basis,” White House Press Secretary Karoline Leavitt said, although she also noted that “there’s been no firm change in our sanctions policy.” Russia also announced that it will send a second shipment of crude oil to Cuba. In the meantime, according to the Cuban Foreign Ministry, it will take about a month for the crude oil from the Anatoly Kolodkin to be processed and distributed.

— Sara Ashbaugh

Quickfire: Regions

A series of successful drone attacks by the Ukrainian military over the past weeks has reduced Russian oil exporting capacity by a fifth, according to industry sources quoted by Reuters. In particular, Ukraine targeted the Baltic ports of Ust-Luga and Primorsk, major oil export hubs. The gas company Novatek announced that its operations at its Ust-Luga gas condensate complex have been suspended, affecting the export of naphtha and gas condensate. The purpose of the attacks is undoubtedly to reduce Russia’s gains from the effects of the ongoing Iran War. In parallel, Ukrainian drones also hit refineries in Russia, namely Surgutneftegaz’s Kinef refinery in the Leningrad Region and Bashneft’s refinery in Ufa, the capital of Bashkortostan. Official sources reported a massive explosion and fire at the Nizhnekamskneftekhim petrochemical plant in Tatarstan, although they did not attribute it directly to the drone campaign. Due to the drone attacks and ongoing maintenance, Russia reinstated a gasoline export ban starting April 1. However, this does not solve the problems stemming from the degradation of Russia’s oil export infrastructure, namely the overloading of Transneft’s pipelines.

The most severe floods in a century struck the southern Russian region of Dagestan over the past weekend. Over 3,300 people were evacuated, more than 500,000 consumers lost power, and a state of emergency was declared in multiple cities. Two other regions in the North Caucasus, Chechnya and Ingushetia, also declared states of emergency. Meteorologists have warned that the flooding in the North Caucasus will not subside until early summer. Meanwhile, several Siberian regions—primarily Irkutsk and Omsk—have also reported severe flooding, with authorities estimating that a total of 260,000 Siberian residents could be at risk in the coming weeks. Floods increase political risks for local and regional governments as well, since budget cuts affecting maintenance and emergency services in several regions have made natural disasters even more dangerous for residents. Two years ago, a dam collapse in the Orenburg Region town of Orsk led to weeks of protests and calls for the local and regional authorities to be held accountable.

— Andras Toth-Cizfra

From Tehran to Donbas: What the Iran War means for Russia and Ukraine

By Robert Person, FPRI Senior Fellow

The sudden outbreak of war in in Iran has snapped the world’s attention away from Eastern Europe toward the Persian Gulf and wider Middle East. Yet for Ukraine, the implications of this new conflict are anything but peripheral. The war in Iran will shape the availability of critical air-defense systems, alter the flow and price of oil that finances Russia’s war machine, and absorb Western diplomatic bandwidth precisely when Kyiv is trying to claw back territory and resist pressure for a premature settlement. In many respects, this new war makes it easier for Moscow to keep fighting in Ukraine—and harder for Ukraine to secure the weapons and diplomatic support it needs to win.

What follows sketches how the Iran War intersects with the Russia-Ukraine War along three key dimensions—military hardware, energy markets, and diplomacy—with a brief look at what it reveals about Russia’s actual great-power reach and the risks of rising isolationism in U.S. politics.

Continue reading on FPRI

By the numbers

2 to 5 - the number of potential military recruits that companies with at least 150 employees need to identify in the Ryazan Region, according to a decree signed by Governor Pavel Malkov. Regional authorities often rely on business elite to implement federally mandated policies (such as vaccination, recruitment, or veteran reintegration). However, Malkov’s decree is the first of its kind in its openness and may be used as a blueprint in other regions as the Kremlin tries to avoid military mobilization. Separately, Russia’s universities reportedly received informal quotas requiring that 2% of male students sign military contracts.
-73% - the decline in Rosneft’s net profit between 2024 and 2025. The company’s press statement attributed this decline to falling oil prices and the strengthening of the ruble, but also noted that the Central Bank’s slow rate-cutting has affected the company negatively. Rosneft’s chair has long criticized the Bank’s rate policy.
-1.8% - Russia’s GDP contraction in January and February 2026 year-on-year, according to figures from the Ministry of Economic Development. Business climate indicators (such as manufacturing PMI and the Central Bank’s business climate survey) suggest that the Russian economy entered a recession in early 2026 comparable in severity to the shocks of 2015 and 2022. This figure was recorded before the Iran War.

— Andras Toth-Cizfra

Rude crude

Sara Ashbaugh — Sat, 28 Mar 2026 02:02:45 GMT

Here’s what you might have missed this week:

President Putin acknowledged Russia’s economic struggles during a speech on Monday.
The Telegram channel “Scarlet Swan” is encouraging Russians to protest internet outages on March 29.
Livestock farmers in the village of Kozikha were forced to cull their cows due to disease concerns.

— Sara Ashbaugh

Ain’t no crude oil dear enough

In remarks made on March 23, President Vladimir Putin acknowledged that the Russian economy is contracting. In January 2026, Russia’s economic output was 2.1% lower than a year prior, with Russia’s industrial productivity index also falling. These figures were recorded before the start of the Iran War, which led to a hike in global oil prices and a temporary suspension of U.S. sanctions on Russian oil. Putin attributed January’s figures to the calendar effect, while urging the Russian government to spend its new windfall revenues in a way that makes the budget more sustainable. The federal government also paused a review of the so-called “budget rule,” which governs how windfall energy revenues are used, due to higher oil prices.

However, even with the oil windfall, expectations regarding the Russian economy remain gloomy. This week, Central Bank Governor Elvira Nabiullina warned that—as Bear Market Brief also noted—a protracted war in the Middle East can easily turn into a net negative for the Russian economy due to higher import prices and an overall reduction in demand for Russia’s commodities (in case of a global recession). The war has also interfered with the Central Bank’s rate reduction plans, causing the Bank to cut rates slower than expected. Putin himself was more cautious when discussing the economy with the Russian Union of Industrialists and Entrepreneurs on March 26, emphasizing the uncertainty that the Iran War has created and promising to develop measures to improve the business climate (albeit mainly through digitization, not by addressing issues with property rights, labor shortages, shifting taxation regimes, and the military industrial complex siphoning resources away from the civilian economy).

According to Rosstat, industrial production fell by another 0.9 points in February, with metallurgy contracting in an accelerated manner. Overall, 22 out of 28 sectors experienced a reduction in output. The Industrial Optimism Index, calculated by the Russian Academy of Sciences (RAS), declined to -20 points in March, the worst it has been since April 2020. The Center for Macroeconomic Analysis and Short-Term Forecasting (TsMAKP), a Kremlin-linked think tank, forecasted a recession before the end of 2026 in a report quoted in the Russian press last week. A survey by Opora Rossii, a business association, found that nearly 45% of small and medium-sized enterprises—important engines of the domestic economy—ended 2025 with either losses or zero profit, and almost all of them complained about a worsening business climate.

Despite the recent tax hikes and expected windfall revenues, which will be realized at the level of the federal budget in April and afterwards, Putin also reportedly asked large businesses to make voluntary contributions to the federal budget. Three years ago, the federal government also turned to large businesses with a request to shore up public finances and to finance the war in Ukraine before opting for major tax hikes instead. Beyond its (likely relatively small) fiscal effect, this could also be interpreted as a loyalty test at a time when the Russian economy is struggling with major structural problems and a quick resolution to the war in Ukraine is not in sight.

— Andras Toth-Czifra

This photo, taken on March 15, 2026, shows the Russian liquified natural gas (LNG) carrier Arctic Metagaz adrift in the Mediterranean Sea. The tanker was damaged in an attack on March 3 and subsequently abandoned by its crew. The sanctioned vessel was on its way from Russia to Egypt with an estimated 62,000 tons of LNG when it was hit. Since then, it has been drifting aimlessly in the Mediterranean Sea, with EU authorities warning that it poses a serious environmental threat. On Saturday, the Libyan National Oil Corporation (NOC) announced that it will tow the ship to a Libyan port with help from the Italian energy company Eni. (photo: Miguela Xuereb / Newsbook Malta / AFP)

Scarlet Swan rally

Members of an anonymous Telegram channel called “Scarlet Swan” have been encouraging Russians to protest increasingly restricted internet access during a mass demonstration planned for March 29. Videos have been circulating on social media sites such as TikTok and Telegram advertising the protest, sometimes using coded language. According to the news outlet 7x7, activists in at least 28 cities in 17 regions have requested permission from local authorities to stage protests on that day, most of which have been denied under various pretexts.

Dmitry Kisiev, the former head of Boris Nadezhin’s 2024 presidential campaign, first introduced the idea of holding a mass protest on March 29. Kisiev, who currently lives abroad, said he chose March 29 as “a symbolic reference to Article 29 of the Constitution,” which guarantees freedom of speech. This “Rally Against Internet and Communication Blockades” will protest the internet disruptions that have been occurring in Moscow and the Russian regions to “send a strong signal to the authorities that they have gone too far,” according to Kisiev.

The same day that Kisiev posted about the protest on Telegram, videos began circulating on TikTok. These AI-generated videos encouraged Russians to attend the March 29 protest, including voiceovers with messages like, “We won’t let our grandfathers take us back to the 20th century.” Others suggested looking for a “runaway cat” together on March 29, with links to the Telegram channel “Scarlet Swan.” As stated in the channel’s description, the group supports “a free information space” and “the constitutional rights to freedom of speech and peaceful assembly.” There have been rumors that the channel itself is connected to the Russian Security Service (FSB), although its alleged members denied any connection to the FSB when asked by the independent media outlet Bereg. Kisiev has also denied any association with the group.

The Interior Ministry has preemptively warned Russians against protesting March 27-29. The Ministry released a statement reiterating that “participation in unauthorized events and involving others (including minors) in them will result in administrative and criminal charges.”

— Sara Ashbaugh

Quickfire: Regions

Livestock owners in the Novosibirsk Region village of Kozikha were forced to give up their resistance to culling their cows by the regional authorities. The cullings, justified by ill-defined and poorly communicated disease control measures (due to an outbreak of rabies and pasteurellosis), have affected many meat and dairy producers in several Siberian regions and triggered protests by small farmers. Rumors have circulated about an ostensible plot to bankrupt smaller producers in favor of larger, more politically connected players and about the real cause of the cullings being an outbreak of foot-and-mouth disease. Although neither of these rumors have been confirmed, they reflect farmers’ general distrust of the authorities and their awareness of trends in the Russian economy, such as the ongoing redistribution of valuable domestic assets. In several localities, residents and online influencers have mounted protests and appealed to the Kremlin, while the authorities have taken action against protest leaders and sympathizers. Protesters have also complained that the compensation and social support payments offered so far are insufficient to cover their needs and restart production. In the Novosibirsk Region specifically, regional authorities have allocated 200 million rubles for compensation. The region’s budget, already strained before the outbreak, will likely face cuts in April.

A Kemerovo Region court ordered Severny Kuzbass, one of the region’s mining enterprises, to pay 8 million rubles to miners whose wages went unpaid last year as the industry’s problems accumulated, as well as moral compensation. This is just one of several cases in the region, which are not exclusive to the coal sector; Sibenergosila, a power distribution company, also recently settled a 282-million-ruble debt with its employees following the intervention of the Prosecution. Over the past weeks, there have been several media reports from other regions as well. For example, cases are appearing in the Sakha Republic, whose coal industry initially did not experience problems as major as the crisis in the Kemerovo Region. In total, wage arrears across Russia reached 1.86 billion rubles in January 2026, according to official statistics. This is not particularly high in historical comparison but is a five-fold growth compared to the same period in 2025. It is most often construction companies that become indebted to their employees, but the coal crisis that started in 2024 led to the suspension or closure of several mines in Kemerovo and other regions, increasing salary arrears in coal mining and linked sectors. In 2026, according to the Energy Ministry, the sector’s cumulative losses could reach 576 billion rubles.

— Andras Toth-Czifra

From Tehran to Donbas: What the Iran War Means for Russia and Ukraine

By Robert Person, FPRI Senior Fellow

What follows sketches how the Iran war intersects with the Russia-Ukraine war along three key dimensions—military hardware, energy markets, and diplomacy—with a brief look at what it reveals about Russia’s actual great-power reach and the risks of rising isolationism in U.S. politics.

Continue reading on FPRI

Numbers of the week:

10 years - the new statute of limitations on privatization cases, according to a bill approved by the Russian government. The bill attempts to mitigate businesses’ growing concerns over asset seizures. The 10-year limit will apply not only to future claims but also to existing cases where a final court decision has not yet been reached. However, the scope of assets is unclear, according to legal experts, and the law provides a number of exceptions for the authorities. This signals that the goal is likely to limit excesses, not to fundamentally change the policy.
14,500 - the estimated shortage of civilian drone specialists in Russia. Most of the vacancies are for drone operators, but the industry also lacks technical personnel, and the Russian government estimates that the demand will only grow. Drone operators in civilian sectors is just one example of the military industrial complex siphoning labor from civilian industry, exacerbating pre-existing labor shortages while the federal budget has cut funding for Russia’s civilian drone program.
389 - the number of Ukrainian drones that targeted Russia on March 24. This is the largest reported number of Ukrainian drones in a single night during the war, highlighting Ukraine’s continuously evolving drone warfare capabilities. The drones targeted facilities in 13 regions, most of them in the Leningrad Region bordering St. Petersburg and the Belgorod Region bordering Ukraine.
40% - the amount by which Russia’s oil export capacity is currently diminished, according to calculations by Reuters. In recent weeks, Ukraine has been targeting Russia’s oil infrastructure—including ports, pipelines, and tankers—in a conscious attempt to limit Moscow’s oil and gas revenues. Ukraine’s large drone attack overnight on Tuesday hit the Baltic Sea ports of Primorsk and Ust-Luga. Since then, both ports have been forced to halt operations, limiting oil exports by a combined 1.7 million barrels per day.
15 - the number of Zimbabwe nationals who have been killed fighting for Russia in the war against Ukraine, according to Zimbabwe’s Information Minister Zhemu Soda. Soda said that Zimbabweans are tricked into traveling to Russia for fake job opportunities, calling it “a sophisticated scheme of deception, exploitation, and human trafficking.” Zimbabwe is not the only African country involved; according to Ukrainian intelligence, more than 1,700 people from 36 African countries have been recruited to fight for Russia.

— Andras Toth-Czifra & Sara Ashbaugh

Havana ooh na-na

Sara Ashbaugh — Sat, 21 Mar 2026 02:45:39 GMT

Here’s what you might have missed this week:

Russia is likely attempting to send oil to Cuba in defiance of a U.S. energy blockade.
A Russian film, “Mr. Nobody Against Putin,” won the Oscar for Best Documentary Feature Film during the 98th Academy Awards on Sunday.
The Central Bank of Russia reduced the key rate by 50 bps to 15% during its Board of Directors meeting on Friday.

— Sara Ashbaugh

Russia sending oil to Cuba?

A tanker full of Russian oil may be headed to Cuba in defiance of a U.S. blockade. According to The Financial Times, Russia dispatched a shipment of gas on a Hong Kong-flagged tanker, the Sea Horse, and a shipment of oil on a Russian tanker, the Anatoly Kolodkin, likely intended for Cuba to support the country during its ongoing energy crisis. Cuba has not received any significant energy shipments since January 9, after the U.S. captured Venezuelan President Nicolas Maduro and took control of Venezuela’s oil exports. Cuba, which relied on Venezuelan oil, is facing a severe economic crisis, exacerbated by the U.S. blocking any other countries from supplying it with oil under threat of tariffs. U.S. President Trump has also questioned Cuba’s sovereignty, saying he will “take” the Caribbean island. “Whether I free it, take it, I think I could do anything I want with it, if you want to know the truth. They are a very weakened nation right now,” he told reporters on Monday. Cuba is experiencing near-daily blackouts, and officials have warned that its power grid is on the verge of collapse.

According to reporting by The New York Times, the Sea Horse, which was carrying nearly 200,000 barrels of gas and was predicted to arrive in Cuba on March 23, abruptly stopped in the middle of the Atlantic Ocean last month. An anonymous source told NYT that its Chinese owners feared retaliation by the U.S. government if the ship completed its delivery to Cuba. After drifting in the Atlantic for three weeks, the Sea Horse is reportedly now looking for a different buyer.

Meanwhile, the Anatoly Kolodkin may reach Cuba as early as next week. According to the analytics company Kpler, the Anatoly Kolodkin departed from Primorsk, Russia, on March 9, listing “Atlantis, U.S.A.” as its destination. The sanctioned ship is carrying approximately 730,000 barrels of crude oil, which could support Cuba’s energy needs for weeks. Cuba needs an estimated 100,000 barrels of oil per day, and it produces roughly 40,000 domestically. However, the crude oil from the Anatoly Kolodkin would need to be refined before it could be used—a lengthy and inefficient process for Cuban refineries, according to the University of Texas’s Jorge Piñón. When asked about the crisis in Cuba, Kremlin spokesperson Dmitry Peskov promised that Russia was “ready to provide all possible assistance.” “Cuba is an independent sovereign state that faces major economic difficulties due to the suffocating embargo imposed on the country,” Peskov said.

— Sara Ashbaugh

The Russian film “Mr. Nobody Against Putin” won the Oscar for Best Documentary Feature Film during the 98th Academy Awards on Sunday. The documentary is about a Russian schoolteacher, Pavel Talankin, who secretly filmed his school’s transformation into a vehicle for state propaganda following Russia’s invasion of Ukraine. Talankin is pictured here celebrating after the ceremony. “In the name of our future, in the name of all of our children, stop all of these wars now,” he said during his acceptance speech. (photo: Angela Weiss / AFP)

Key rate decision

The Central Bank of Russia (CBR) once again lowered the key rate during its Board of Directors meeting on Friday. This is the Bank’s seventh consecutive key rate cut, after the rate was raised to a two-decade high of 21% in September 2024. Since then, the CBR has been working to combat price increases with tight monetary policy in order to return inflation to its 4% target. According to the Bank, annual inflation is currently 5.9%, but it is expected to reduce to 4.5-5.5% by the end of 2026. “The economy is approaching a balanced growth path,” the CBR said in its press release on Friday, explaining its decision to reduce the rate by 50 bps to 15%. Although there was significant price growth in January and February of this year due to “one-off factors,” such as the recent VAT increase, an overall downward trend in inflation has reemerged.

However, the escalating conflict in the Middle East may have negative effects on Russia’s economy. “Uncertainty regarding the external environment has increased considerably,” the CBR’s press release notes, and CBR Governor Elviria Nabiullina expanded on this idea during her press briefing. “In the long run, the situation in the Middle East might adversely affect both global demand and investment growth prospects, accelerate inflation in economies importing energy commodities, and disrupt supply chains,” she said. Increased demand for Russian crude oil may prop up the ruble and support Russia’s federal budget, but high geopolitical tension is also likely to exacerbate pro-inflationary risks and increase global economic uncertainty. While the Bank is expected to continue to reduce the rate at its future Board of Directors meetings, its decision will depend on the impact of geopolitical tension on the global economy.

The CBR’s next key rate meeting is scheduled for April 24, 2026.

— Sara Ashbaugh

From Tehran to Donbas: What the Iran War Means for Russia and Ukraine

By Robert Person, FPRI Senior Fellow

Continue reading on FPRI

Numbers of the week

250 - the number of Belarusian political prisoners freed as part of a U.S. deal with Belarus. In exchange for freeing the prisoners, the U.S. agreed to remove sanctions from several Belarusian companies and government entities, such as banks, fertilizer producers, and the Belarusian Finance Ministry. Several high profile prisoners were released in the exchange, including human rights activists Valentin Stefanovich, Marfa Rabkova, and Anastasiya Loika, according to Belarusian rights group Viasna.
1.06 trillion rubles ($12.5 billion) - Lukoil’s net losses in 2025. The oil giant was forced to initiate a sell off of its international assets, valued at $22 billion, when the U.S. imposed sanctions on it in October 2025. According to the company, it reached a preliminary agreement to sell it foreign assets to the U.S.-based Carlyle Group, but no deal has been finalized. In February, the U.S. Office of Foreign Assets Control extended the license for Lukoil to sell its assets overseas until April 1, in order to “facilitate ongoing negotiations with Lukoil and to reach a deal that supports President [Donald] Trump’s efforts to deprive Russia of the revenue it needs to support its war machine and to achieve peace,” according to an anonymous U.S. official.
12 - the number of medals Russian athletes won at this year’s Winter Paralympics, making Russia the third-highest country in medal standings overall. Six Russian athletes competed in a total of 18 medal events, including cross-country skiing, alpine skiing, and para-snowboarding. President Putin congratulated the Russian team in a national address, calling their participation in the Games “one of the brightest pages in the history of world paralympic sports.” He also noted that this was the first time in 12 years that Russian athletes have competed in the Paralympic Games under their own flag.

— Sara Ashbaugh

Oil and water

Sara Ashbaugh — Sat, 14 Mar 2026 03:10:18 GMT

Here’s what you may have missed this week:

Demand for Russian crude oil increased due to the war in the Middle East.
Sweden intercepted and boarded two ships, the Sea Owl I and the Caffa, suspected of belonging to Russia’s shadow fleet.
Severe mobile internet disruptions in Moscow have impacted businesses in the Russian capital.

— Sara Ashbaugh

A beneficiary of the Iran War—for now?

Russian politicians and businesses continue to react to the ongoing warfare in the Middle East, as the United States and Israel carry on attacking Iran. In response, Iran has attacked various Middle Eastern nations and kept the Strait of Hormuz under blockade.

Russia’s most immediate benefit from the situation is a sharp rise in interest to buy Russian crude oil. The Financial Times estimated that, based on industry data and experts’ assessments, the Russian budget stands to receive an additional $110-160 million windfall revenue per day. The price of Urals crude oil has moved above $70 per barrel and Indian buyers have bought 30 million barrels using a sanctions waiver from the United States (even though the country’s largest bank has refused to process oil-related payments). On Thursday, U.S. Treasury Secretary Scott Bessent announced another general 30-day waiver.

This comes after an especially dire February for Russian oil exports. The country earned a mere $9.5 billion from oil exports in February—the lowest it has been since 2022. As such, the situation provides much-needed breathing space for the federal budget. Facing a ballooning deficit, the government was planning to cut non-essential expenditures by 10%. In the medium term, by undermining the effect of previous oil sanctions against Russia and normalizing sanctions waivers, the war in the Middle East may make it easier for Russia to argue for a permanent suspension of sanctions on Russian oil and possibly gas. Kremlin Envoy Kirill Dmitriev, on a trip to the United States to hold negotiations with U.S. Envoy Steve Witkoff, may already be doing this.

In the short term, as the business daily Kommersant reported, demand for Russian aluminum and fertilizers—two further sectors that have suffered from the consequences of Russia’s war—may rise. On the other hand, the blockade of the Strait of Hormuz also hurts Russia’s own struggling export-oriented industries, such as metallurgy, by adding freight costs. While Russian officials have used the opportunity to tout the Northern Sea Route as an alternative, Russia has so far not built the necessary infrastructure and technology to make this route viable at scale and year-round. It is worth noting that, along with a range of energy projects, the war has also led to a halt of the development of the North-South Transport Corridor, a Russian-Iranian project whose purpose is to link Russia to South Asian markets.

In its less immediate effects, the Iran war, if it grows into a protracted conflict, may also contribute to the exhaustion of the U.S. military industrial complex, giving it less resources and attention to spend on the war in Ukraine. This is especially beneficial for Russia if the credibility of the U.S. military is also undermined, which is likely one reason why Russia is reportedly sharing intelligence and training with the Iranian military. Furthermore, the war, as long as its aims are unclear and its means harm the civilian population, can further undermine the U.S.’s standing as a peacemaker or guarantor of the global order. However, since the war in Ukraine is a clear priority for the Kremlin, decision-makers are also likely wary of upsetting the Kremlin’s relationship with the Trump administration. Upsetting the U.S. may result in backlash against Russia and less willingness to consider a peace agreement on Russia’s terms.

— Andras Toth-Czifra

The Russian Investigative Committee has filed criminal charges against officials in the Netherlands and Ukraine in relation to a group of gold artifacts from Crimea, including the spiraling torque pictured here. The ancient Scythian artifacts were sent on loan to Amsterdam’s Allard Pierson Museum in 2013. In 2023, the items were returned to Ukraine in accordance with a ruling by the Netherlands’s Supreme Court. However, Russia’s Investigative Committee argues that, due to Russia’s occupation of Crimea, the artifacts belong to Russia instead. “All circumstances surrounding the incident will be established, as well as the identities of the individuals involved in the misappropriation of these unique cultural valuables and their failure to return them to the territory of the Russian Federation,” the Investigative Committee said. (photo: Peter Dejong / AP / TASS)

Sweden investigates shadow fleet tankers

For the second time in a week, Swedish authorities have boarded an oil tanker believed to be part of Russia’s shadow fleet. On Thursday, Sweden intercepted the Sea Owl I, an EU-sanctioned tanker, as it sailed past the port city of Trelleborg. The ship was flying the Comorian flag, but, according to the Swedish Coast Guard, “The coast guard suspects that it is not included in their ship register, that it is sailing under a false flag and that there is therefore no flag state that can guarantee the safety on board.” According to ship tracking services, the Sea Owl I left Brazil on February 15 and was headed toward Tallinn, Estonia. However, Swedish authorities suspect it was actually bound for the Russian port of Primorsk.

Later that day, Swedish Civil Defense Minister Carl-Oskar Bohlin confirmed that the Swedish Coast Guard is investigating the tanker’s role in transporting sanctioned Russian oil. “The Russian shadow fleet poses a significant security and environmental threat,” he said, “The fleet consists of hundreds of ships that are often old, poorly maintained, falsely flagged or completely stateless.” Ukrainian Foreign Minister Andrii Sybiha praised the move by Sweden. “We commend this firm action,” he posted on X, “Russia’s shadow fleet helps finance its war against Ukraine and threatens our European security. It must be confronted decisively and without hesitation.”

Last Friday, Sweden also took control of another cargo ship bound for Russia. The ship, named the Caffa, was flying the Guinean flag but was suspected by Swedish authorities of sailing under a false flag. 10 of the Caffa’s 11 crew members were discovered to be Russian nationals, and at least one was detained for suspected maritime code violations and carrying forged documents. Dan Stenling, the Swedish Coast Guard’s acting Head of Operations, commented on the investigation during a press conference last Saturday. “We have been able to establish that the vessel is sailing under a false flag. She is registered in Guinea, but that registration is in fact false,” he said. The ship is suspected of being used to transport stolen Ukrainian grain.

— Sara Ashbaugh

Quickfire: Regions

Severe mobile internet disruptions began over the past week in central Moscow, adding the Russian capital to an already long list of regions experiencing such problems. According to the “In Touch” project, which monitors the situation, 68 regions have been experiencing problems with mobile internet. Kremlin spokesperson Dmitry Peskov declared that the shutdowns would last “as long as necessary for the security of our citizens.” They appear to be connected to the Kremlin’s ongoing effort to block access to websites and services that are not on a federally approved “white list,” thus significantly strengthening control over Russians’ online activity. Economic damage in Moscow was estimated at 1 billion rubles per day, with cumulative losses over five days between 3 and 5 billion rubles. This is happening in parallel with efforts to completely block Telegram, a popular direct messaging, group messaging, and news sharing app, which the authorities have reportedly decided to completely block before the September legislative elections.

In a decree issued last week, President Vladimir Putin transferred the shares of several regional energy companies to the network operator Rosseti, including Oblkommunenergo and the Siberian-Ural Energy Company. These companies were nationalized last year from Artyom Bikov and Alexey Bobrov, two businessmen based in the Sverdlovsk Region, for alleged corruption offenses. Several Stavropol-based companies previously owned by Magomed Kaitov, an energy entrepreneur from the North Caucasus, were also seized for similar corruption offenses. Kaitov is a member of an influential local family, which has been the focus of corruption allegations coming from both the government and anti-corruption campaigners for a long time. Additionally, prosecutorial action against Bobrov and Bikov led to the arrest of a former deputy governor of the region. The cases highlight a Kremlin-supported (but not always clearly controlled and coordinated) crackdown on influential local elites under various pretexts, as the authorities seek more complete control of domestic assets.

— Andras Toth-Czifra

From the frontlines

FPRI Senior Fellow Rob Lee and the Kyiv Independent’s Francis Farrell speak with Lieutenant Colonel Yevhen Bespalov, the Commander of Ukraine’s 38th Marine Brigade, about the current situation in Myrnohrad, the role of Russia’s Rubicon Center, how Ukrainian forces navigate constant Russian pressure, the heavy use of glide bombs, and a significant enemy manpower advantage.

Numbers of the week

3.45 trillion rubles - the recorded deficit of Russia’s federal budget in the first two months of 2026. This corresponds to 1.5% of Russia’s GDP. The deficit is the consequence of increased spending and declining revenues, especially from oil and gas exports. Revenues were at 4.8 trillion rubles, 600 billion rubles behind last year’s in nominal terms, prompting the Finance Ministry to announce a 10% cut of non-essential expenditures.

408 billion rubles - the losses of the Russian coal sector in 2025, representing an almost fourfold increase over 2024 (when companies racked up 112 billion rubles worth of losses). Two-thirds of Russian coal companies experienced losses last year, with the federal government so far only providing tax deferrals and export incentives.

31% - the share of small business owners considering closing or selling their businesses due to rising costs, according to a study by the Higher School of Economics (HSE). This year, amid tax increases introduced for small businesses due to the growing deficit of the federal budget, these businesses can also expect declining support from the government, HSE pointed out, studying data from 2025.

3 billion rubles ($37 million) - the amount of money Russian tour companies lost during the first ten days of the war in Iran, according to the Russian Union of Travel Industry (RST). Flight disruptions in the region stranded tourists, requiring companies to pay for new plane tickets and extended hotel stays, said Dmitry Gorin, RST’s Vice President. The majority of companies’ losses, however, came from refunding canceled tours scheduled for March, April, and May, Gorin noted. 46,000 Russians have returned from Persian Gulf countries over the past ten days.

155 - the number of Russian billionaires on Forbes’s annual ranking of the world’s richest people. Alexei Mordashov, majority shareholder in the steel company Severstal, was the wealthiest Russian on the list, with an estimated net worth of $39 billion. This is the fourth consecutive year that the number of Russians on the list has grown, and this year set a new record for the overall number of Russian billionaires. The combined net worth of all 155 Russians on the list was estimated at $695.5 billion.

— Andras Toth-Czifra & Sara Ashbaugh

Budging the budget

Sara Ashbaugh — Sat, 07 Mar 2026 02:15:22 GMT

Here’s what you might have missed this week:

According to Finance Minister Anton Siluanov, the 2026 Russian federal budget may require early revisions due to declining oil and gas revenues.
Local authorities in several Russian cities prevented protests over increasingly severe mobile internet blockages.
Businessman Umar Dzhabrailov reportedly committed suicide at a luxury apartment complex in Moscow after several political and financial scandals.

— Sara Ashbaugh

Budget troubles

This week, Finance Minister Anton Siluanov acknowledged that the 2026 federal budget may already require revision due to deteriorating external conditions, specifically falling revenues from oil and gas sales. According to Siluanov, this shortfall is accelerating a planned revision of the so-called “budget rule,” which specifies when hydrocarbon revenues are funneled into the National Welfare Fund. Under the current rule, the cut-off price is $59 per barrel, but Russia’s Urals blend sold at an average of $54.20 per barrel in January, increasing the deficit and risking a faster drawdown of reserves. A revision of the rule would see a reduction of the oil price. Siluanov nonetheless insisted that social obligations, investment under the National Projects, and technological initiatives would remain fully funded.

This might be true for the federal budget, for now, but regions that execute a major part of social spending (as well as the funding of education, health care, and housing programs) are already cutting these expenditures in budgets that have been increasingly under pressure.

The legislature of the Maritime Territory, for example, approved a correction of the budget last week that cut expenditures on education, health care, and social services, among other things. The Chelyabinsk Region cut its budget in January. Many regions already revised their spending downwards in 2025, with spending on housing, public services, and transfers to municipalities among the headings facing the biggest cuts. Meanwhile, social security spending went up by 20%, and even more in regions outside of Moscow. Regional debt service costs also grew significantly, as several regions had to take out loans to cover growing debt. The independent news site NeMoskva remarked on the growing trend of municipalities, often highly dependent on regional transfers, introducing “self-taxation,” a form of participatory budgeting to extract more resources from locals for local needs.

This does not affect only poor regions. In a significant move, both Moscow and the Moscow Region, which is independently administered from the city, announced simultaneous 15% reductions in their civil service headcounts. Moscow Mayor Sergei Sobyanin said that this was because the capital’s budget revenue growth in the first two months of the year was just 2%, against a planned 6.5%. Moscow will also cut its investment program by 10%, all while keeping expenditures on war-related programs—including social support to soldiers’ families—protected. The Moscow Region government attributed the cuts partly to AI-driven automation of routine administrative tasks. However, the region’s expenditures in 2025 also grew twice as fast as its own revenues (similarly to other regions). Moscow and the Moscow Region often execute policies as a signal for other regions to follow.

These unusually early revisions signal that both federal and lower-level budgets are unsustainable under current circumstances. Growing global oil prices—a side effect of the conflict in the Middle East—may provide temporary relief to the federal budget, but are unlikely to help most regional budgets. These budgets face collapsing corporate income taxes, consistently high war-related expenditures, and a lack of sufficient reserves. This may result in liquidity problems and a more significant crackdown on some forms of corruption to increase spending efficiency.

— Andras Toth-Czifra

The Russian flag was displayed during the opening ceremony of the Paralympic Games on Friday for the first time since 2014. The International Paralympic Committee (IPC) reversed an earlier decision that banned Russia from competing in the Games, eventually allowing six Russian athletes to participate under their national flag and anthem. As a result, seven countries boycotted Friday’s opening ceremony in Verona in protest, including the Czech Republic, Estonia, Finland, Latvia, Lithuania, Poland, and Ukraine. IPC President Andrew Parsons justified the Committee’s decision to allow Russia to compete, saying, “In a world where some countries are better known by the names of their leaders, I prefer to know the countries by the name of their athletes.” (photo: Luke Hales / Getty Images)

Quickfire: Regions

Protests against increasingly severe mobile internet blockages and the effort to fully ban the use of the Telegram messaging app were attempted in multiple Russian cities over the past week. Local authorities denied or revoked permits in Barnaul, Irkutsk, Petropavlovsk-Kamchatsky, and Vladivostok using various justifications, ranging from denying that internet blockages exist to citing the risk of the planned protest “exceeding the declared number of participants.” A rally in Khabarovsk was approved by the authorities, while in Novosibirsk, organizers proceeded at a pre-designated free-speech zone where no permit is legally required. According to the latest press reports, rather than “negotiating” with Telegram, the Kremlin has come to a final decision to fully throttle the app in Russia starting April 1. Earlier, people with various backgrounds, from private sector companies to war bloggers and even regional officials, expressed concern over the throttling and planned banning of Telegram.

Umar Dzhabrailov, a businessman and former member of the Federation Council from Chechnya, reportedly shot himself dead at a luxury apartment complex in Moscow on March 2. According to reports, all of his accounts across five banks had been blocked by the tax authorities shortly before his death. Dzhabrailov, who once managed major Moscow real estate assets and ran for president in 2000, previously attempted suicide in 2020. His political career had been in decline since 2018 when he was expelled from the ruling United Russia party for shooting a gun in a Moscow hotel while under the influence of narcotics. In early February, it emerged that he was mentioned in the Epstein files for having arranged a meeting in Moscow with Ghislaine Maxwell, Jeffrey Epstein’s partner. According to anti-corruption analyst Ilya Shumanov, Dzhabrailov may simply have outlived his usefulness to the political establishments in Moscow and Chechnya, which once used him as an intermediary.

— Andras Toth-Czifra

From the frontlines

Numbers of the week

4 - the number of former deputies of Security Council Secretary Sergey Shoigu, from his time as Russia’s Defense Minister, who have faced criminal prosecution since Shoigu’s transfer to the Security Council in 2024. Ruslan Tsalikov, a long-time associate of Shoigu, was arrested on charges of running a criminal organization, embezzlement, and bribery this week. In 2024, Tsalikov tried to get immunity by becoming a member of the Federation Council from Tuva, Shoigu’s home region, but failed to get a nomination.

20 years - January and February 2026 were the worst months for Russia’s car market in 20 years, according to AvtoVAZ’s Director of Sales and Marketing Dmitry Kostromin. Kostromin added that the official statistics still understate the trouble car manufacturers are in after high interest rates and a squeeze on household disposable income has led to a collapse in new car sales.

40 - the number of Russian regions (out of 83), which have accumulated some degree of experience with online voting (not counting the occupied Sevastopol). According to Vedomosti, electoral authorities will only want these regions to conduct online voting in the September Duma elections. In recent years, the Kremlin has pushed for a widespread rollout of online voting in a bid to reduce both voting transparency and reliance on local officials, although several regions have pushed back against this.

0.51 degrees Celsius - the amount by which the air temperature in Russia has increased over the last ten years, according to a recent Roshydromet report on the country’s climate. This is more than double the global average of 0.2 degrees Celsius. 2025 was Russia’s second-hottest year on record, behind only 2020, and Russia also experienced 110% of its usual precipitation in 2025.

308,000 people - the number of people currently incarcerated country-wide in Russia, according to Supreme Court First Deputy Chief Justice Vladimir Davydov. This is a 70% decrease compared to 25 years ago, when the number of inmates in Russian prisons was roughly 1 million. Davydov attributed the decrease to the “humanization” of Russian law enforcement. However, he did not acknowledge the Russian military’s efforts to recruit thousands of prisoners to fight in Ukraine, which has also reduced the overall number of incarcerated people.

— Andras Toth-Czifra & Sara Ashbaugh

Four years on

Sara Ashbaugh — Sat, 28 Feb 2026 00:00:31 GMT

Here’s what you might have missed this week:

U.S. officials met with Russian and Ukrainian negotiators in Geneva for continued peace talks, which have so far produced little results toward ending the war.
Hungary and Slovakia are blocking a 90-billion-euro loan to Ukraine until oil supply resumes through the damaged Druzhba pipeline.
Two leading Russian economic experts criticized the government’s economic development strategy, especially regarding the Siberian regions.

— Sara Ashbaugh

Peace talks stall

Tuesday marked the fourth anniversary of Russia’s full scale invasion of Ukraine. As the war grinds on, continued peace talks between the U.S., Russia, and Ukraine have yielded little results. This year’s third round of U.S.-led peace talks took place on Thursday in Geneva, where U.S. representatives met separately with Ukrainian and Russian delegations. They reportedly discussed ongoing territorial disputes, details for the next trilateral meeting, and plans for post-war Ukrainian reconstruction, among other things. Negotiations have essentially reached a dead end, a senior NATO official told The Moscow Times, as long as Russia sticks to its maximalist demands. Specifically, the demand that Ukraine cede the entire Donbas region to Russia has been a major sticking point. Earlier this month, President Zelenskyy told reporters that the White House is pushing for a settlement by this summer. According to Bloomberg, citing U.S. allies, President Trump wants to secure a ceasefire agreement before July 4. Moscow and Washington are now waiting to see “who will fold first,” the anonymous NATO official said.

According to Zelenskyy, negotiations are expected to resume in Abu Dhabi in early March. During one of his recent evening addresses, Zelenskyy advocated for a direct meeting between the three presidents. “We need to finalize everything that has been achieved in terms of real security guarantees and prepare for a meeting at the leadership level,” he said, adding, “This format can solve a lot.” President Putin has so far appeared reluctant to meet with Zelenskyy directly, publicly questioning the Ukrainian leader’s legitimacy.

Meanwhile, Russia and Ukraine have continued to exchange the bodies of fallen soldiers under the agreement they reached in Istanbul last June. On Thursday, Russian official Vladimir Medinsky announced that Russia sent 1,000 bodies to Ukraine this week and received 35 in return. The reason for the discrepancy between the two sides is unclear. Both countries have suffered heavy losses during the war; the Washington-based Center for Strategic and International Studies (CSIS) estimates overall military casualties at about 1.8 million, including up to 465,000 killed. In early February, President Zelenskyy claimed that 55,000 Ukrainian troops have been killed on the battlefield, which is likely an underestimate. The CSIS places the figure between 100,000 and 140,000, and estimates that up to 325,000 Russian soldiers have been killed as well.

— Sara Ashbaugh

Police cordoned off the Savyolovsky Railway Station Square in Moscow on Tuesday after an explosive device was detonated in the area. The blast, which occurred just after midnight, killed one police officer and injured two others. According to Russia’s Interior Ministry, an attacker approached the officers and triggered “an unidentified device” in an apparent suicide bombing. The suspect was identified as a 22-year-old man from the Udmurt Republic in west-central Russia. His possible motive has not yet been established. (photo: Pavel Seleznev / TASS)

Severed Druzhba

The Hungarian and Slovakian governments are blocking the release of a 90-billion-euro loan to Ukraine that the two countries previously agreed to, as well as further sanctions on Russia, until oil supplies via the damaged Druzhba pipeline are relaunched. The Slovakian government has also stopped its emergency electricity supplies to Ukraine until oil shipments resume. Meanwhile, a Ukrainian drone strike damaged a key pumping station near the Tatarstan town of Kaleykino, which also serves the Druzhba, prompting Transneft to cut its intake from the Tatneft oil company. The two governments have not made similar demands to Russia over this disruption.

The Ukrainian government attributed the supply disruption through the Druzhba, which started on January 27, to a Russian drone strike on the pipeline near the Brody oil hub in Ukraine. While Ukrainian authorities have said that they are conducting repairs, they also underlined that reliable supply through the pipeline will be impossible as long as Russian attacks against Ukraine’s energy infrastructure continue. To replace the oil supply, Ukrainian officials offered a bypass through the Odessa-Brody pipeline using non-Russian oil.

Instead, Hungary and Slovakia opted for increased supplies of Russian oil via the JANAF pipeline in Croatia, arguing that their current exemptions from EU sanctions on the import of Russian oil allow them to do so. This move, in turn, resulted in a diplomatic spat between the Croatian and Hungarian governments over Slovakia and Hungary’s ongoing prioritization of Russian oil, which Croatia rejects, and whether or not the capacity of the JANAF pipeline is enough to ensure the energy security of Hungary. Due to the disruption in supply, Hungary’s strategic reserves were opened, so the country does not face an immediate crisis. However, MOL, Hungary’s largest oil company (which also operates Slovakia’s Slovnaft refinery), claimed that it will have to reduce production in its refineries to 70-80% of capacity, as they are still not fitted to process non-Russian crude.

On February 27, Hungary and Slovakia agreed to participate in a joint committee to investigate the damage to the pipeline. This suggests that they are facing some pressure from EU peers, but it is unclear whether it will precipitate the withdrawal of the veto. On the same day, the Hungarian Foreign Ministry claimed that the Ukrainian government “admitted” to Hungary’s charge d’affaires in Kyiv that the delay in repairs is politically motivated. Ukraine has denied this.

The Slovakian and Hungarian responses come as both governments face increased domestic opposition. The Slovak opposition has been roundly critical of their government’s increasingly pro-Russia stance. In Hungary, according to a recent poll, the Fidesz Party of Prime Minister Viktor Orban may be twenty points behind its opposition challenger, the Respect and Freedom (Tisza) Party, only five weeks before a parliamentary election. If the Tisza Party wins, it would mean the end of Orban’s 16-year rule as Hungary’s prime minister.

In 2022, following the start of Russia’s full-scale invasion of Ukraine, Fidesz surged in the polls after Orban argued that an opposition victory would mean Hungary would be “dragged into the war.” Since then, his party has continuously campaigned with the same rhetoric, which has an increasingly aggressive anti-Ukrainian flair. This week, Orban ordered the deployment of army units to key energy facilities, claiming, without evidence, that Ukraine was preparing further disruptions in the campaign period. The leader of the Hungarian opposition in turn accused Orban of preparing a false-flag attack. Rhetorical sabre-rattling against Ukraine in the Druzhba case fits into Fidesz’s campaign tactics, as does the allusion that, if a less Kremlin-friendly government comes to power, Hungarians will face much higher gas prices (even though gas prices are already the second highest in the region).

— Andras Toth-Czifra

Quickfire: Regions

Two important figures in Russia’s economic elite delivered remarks very critical of Russia’s current economic development trajectory at a conference in Krasnoyarsk this week. Industrialist Oleg Deripaska called the courts, the prosecutor’s office, and the quality of regional governance the main barriers to investment (referring, most likely, to recent nationalization cases), and called for special economic zones for Siberia. The livestream of his panel was subsequently removed from the VK social network. The Chief Economist of Vneshekonombank (VEB), Andrei Klepach, declared the government’s current Siberian development strategy “unviable,” saying it amounts to little more than generic theses about exploiting natural resources through a “cluster approach.” Even more importantly, Klepach remarked that money previously earmarked for the development of the public and economic infrastructure of Siberian regions is now being redirected westward to the occupied territories and border regions. The remarks of both men constitute a rebuke, with relative bluntness, of the government’s current spending priorities and the growing influence of the Federal Security Service.

The Kremlin’s concerns over widespread complaints about rapidly growing utility bills across Russia have apparently triggered a high-level response. During a discussion about Prime Minister Mikhail Mishustin’s report on the government’s work in the State Duma, in an answer to a question by Duma Speaker Vyacheslav Volodin, the Prime Minister placed responsibility for these price hikes squarely on regional regulatory bodies, saying that some of them should be “disqualified.” Mishustin also underlined a bill adopted in the first reading that would give the Federal Antimonopoly Service (FAS) the power to set tariffs directly in the regions. The Prime Minister’s remarks, which avoided discussing the effect of the federal government’s decision to raise the rate of VAT or upcoming larger utility tariff hikes scheduled for October, fit very well into the Russian government’s usual crisis management strategy. This strategy decentralizes political responsibility for unpopular developments while absolving federal institutions, in this case both the government and FAS, which last week found no evidence of major tariff hikes.

— Andras Toth-Czifra

From the frontlines

Numbers of the week

50/55 - according to Russian media reports, the Kremlin’s new target for the governing United Russia party to hit in the September 2026 State Duma elections is 55% support at a 50% turnout. The turnout target was apparently revised downwards from 55%, suggesting that the Kremlin is aware of growing social discontent and thus aims to mobilize only “reliable” voters.
60-70% - the average wear level of heating utility pipes in Russian cities, according to experts. With replacement rates running at 2.2% annually (against a planned 5%) and the government failing to put previously promised financing behind the renewal of networks, the public infrastructure gap is actively widening each year. This leaves approximately 41 million Russians in areas with unreliable heating.
39% - the share of expenditures on food in the budget of the average Russian household, according to Rosstat data. This is the highest figure since 2008 and a 2.1-point growth on pre-2022 levels. A growing share of household spending on food is usually a marker of increasing poverty and declining living standards.
$22 billion - Sberbank’s reported profit for 2025. This is 7.9% higher than the bank’s net profit last year and represents its third consecutive year of growth. Sberbank CEO Herman Gref attributed the bank’s success to AI, saying, “Organic integration of artificial intelligence into processes and the daily lives of people has become a key driver of our growth.” When Western sanctions were imposed in early 2022, Sberbank was one of the first companies hit, resulting in a 75% plunge in profits. This year’s net profit, however, is even higher than pre-war levels, setting a new record.
859,000 barrels per day - the volume of Russian oil imported by India in January 2026. January’s oil imports were 40% lower compared to December’s and less than half of what they were last year, according to Argus, an independent price reporting agency. Reuters found that Russia’s share of India’s total oil imports fell to 21.2% in January, the lowest it has been since October 2022. India’s reduction in Russian oil purchases is likely an attempt to appease the U.S., which placed significant tariffs on India over its reliance on Russian oil.

— Andras Toth-Czifra & Sara Ashbaugh

At your service

Sara Ashbaugh — Sat, 21 Feb 2026 03:30:39 GMT

Here’s what you might have missed this week:

The State Duma passed a law allowing the Federal Security Service to further restrict internet access in Russia.
Roskomnadzor accused Telegram of allowing users’ data to be stolen and sold by third-party services.
Steelmakers reported a 16% drop in revenue, sparking concerns about a potential crisis in the industry.

— Sara Ashbaugh

New powers for the FSB

The State Duma passed a law expanding the authority of the Federal Security Service (FSB) to shut down communications networks. In the future, network operators will be obliged to block both wireless and landline internet services upon request, even if there is no imminent security threat. The law allows the president to determine the circumstances in which such measures must be taken in a classified decree, essentially allowing Putin to order a suspension of service at will, either regionally or countrywide.

In the past, Russian authorities have experimented with shutting down mobile internet in certain areas during mass protests. Many Russian regions experienced a wave of intermittent mobile internet shutdowns over the past year. These were ostensibly a consequence of Ukraine’s successful “Operation Spiderweb,” which partially relied on Russian mobile networks. At the end of last year, several regional authorities decided to block mobile internet completely until the end of the war, allowing access only to online services on a pre-determined “white list.” This led to complaints not only from citizens, but also from certain public officials, such as Kamchatka Governor Vladimir Solodov.

The current law centralizes decision-making and implementation and also makes it impossible for users to sue telecommunications operators for the outages, as some tried to do last year. However, the absence of legal recourse also leaves citizens without an outlet to channel their frustration with disruptions caused by mobile internet shutdowns, so it remains to be seen how broadly the authorities will apply the restrictions. Ultimately, the goal seems to be the full separation of the Russian internet from foreign and independent (unsupervised) services and content.

The law fits into a recent series of legislative proposals and executive measures that aimed to tighten control over the digital services accessible to Russians, including a recent (partially successful) attempt to block the Telegram messaging app and a proposal to grant the FSB wider powers to monitor the digital footprint of Russian citizens. Overall, the FSB’s domestic powers, as well as the agency’s budget, have been gradually and steadily expanded since the start of Russia’s full-scale invasion of Ukraine.

— Andras Toth-Czifra

The Gulag History Museum in Moscow, pictured here, will be replaced by a new “Museum of Memory” dedicated to the “victims of the genocide of the Soviet people,” according to a statement on the Museum’s website. The Gulag History Museum was abruptly closed in November 2024 due to “fire safety violations,” although many speculated that the real reason was political. The Museum of Memory will feature exhibits on Nazi war crimes during the Great Patriotic War, using archival materials collected by the “No Statute of Limitations” Project. It is expected to open in 2026. (photo: Kristina Kormilitsyna / RIA Novosti / Sputnik / Profimedia)

Accusations against Telegram

After introducing additional restrictions on the social media platform Telegram last week, Russian authorities have now leveled new accusations against the messenger. According to Roskomnadzor, Russia’s federal media agency, Russian citizens’ information is being leaked from the website and distributed in the form of “personal dossiers.” Roskomnadzor accused Telegram of failing to crack down on so-called “probiv” services, which collect and sell personal information about its users. Although Telegram agreed to remove up to 100 of these third-party services from the site weekly, “the situation remains fundamentally unchanged: new bots are emerging to search for personal data,” Roskomnadzor’s statement says.

Earlier this week, the Minister of Digital Development, Communications, and Mass Media, Maksut Shadayev, claimed that Russian military information is also being leaked from Telegram. According to Shadayev, foreign intelligence services are accessing Russian military correspondence via Telegram and using it against Russian forces on the battlefield. Telegram is still in use by the Russian armed forces, but Shadayev encouraged military personnel to switch to another messenger. Telegram denied Shadayev’s accusations, telling Reuters that “no breaches of Telegram’s encryption have ever been found.” “The Russian government’s allegation that our encryption has been compromised is a deliberate fabrication intended to justify outlawing Telegram and forcing citizens onto a state-controlled messaging platform engineered for mass surveillance and censorship,” the company said.

According to Baza, citing inside government sources, Telegram may be completely blocked in Russia starting April 1. When asked for a comment, Roskomnadzor said that it had “nothing to add to the previously published information.” While some people, including Z-bloggers, have expressed concern that blocking the app will affect the coordination of Russian troops in Ukraine, the Kremlin refuted this idea. “I don’t think it’s possible to imagine frontline communications being provided via Telegram or any other messaging app. It’s difficult and impossible to imagine,” Kremlin spokesperson Dmitry Peskov said.

— Sara Ashbaugh

Quickfire: Regions

Steelmakers reported to Deputy Prime Minister Alexander Novak a 16% drop in revenue, a 50% average decline in EBITDA, around 3,000 layoffs, and reduced work weeks. Consequently, investment programs have been slashed by 30% and blast furnaces are entering a period of “hot conservation.” The federal government had so far declined most requests to adopt a wide sectoral aid program due to budgetary limitations. The government’s proposal of tax deferments and import restrictions would only save metallurgical companies an estimated 15 billion rubles, and even these are not sure to be adopted. Stricter inspections, which are impacting exports in Russia’s Northwestern seaports, may also weigh down on the sector. The looming crisis of the sector has direct implications for the budgetary security of regions that depend on metallurgy, such as Murmansk, Lipetsk, Vologda, and Chelyabinsk. In 2025, the Vologda Region posted the highest deficit relative to its own fiscal incomes among Russia’s 83 regions. This led some to accuse Severstal, the region’s main employer, of deliberately underpaying corporate taxes due to its owner’s ongoing conflict with the region’s governor.

The Federal Antimonopoly Service (FAS) reported to the government that there has been no increase in utility tariffs in the country other than a planned 1.7% adjustment. The agency ostensibly held an inspection after widespread complaints from people across the country over the past weeks about utility bills rising by more than a third and occasionally more, all while several settlements suffered long outages due to accidents with aging infrastructure. According to providers, this is due to a cold winter and the recalculation of 2025 charges, which citizens can, theoretically, challenge if they think that their bills are inaccurate. Officially, tariffs will only increase in October after federal legislative elections—in many regions by more than 20%, well above projected inflation. Yury Afonin, a Duma deputy from the Communist Party, suggested freezing tariffs until 2028. Utility providers also face pressure to increase investment in crumbling infrastructure. Other than ordering the (inconclusive) FAS probe and “monitoring” the situation, the federal government expects governors to assume the communications burden of rising tariffs. Kaliningrad Governor Alexey Bezprozvannykh, for example, himself ordered a probe into price hikes.

— Andras Toth-Czifra

From the frontlines

FPRI Senior Fellow Rob Lee and the Kyiv Independent’s Francis Farrell speak with Lieutenant Colonel Yevhen Bespalov, the commander of Ukraine's 38th Marine Brigade, about the current situation in Myrnohrad, the role of Russia’s Rubicon Center, how Ukrainian forces navigate constant Russian pressure, the heavy use of glide bombs, and a significant enemy manpower advantage.

Numbers of the week

22.3 billion rubles - the amount of extra revenue that Russian Railways (RZhD) may realize from tariff hikes this year, according to calculations by Reuters, which would cover barely 10% of the company’s stated extra financing needs. Due to severe losses from falling cargo loading, inefficient operations, and pressure to subsidize the coal sector, RZhD has had to cut its investment program, sell properties, and turn to the federal government for help.
5.5 million people - The number of Russians working part-time, according to a recent report by FinExpertiza. The report underlines that the number grew by 12% over the past year. While unemployment remains at historic lows, this increase supports reports that several companies, especially in sectors facing protracted crises, are cutting working hours rather than laying people off, thereby masking growing economic problems.
11 million rubles - The amount of unpaid wages demanded from a city-owned company by bus drivers in Kyzyl in the Republic of Tuva. The mayor of the city promised partial payments to the drivers. The rare labor strike is emblematic of the growing pressure that regional and local budgets have faced over the past two years, as some have struggled to pay public-sector workers.
90 billion euros - the total amount of an EU loan intended for Ukraine. EU leaders agreed on the loan in December 2025 after prolonged negotiations. However, Hungary is now blocking the loan until the flow of Russian gas through the Druzhba pipeline is restored. Oil transit through the Druzhba was halted last month after a Russian attack damaged the pipeline, cutting off supply to Hungary and Slovakia. Since then, Hungary has accused Ukraine of intentionally refusing to repair the damage. “Ukraine is blackmailing Hungary by halting oil transit in coordination with Brussels and the Hungarian opposition to create supply disruptions in Hungary and push fuel prices higher before the elections,” Hungarian Foreign Minister Péter Szijjártó posted on X. “We will not give in to this blackmail,” he said.
2.6% - the overall increase in Russian supermarket prices in January, according to the BBC. Citing data from Rosstat, Russia’s Federal Statistics Service, the BBC reported that many grocery store staples became more expensive at the beginning of this year, including meat, milk, potatoes, and pasta. Compared to two years ago, overall food inflation in Russia is up 18.1%, Rosstat figures suggest. January’s price increases are not surprising considering the recent VAT hike from 20% to 22%, which went into effect on January 1.

— Andras Toth-Czifra & Sara Ashbaugh

Left on blocked

Sara Ashbaugh — Sat, 14 Feb 2026 00:30:05 GMT

Here’s what you might have missed this week:

Roskomnadzor restricted access to popular social media sites Telegram and WhatsApp, pushing users toward the Kremlin-backed messaging app MAX.
The Central Bank of Russia reduced the key rate by 50 bps from 16% to 15.5%.
Aging public utility infrastructure continued to disrupt access to heat and water in several of Russia’s regions.

— Sara Ashbaugh, Editor in Chief

Left on blocked

The Russian authorities cranked up their repression of messaging applications independent of the state this week. The government announced a complete block of WhatsApp, which is owned by Meta (earlier labeled a “terrorist or extremist organization” in Russia). Roskomnadzor (RKN), Russia’s federal communications agency, started removing banned and blocked websites and domains—including WhatsApp’s and YouTube’s—from the “National Domain Name System,” which Russia created under the so-called “sovereign Internet” law. Removed domains are still accessible with VPNs, but not from Russian IP addresses.

At the same time, RKN also started to restrict access to Telegram, a messaging app developed by Russian-born entrepreneur Pavel Durov. RKN claimed that it was “protecting citizens” with the restrictions; earlier, the Russian authorities accused Telegram of failing to combat fraud and throttled the messaging service on several occasions. Durov, in turn, accused the Russian authorities of trying to pressure users into switching to MAX, a Kremlin-backed messaging app. The authorities have been trying to build up MAX as an “everything app,” but it has been called spyware by its critics due to its security flaws. Durov also likened the disruptions to unsuccessful attempts by the Iranian authorities to block his app. Andrey Gurulyov, a prominent ruling party deputy in the State Duma, claimed that blocking Telegram was part of Russia’s conflict with NATO.

Blocking Telegram is a complex issue. The app is widely used in Russia by citizens, independent media outlets, researchers, cybercriminals, and scammers, as well as by public officials, pro-Kremlin propagandists, and major enterprises, with the security services conducting influence operations using it. Earlier disputes between Russian authorities and Telegram’s founders typically centered not on fraud, but on the degree of cooperation that Telegram is willing to maintain with Russia’s Federal Security Service (FSB). It is unknown to what extent Telegram is cooperating with various intelligence services, and questions have arisen about the security of the data it transmits.

Prior to major elections, the authorities have frequently increased pressure on Telegram. During the 2021 federal legislative election, Telegram removed the “Smart Voting” bot developed by Alexei Navalny’s campaign, which was intended to frustrate ruling party victories in single-mandate districts. It seems plausible that the authorities are pressuring the app before State Duma elections planned for this September too.

It seems unlikely that, at this point, the authorities will be able to force Telegram’s more than 100 million Russian users to switch to MAX instead. In spite of the authorities’ relentless promotion of the messenger, Telegram fulfills functions that MAX is not well-placed to take over. Even some governing party politicians have criticized the disruptions (along with politicians from so-called “systemic” opposition parties). Vyacheslav Gladkov, the governor of the Belgorod Region and an official with one of the highest numbers of followers among Russian politicians, warned that Telegram disruptions could interfere with the authorities’ ability to communicate with residents, including about drone attacks in the region. Dmitry Myasnikov, a member of the Irkutsk Region legislative assembly from the United Russia party, lamented that the work invested into creating communications channels on Telegram would go to waste.

— Andras Toth-Czifra

Ukrainian skeleton racer Vladyslav Heraskevych was disqualified from the Winter Olympics on Thursday after he insisted on wearing a helmet depicting the faces of Ukrainian athletes killed during the war. A statement by the International Olympic Committee said that Heraskevych was disqualified for “refusing to adhere to the IOC athlete expression guidelines,” which prohibit political demonstrations during the Games. Ukrainian officials criticized the decision, including President Volodymyr Zelenskyy. “This truth cannot be inconvenient, inappropriate, or called a ‘political demonstration at a sporting event.’ It is a reminder to the entire world of what modern Russia is.” Zelenskyy said. Later, he awarded Heraskevych with the Ukrainian Order of Freedom. (photo: Andrea Solero / EPA / Scanpix / LETA)

Central Bank cuts the key rate

The Central Bank of Russia (CBR) once again lowered its key rate during the board of directors meeting on Friday. The rate was cut by 50 basis points (bps) from 16% to 15.5%, following a recent trend of rate cuts during the CBR’s rate decision meetings last year. This is the sixth consecutive rate cut since June 6, 2025, signaling cautious optimism from Russia’s financial regulator. “The economy continues to return to a balanced growth path,” the CBR’s press release states. The rate cut came as a surprise to many financial experts, however; after inflation accelerated in January, most analysts expected the Bank to hold the rate at 16%, according to an RBC expert poll.

Despite price growth in January, the Bank remains confident that disinflation will continue for the rest of this year. The “temporary but considerable” price acceleration in January was due to “higher VAT and excise taxes, the indexation of administered prices and tariffs, and price adjustments for fruit and vegetables,” according to the CBR. The Bank’s current forecasts still predict that annual inflation will decrease from 6.3% (as of earlier this week) to between 4.5% and 5.5% by the end of 2026. Additionally, the labor market is cooling slightly, with reported labor shortages reaching their lowest levels since 2023.

While the Bank expects to bring the rate down further at its upcoming board of directors meetings, CBR Governor Elvira Nabiullina noted that it may tighten monetary policy as necessary to move inflation toward the 4% target. “I want to emphasize once again that our signal is not an unconditional commitment to cut the rate… Therefore, we say that we will assess the advisability of further key rate cuts by analyzing all the data,” she remarked during a press briefing following the meeting. According to macroeconomics analyst Alexander Ivanov, the Bank’s decision to reduce the rate gradually will have significant long term effects. “The chicken pecks grain by grain,” he said, employing a Russian idiom meaning that small consistent efforts add up over time. “The regulator’s small steps are not just a symbolic gesture,” he added.

The CBR will hold its next board of directors meeting to evaluate the rate on March 20.

— Sara Ashbaugh

Quickfire: Regions

The breakdown of aging and overstretched public utility infrastructure has continued to lead to long disruptions in several Russian regions and cities over the past week. Thousands of residents of the Irkutsk Region town of Bodaibo, a center of gold mining, have been forced to heat their homes with electric heaters for more than two weeks (and counting) due to an accident in a boiler house, which in turn put pressure on the electricity grid and created a fire hazard. Water provision was also disrupted in the town. А heating outage in Abakan, the capital of Khakassia, affected 50,000 residents. In one of the districts of Novosibirsk, Russia’s third-largest city, several businesses complained about unreliable electricity provision. At the same time, residents in several regions have complained about significant increases in the price of utilities, which threaten the livelihood of lower-income Russians. The Federal Anti-Monopoly Service announced inspections, claiming that the VAT hike and a 1.7% tariff hike that came into force in January would not justify significantly higher bills. The authorities likely follow these complaints closely, as tariff hikes accompanied by worsening service provision led to protests in several regions before, and the outages are widely recognized as a failure of state institutions.

The deficit of consolidated regional budgets reached 1.538 trillion rubles in 2025, according to data released by the Russian Finance Ministry. This is an unprecedented figure, and a five-fold growth compared to 2024. Regional budgets have been struggling with falling corporate income tax revenues and federal transfers, while their spending on social policy and regional economies have continued to grow. According to the latest data from Russia’s “Electronic Budget,” 70 out of 83 regions were in deficit at the end of 2025. The deficit is not spread evenly: regions such as Kemerovo, Irkutsk, Arkhangelsk, and Murmansk, which have been able to rely more on their own revenues in the past but whose key industries are facing protracted crises, are particularly vulnerable. If federal transfers are not significantly increased, several regions will likely have to make further cuts to headings such as health care and education. Figures on federal finances also suggest a dangerously widening deficit. In January, federal fiscal incomes were 11.6% lower than in the first month of 2025, leading to a federal deficit of 1.7 trillion rubles, almost a half of the amount planned for the whole year. This matters because federal authorities are relying on regional governors and quasi-state actors (corporations and civil society) to manage political risks with as little money as possible. However, some may be incentivized to co-opt rather than suppress dissatisfaction.

— Andras Toth-Czifra

From the frontlines

FPRI Senior Fellow Rob Lee speaks with members of the 7th Rapid Response Corps of Air Assault Forces about the use of unmanned ground vehicles (UGVs) on the Pokrovsk axis. The trio discusses how Defense Forces deploy UGVs, replacing personnel in the most dangerous logistics and evacuation missions. They also discuss whether UGVs can be used as assault platforms and discuss where UGV development is heading this year.

Numbers of the week

37.02 million tons - the amount of cargo transported via the Northern Sea Route along Russia’s Arctic coast in 2025, according to a study by Gekon Consulting. This is 2.3% lower than in 2024. In spite of Russia’s plans to make the route a major transit corridor, due to a lack of suitable vessels to navigate the route year-round and to the fact that the overwhelming majority of cargo remains Asia-bound hydrocarbons, actual volumes have consistently fallen short of plans so far.
1.6 GW - the energy capacity that the Russian government plans to build in the Far East to address the macroregion’s energy deficit (due to inadequate generating capacity) and its growing use (due to Russia’s Asian pivot). Even if the plans are realized, experts have concluded that the region will still lack 700 MW of capacity by 2031. Power grids have also faced increasing strain in Siberian regions.
1 trillion rubles - the losses of Russian oil companies from Ukrainian drone attacks on Russian refineries, according to the insurance broker “Mains.” This includes estimated lost profits and indirect losses (direct losses are more modest at 100 billion rubles). Ukraine’s attacks on Russia’s fuel generating capacity have been considered one of the most impactful campaigns of the war.
50.1% - the share of total infrastructure spending on Moscow, St. Petersburg, and the Moscow Region in 2025, according to a new study by the Sherpa Group. The growth of infrastructure spending (10.3%) over 2024 was slightly above inflation, but very uneven; in Siberian and Far Eastern regions, it either declined or did not offset a decline in investments.
13 - the number of Russian athletes competing in the 2026 Winter Olympics. Russia was banned from participating in the Olympics in 2023 following its invasion of Ukraine. While Russian athletes are not allowed to represent their country at the Games, a small number are still allowed to compete as “Individual Neutral Athletes,” or AINs. These athletes are participating in several events at Milano Cortina 2026, including skiing, figure skating, speed skating, and luge.

— Andras Toth-Czifra & Sara Ashbaugh

Fixing the rules

Sara Ashbaugh — Sat, 07 Feb 2026 02:30:19 GMT

Here’s what you might have missed this week:

The Ministry of Economic Development prepared a draft law in response to demands by business owners to establish clear rules for privatization deals.
Russian and Ukrainian delegations wrapped up their latest round of peace talks in Abu Dhabi, resulting in a prisoner exchange.
Police in the Altai Territory raided the local offices of the Communist Party (KPRF), arresting two lawmakers and several other party workers on grounds of embezzlement.

— Sara Ashbaugh, Editor in Chief

Fixing the rules

Russia’s Ministry of Economic Development prepared a draft law on establishing a statute of limitations for challenges to privatization deals. According to the draft, this would in the future be three years from the discovery of violations, but no more than ten years from the privatization of public property.

The purpose of the draft is to calm the anxieties of business owners, who have been demanding clear rules concerning the review of privatization deals. The Russian government has seized around 6 trillion rubles worth of private assets over the past three years (more than half of them in 2025) under various pretexts, including alleged violations of privatization laws. The Russian Union of Industrialists and Entrepreneurs (RSPP) proposed establishing a statute of limitations in 2024 and has been repeatedly pushing for clearer rules. Anxieties over unbridled nationalization increased last year when President Putin appointed Igor Krasnov to head the Supreme Court. As chief prosecutor advancing scores of nationalization cases, Krasnov often clashed with the court over legal norms.

The proposed new rules only partially satisfy this request. First, they will not affect the seizure of private property under anti-corruption and “anti-extremism” legislation. Second, current legislation allows the Prosecution ample leeway to argue that the statute of limitations should be disregarded in specific cases. RSPP thus wants the Constitutional Court to append a note of interpretation to the law. In its current form, however, the proposed law does not create clear rules.

This is important because the instability of property rights and ever-shifting legal and practical norms governing ownership and taxation over the past three years have weighed down on Russia’s domestic business climate. Beyond squeezing already falling profit margins in the civilian economy, uncertainty can depress hiring and investment planning. Due to fiscal shortfalls (see below), the tax system, another major pain point for employers, is still in flux. The Ministry of Finance is currently preparing to increase taxes on imported non-food products and to introduce an export duty on diamonds. The tax office has reportedly also increased the frequency with which it is trying to revise and collect older debts from companies, in line with the Kremlin’s desire to shore up budgetary income by increasing the efficiency of tax collections.

— Andras Toth-Czifra

Russian and Ukrainian delegations wrapped up their latest round of peace talks in Abu Dhabi on Thursday. Afterwards, U.S. Special Envoy Steve Witkoff announced that the two countries had agreed on a prisoner exchange involving 314 prisoners of war. “This outcome was achieved from peace talks that have been detailed and productive,” Witkoff posted on X. A source on the Russian side, however, said that a peace agreement is still far off. “The work is being carried out in a multifaceted and phased manner. It’s unlikely to be completed in a month,” the source told TASS. This week’s peace talks were the second this year in Abu Dhabi, the first having taken place January 23-24. (photo: Press Service of the UAE Ministry of Foreign Affairs / TASS)

Quickfire: Regions

A month after nine newborns died in a maternity clinic in the Kemerovo Region, another preventable health care disaster struck the region over the past week. Nine patients died of a viral infection in a psychiatric facility in the city of Prokopyevsk, with many others hospitalized. Similar to the January tragedy, federal probes were ordered into the case and into other psychiatric facilities. While it is possible that the negligence of individual employees played a role, this time Governor Ilya Seredyuk had to admit that the region’s health and social care services were in a “critical condition.” Even after the January tragedy, staff shortages in spite of hospital closures were cited as a contributing factor. Health care spending in the region in the first eleven months of 2025 has been lower in nominal terms than at any point since 2021. The regional budget, which is responsible for maintaining hospitals, had to make several cuts over the past two years due to the slow-burn crisis of the coal industry—the backbone of the region’s economy. The poor state of health and social services, however, also reflects years of underinvestment into public infrastructure. Under the current federal and regional fiscal constraints, most regions are ill equipped to solve this problem.

Police in Siberia’s Altai Territory carried out raids in the offices of the local branch of the Communist Party (KPRF) over the past week and arrested two lawmakers and other party workers accused of embezzlement. The KPRF’s Altai Territory branch has been one of the most active and strongest regional branches over the past years. Regional Communist politicians have regularly organized and participated in protests triggered by bread-and-butter issues such as utility price hikes and poor quality public services. In late 2025, local law enforcement had already interrogated, searched, and arrested several local Communist politicians and their employees. The party, just like now, called this an attempt to pressure the branch to tone down its criticism of the regional government and not mount a serious challenge in regional elections that are scheduled to take place in September, together with elections to the State Duma. Maria Prusakova, the head of the local party branch, also said that unconfirmed reports about a police probe into her activities were part of this pressure campaign. Over the past weeks, regional authorities in several regions blocked opposition deputies’ meetings with voters, equating them with unauthorized protests.

— Andras Toth-Czifra

From the frontlines

Numbers of the week

393.3 billion rubles – the amount of oil- and gas-related revenues that the Finance Ministry reported for January. This is roughly half the amount of last January’s income and the lowest nominal monthly figure since July 2020, when the COVID pandemic depressed oil sales. The falling income is a consequence of widening discounts on Russia’s Urals oil and low global oil prices, with a negative outlook.
199 – the number of rapes registered in the Belgorod Region in 2025. This grim statistic in the region bordering Ukraine grew threefold over the past year. The upwards trend started in 2022, as did Russia’s full-scale invasion that brought soldiers into Belgorod. Last year, more rapes were committed in the region than in the much more populous Moscow Region.
9.6% – the profitability of sales in the Russian metallurgical sector in the first eleven months of 2025, according to the Kremlin-linked think tank CSR, down from 28.7% in 2021. A sharp decline in domestic demand, higher prices, and rates have pushed the sector towards a crisis, which may weigh down regional budgets as early as this year.
1,280 – the number of accidents and outages involving utility networks reported in January in Russia, according to Novaya Gazeta. This is almost twice as high as in January 2025 (although lower than in 2024). In most cases the outages are caused by worn-out infrastructure, replacements for which the federal budget has not prioritized.
1.7 trillion rubles – the Russian federal budget deficit in January, according to data published by the Finance Ministry. Federal budget revenues in January 2026 were 11.6% lower than in 2025, and this year’s January deficit exceeds last year’s by 17%. “The high deficit at the beginning of the year was primarily due to the accelerated financing of expenditures within the year and will not impact the overall achievement of the structural balance targets for 2026,” the Ministry says.

— Andras Toth-Czifra & Sara Ashbaugh

Powerless to act

Sara Ashbaugh — Sat, 31 Jan 2026 01:40:24 GMT

Here’s what you might have missed this week:

Residents of Murmansk and Severomorsk were left without power for several days, leading to rolling blackouts and a state of emergency in the region.
Russia agreed to pause strikes on Kyiv at President Trump’s request ahead of this weekend’s peace talks in Abu Dhabi.
Novosibirsk’s legislative assembly voted to implement the federal government’s municipal reforms, eliminating more than 300 self-governing bodies.

— Sara Ashbaugh, Editor in Chief

Powerless to act

Over the past week, several thousand residents of Murmansk, Russia’s “Arctic capital,” and Severomorsk, the main base of Russia’s Northern Fleet, were left without power for four days due to an accident with aging infrastructure. The authorities initially promised to resolve the outages swiftly, but were unable to do so. They were then forced to introduce rolling blackouts and a state of emergency, which was raised on Wednesday after the network operator Rosseti installed temporary pylons. A couple of days prior, large snowdrifts paralyzed the Far Eastern region of Kamchatka, cutting off tens of thousands of residents and forcing many to leave their apartments through their windows as their entrances were completely blocked. Governor Vladimir Solodov admitted that the region lacked sufficient snow removal machinery and appealed to the federal government for help. In the middle of last week, Solodov claimed to President Putin that the situation was under control, even as local residents continued to complain about the authorities’ insufficient response. The situation in Kamchatka also drew attention to the authorities’ aggressive throttling of mobile internet, which impeded the normal operation of private and public services in Kamchatka enough for Solodov to request a suspension of the blocking. Even so, this week the State Duma adopted in the first reading a draft law that will allow the Federal Security Service to throttle even domestic internet services.

These incidents are only two of the largest involving public services and utilities that regional authorities have been unable to deal with. In the Altai Territory town of Rubtsovsk, more than 120,000 people had to be evacuated earlier this month due to a heating failure. Similar accidents happened over the past week in Ulan-Ude, Omsk, and a number of smaller cities. The list of accidents over the entire heating season is much longer, even without considering border regions such as Belgorod where Ukrainian drone strikes, responding to Russia’s relentless battering of Ukraine’s civilian infrastructure, have resulted in major utility outages.

In almost all of the regions with major outages, regional authorities have relied on local businesses and residents to provide essential aid to those affected. While Russians are usually ready to help in such cases, they have also voiced growing frustration over the worsening state of public utilities both online and in person. The vast majority of Russian utility and power networks are in need of repair, requiring an estimated 4.5 trillion rubles. Under the current war-focused fiscal circumstances, the Russian government has been reluctant to allocate these funds despite repeatedly promising to do so. The Kremlin is relying instead on regional governors and presidential plenipotentiaries to solve the problems where and when they arise and to assume political responsibility. The fact that at the same time utility tariffs have been growing across the country has led to localized protests in previous years in several regions. This year, likely due to the federal legislative election scheduled for September, the main tariff hike—which in some regions will be over 20% (significantly higher than inflation)—will take place on October 1.

— Andras Toth-Czifra

Moscow experienced heavy snowfall this week, with accumulation in the capital reaching up to two feet. Pictured here is the famous Miusskaya Snow Dune, a large snowdrift in Miusskaya Square where municipal workers pile snow from nearby streets. The massive dune, which first appeared during heavy snowfall in 2018, is so well-known by Muscovites as to have inspired its own merchandise and social media accounts. (photo: Alexander Nemenov / AFP / Scanpix / LETA)

Updates: War in Ukraine

On Thursday, U.S. President Trump announced that Russia agreed to pause strikes on Kyiv and other Ukrainian cities until February 1. According to Trump, he requested the temporary pause due to the extreme weather conditions in Ukraine. “They say they’ve never experienced such cold,” he said during a Cabinet meeting. Russia confirmed the pause in strikes but framed it as a gesture of goodwill for upcoming peace talks in Abu Dhabi, which are scheduled for this weekend. “I can say that President Trump did indeed make a personal request to President Putin to refrain from striking Kyiv for a week, until February 1, as a way to create more hospitable conditions for negotiations,” Kremlin spokesperson Dmitry Peskov said. On Friday, Ukrainian President Zelenskyy commented that there had been no direct agreement between Moscow and Kyiv, but that Ukraine would refrain from attacking Russian energy infrastructure if Russia did the same.

According to new estimates published by the Washington-based Center for Strategic and International Studies (CSIS) on Tuesday, Russian losses in the war in Ukraine have reached almost 1.2 million. “Russian forces have suffered approximately 1.2 million casualties (killed, wounded, and missing) and as many as 325,000 killed since February 2022,” the report states. Meanwhile, CSIS estimates that the Ukrainian Armed Forces have likely lost between 500,000 and 600,000 soldiers, including up to 140,000 killed. The Russian government disputed the CSIS’s findings, however, with Peskov claiming that only information provided by the Ministry of Defense can be trusted.

Russia and Ukraine completed an exchange of deceased soldiers on Thursday, the first such exchange of 2026. According to State Duma lawmaker Shamsail Saraliyev, Russia transferred the remains of 1,000 Ukrainian soldiers and received the bodies of 38 Russians in return. The exchange took place under the provisions of the Istanbul agreement, which saw the transfer of 14,871 total bodies in 2025. The Ukrainian headquarters for the treatment of prisoners of war confirmed the exchange, noting that Ukrainian institutions would now work to identify the repatriated deceased.

— Sara Ashbaugh

Quickfire: Regions

Ilya Seredyuk, the governor of the Kemerovo Region, had to publicly apologize after he put part of the blame on mothers for the deaths of nine newborn children in one of the region’s maternity clinics over the new year. The governor talked about the tragedy in his “Direct Line” television interview, a format that mimics Vladimir Putin’s carefully choreographed “interactive” television show, and said that pregnant women were unwilling to take necessary precautions and visit for consultations. Later, a Communist deputy in the State Duma called for the dismissal of the governor. The tragedy drew attention to staff shortages, the closure of midwife stations, and a lack of adequate health care funding in the region, which has been struggling with the crisis of its core industry, coal mining, for the second consecutive year. It also highlighted the general shortage of competent health care personnel in state-run clinics in the Russian countryside.

The Novosibirsk Region’s legislative assembly voted in two laws implementing the federal government’s municipal reform. The region, which had been one of the most politically pluralistic areas of the country over the past decade, will abolish the lower tier of municipalities and fold them into municipal districts, eliminating more than 300 self-governing bodies. The other regional law stipulates that, in the future, the mayor of the regional capital will be selected from candidates proposed by the regional governor—a Kremlin appointee. This eliminates even the theoretical possibility of an opposition or independent politician standing for this office and courting the support of local elites represented in the city council. Direct mayoral elections were already scrapped in 2023, amidst protest from opposition deputies, who have since been deprived of their mandates.

— Andras Toth-Czifra

Recent Report

From Front Line to Fault Line: Russia’s Challenge Managing Veteran Reintegration - András Tóth-Czifra

Russia’s policy execution structure decentralizes responsibility for the reintegration of war participants while centralizing credits for success stories. The execution of the policy is rife with political risks, but keeping the narrative of reintegration under tight control is a vital objective for the Kremlin. Read the report.

By the numbers

600 million rubles – the amount of wages that employers in the Kemerovo Region—most of them coal companies—owe their employees. To put this number into perspective, as of November 2025, the official amount of country-wide wage arrears was 1.77 billion rubles. Overall, this is still far from the amount of wage arrears that workers experienced in the 1990s, but as Kemerovo’s example shows, specific sectoral crises can lead to a significant concentration of arrears.
423 people – the bottom estimate for the number of people who have been killed in Russia by war participants returning from Ukraine, according to a research project by Novaya Gazeta. The violent behavior of traumatized veterans, many of whom are convicted felons, is one of the main concerns of the Russian authorities regarding their reintegration.
13.7% – Russian citizens’ inflation expectations, according to a survey ordered by the Central Bank. The rate has grown by more than one percentage point since October last year. Both the general population and businesses are expecting higher prices due to a VAT hike and other similar measures that came into force in January. This may slow down the bank’s rate cutting.
66 billion rubles – the amount for which Moscow’s Domodedovo Airport was sold to Perspektiva LLC, a subsidiary of Sheremetyevo International Airport. The final selling price at the Dutch-style auction on Thursday was down to half of the 132.2-billion-ruble starting price, according to RBC. Domodedovo was nationalized in June 2025 at the request of the Prosecutor General’s Office due to the foreign citizenship of its owners, Dmitry Kamenshchik and Valery Kogan. Sheremetyevo CEO Mikhail Vasilenko called Thursday’s acquisition “a business project aimed at rehabilitating an important part of the Moscow aviation hub.” Domodedovo’s new owners have also acquired the airport’s debt, which exceeds 70 billion rubles. Domodedovo is “an asset with significant debt, requiring significant financial investment,” the Transport Ministry noted.

— Andras Toth-Czifra & Sara Ashbaugh

Warranted Opinion

Leah Pedro — Fri, 23 Jan 2026 20:20:32 GMT

Tell us what you find most valuable in the Bear Market Brief by answering these three questions!

Comment on this post to give additional feedback on topics covered in the Brief.

From Front Line to Fault Line

Leah Pedro — Wed, 07 Jan 2026 16:45:15 GMT

Download the Report

Nearly four years into Russia’s war in Ukraine, the Kremlin faces challenges in reintegrating war participants into Russian society.

In From Front Line to Fault Line, Eurasia Program Fellow and Bear Market Brief contributor András Tóth-Czifra explains shortcomings in Russia’s policy approach to reintegration. The author also points out that while “new elite” of war participants has been successfully turned into a political brand over the past two years, war participants, drawn from diverse backgrounds and as a consequence facing very different palettes of opportunities, have not yet turned into a political class or pressure group.

Reintegrating war participants into civilian life will put a significant burden on both federal and lower-level budgets in Russia, as well as on large employers. On the whole, regional governments and budgets will likely have to take on political responsibility for the implementation of reintegration policies, even though in most cases the social infrastructure operated by them lacks the capacity to deal with the expected magnitude of the problem. Both federal and regional governments will likely attempt to pass on part of the financial burden of these policies to employers. The Kremlin will supervise and coordinate this work by defining standards and, in select cases, providing funding, while taking credit for cases of successful reintegration, which will likely be highly promoted in the media controlled by the authorities. However, the main risk is not the unavailability of funding, but the lack of capacity of the state to deliver social and medical services.

András Tóth-Czifra is a Fellow in the Eurasia Program at the Foreign Policy Research Institute (FPRI) and contributing author for FPRI’s Bear Market Brief Newsletter. Read more of his analysis in No Yardstick, now on Substack.

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The Brief, In Brief

Sara Ashbaugh — Mon, 22 Dec 2025 18:40:27 GMT

In this episode, the current editor of the Bear Market Brief talks to a former editor of the Brief about an important question: in the big picture, what actually happened in Russia in 2025? Also, they discuss how to go about making a news brief.

Perma-frozen assets

Sara Ashbaugh — Sat, 20 Dec 2025 01:00:16 GMT

This week in the news:

EU member states agreed to loan Ukraine $105 billion over the next two years for its military and public service needs.
President Putin held his annual Direct Line press conference to address questions from the media and the Russian public.
The Central Bank of Russia cut its key rate by 50 basis points to 16% amid growing pressure from the government and the business sector.

After today’s brief, BMB will take a hiatus until next year. Happy Holidays!

— Sara Ashbaugh, Editor in Chief

EU loan to Ukraine—without Russia’s assets

European Union leaders failed to agree on the so-called “reparations loan” to support Ukraine’s finances for the next two years. The instrument, proposed by the European Commission, would have used Russia’s assets frozen in the European Union as collateral against which to borrow funds, repayable only if Russia agrees to pay reparations to Ukraine as part of a future peace deal. In a last-ditch effort to get the loan across the line, German Chancellor Friedrich Merz held talks with Bart de Wever, Prime Minister of Belgium, where the lion’s share of the frozen Russian assets are held. Ukrainian President Volodymyr Zelenskyy also attended the summit.

The summit reportedly did have a compromise solution on the table that would have addressed Belgium’s concerns by spreading the risks of using the assets in various ways, but this did not get the necessary support. Instead, the EU will borrow 90 billion euros ($105 billion) against unused funds in its seven-year budget. This still helps to meet Ukraine’s financing needs and is arguably a significant step for the EU. However, it comes with added costs for both the bloc and Ukraine, and thus it represents a political defeat for Merz and the loan’s other backers. The borrowing, which will take the form of so-called “enhanced cooperation” between 24 member states, will not come with additional financial obligations for Hungary, Slovakia, and the Czech Republic, which opposed supporting Ukraine in this way.

Crucially, Russia’s assets will remain immobilized until the end of its aggression against Ukraine under a separate decision made last week. That deal made reference to Article 122 of the EU Treaty to declare an economic emergency and circumvent the risk of vetoes by member states. The risk of vetoes existed under the previous sanctions regime, which required the Council to extend the freezing of the assets every six months. This asserts the EU’s control over these assets, strengthens the bloc’s negotiating position, and may be seen as a blueprint for similar decisions in the future where member states’ vetoes threaten a unanimous decision.

Reservations against the reparations loan fell into three wide categories. The first category included potential issues with the legality of the instrument, which would allow Russia to challenge it (including in the framework of a bilateral treaty signed with Belgium). There was also a wider fear of Russian retaliation, ranging from Russia pulling out of ongoing peace talks with the United States to the Russian state seizing assets belonging to European owners immobilized in Russia and possibly in other jurisdictions. Finally, there was the unresolved question of Ukrainian post-war reconstruction, which, under the U.S. government’s plan, would be partially financed from the frozen Russian assets (albeit in a way that opens the door for the U.S. to de facto benefit from the assets and also allows the money to be used for reconstruction in Russian-occupied territories).

Hungarian Prime Minister Viktor Orban and his Slovakian ally, Robert Fico, opposed the loan. Orban called the open-ended immobilization of the assets a “rape of EU law.” From the point of view of the two illiberal leaders, the decision de facto limits their influence. Orban’s government has used its veto liberally to extract concessions from other member states. Also, Orban has focused his party’s campaign for the upcoming legislative election in April 2026 on unfounded claims that his opposition would be pressured by EU institutions to raise taxes in order to finance Ukraine. Earlier, Orban called on EU member states to support the 28-point plan put together by the Trump administration without reservations.

Russia also put pressure on the European Union prior to the summit, with Vladimir Putin calling EU leaders “little hogs” of the former Biden administration in an attempt to communicate that the EU should be blamed for a failure of the U.S.-led negotiations. Additionally, Belgian financial and political decision-makers have reportedly faced intimidation attempts. When it comes to weakening the European Union’s capacity to act, the Kremlin’s interests coincide with the Trump administration’s, as laid out in the new National Security Strategy penned by the White House. The Kremlin likely regards this as an opportunity.

— Andras Toth-Czifra

Danish Prime Minister Mette Frederiksen, European Council President Antonio Costa, and European Commission President Ursula von der Leyen announced the results of the EU summit in Brussels on Friday. While EU leaders finalized a deal to lend Ukraine $105 billion over the next two years, they were unable to reach a consensus on the use of $246 billion in frozen Russian assets as collateral. The initiative was mainly opposed by Belgium, where the majority of the frozen Russian assets are located. Russia threatened legal action against Belgium and Brussels-based Euroclear, the financial market infrastructure group where most of the Russian assets are held, if the plan went through. Nevertheless, the $105 billion loan deal will cover two-thirds of Ukraine’s military and public service needs over the next two years. “We committed, we delivered,” Costa said. (photo: Reuters)

Direct Line

President Vladimir Putin held his annual “Direct Line” end-of-the-year press conference on Friday. According to the Kremlin, Russians from across the country submitted more than 2.6 million questions this year, some of which moderators selected for Putin to answer live. Attendees also asked questions in person, including one journalist who wanted to know if Russia had discovered aliens. (“It’s top secret information,” Putin joked, before telling her that interstellar object 31/ATLAS is just a comet.) While a broad range of issues were addressed during the event, the dominant theme was the U.S.-led peace process and the war in Ukraine. Putin also discussed recent European efforts to seize frozen Russian assets and use them as a “reparations loan” for Ukraine, a measure that failed during the European Union’s summit in Brussels earlier on Friday. Additionally, he fielded questions about Russian domestic issues, including high prices, payments to soldiers, and internet disruptions. The marathon press conference lasted four and a half hours in total, ending with Putin’s thoughts on love, friendship, and his vision for Russia’s future.

On the issue of the war in Ukraine, Putin insisted that Russian forces are gaining territory on the frontlines while also claiming that Russia is making every effort towards peace. “Our troops are advancing along the entire line of contact, in some places faster, in others more slowly, but in all directions, the enemy is retreating,” Putin said, adding that the “strategic initiative” is entirely in Russia’s hands. However, he also said that Russia agreed to the U.S. peace proposal and has already made compromises in an effort to promote peace. “Therefore, to say that we are rejecting anything is completely incorrect and has no basis,” he said. He put the onus on Ukraine and Europe, saying, “The ball is entirely in the court of our Western opponents, primarily the leaders of the Kyiv regime, and in this case, first and foremost, their European sponsors. We are ready for both negotiations and a peaceful resolution to the conflict.”

On the topic of Europe, Putin expressed concern about the buildup of NATO military infrastructure near Russia’s borders. “Will there be new special military operations? There won’t be if you treat us with respect and respect our interests, just as we’ve always tried to respect yours,” he said. He called the recent European initiative to use frozen Russian assets as collateral for a loan to Ukraine “daylight robbery.” “Why can’t this robbery be carried out? Because the consequences could be grave for the robbers,” he said, explaining that such a measure would undermine worldwide confidence in the safety of assets stored in Europe.

Not all of the comments from the Russian public were positive. Despite the highly choreographed nature of the event, the live messaging system caused some hiccups. “Not a direct line, but a circus,” said one comment that briefly flashed across the screen before the camera moved away.

— Sara Ashbaugh

Putin’s annual Direct Line press conference on Friday included a Q&A session to answer questions from the public and the media. In addition to live questions from journalists and spectators, written questions and comments were projected on a giant screen in the venue. The comment pictured here concerns the need for asphalt roads in the Klimovskaya village in the Moscow region. (photo: RBC / Broadcast of the direct line with Russian President Vladimir Putin)

The Central Bank cuts its key rate

The Russian Central Bank cut its key rate by 50 basis points to 16% today, continuing a policy that has seen the rate drop from 21% to 16% over the past year. The decision was expected, but Elvira Nabiullina, the head of the Bank, added that further rate cuts in 2026 would not be automatic and the Bank would keep an eye on economic developments.

The Central Bank has faced growing pressure from the government and the business sector to drop its key rate faster. While the 2025 rate cuts were quicker than the Bank’s original expectations, they were slower than what the Finance Ministry used to calculate Russia’s 2025 federal budget. According to the latest data published by the Central Bank, while inflation slowed to around 6% in 2025, a recently adopted VAT hike led to higher short-term inflation expectations by both employers and citizens. Wage growth rates have also slowed in 2025, as it appears that the economic conjuncture triggered by wartime spending is wearing out.

High inflation and borrowing rates also contributed to a 20% growth in tax arrears between 2024 and 2025. Last week, Sberbank warned that metallurgical companies (among others) were having trouble servicing debt and were counting on monetary easing in 2026. The sector is struggling due to the fizzling out of a construction sector boom and the federal government has been reportedly considering a sectoral aid package similar to the one received by the coal sector.

— Andras Toth-Czifra

On the podcast

Howard Amos and Nina Zakharkina-Berezner join host Aaron Schwartzbaum to discuss the lived reality of modern Russians in the country’s periphery and informal, dissident spaces that exist under the radar. Listen here or wherever you get your podcasts.

New report

From Front Line to Fault Line: Russia’s Challenge Managing Veteran Reintegration - András Tóth-Czifra

Quickfire: Regions

Hundreds of people protested in the Southern Russian city of Krasnodar against plans to build a church honoring Russian soldiers that fell during the war against Ukraine in a public space currently used for recreational purposes. The protestors also recorded a video message addressed to Vladimir Putin. The protest was supported by Alexander Safronov, a local Communist deputy. It came after the Communist Party’s local branch collected signatures to force the resignation of Mayor Yevgeny Naumov for the mismanagement of public services. The current protests call to mind a similar local movement in Yekaterinburg in 2019, which also tried to prevent the construction of a church in a popular riverside park. Protesters then managed to force Putin to call for a compromise, which stopped the project. The size of the Krasnodar protest is smaller, and the level of domestic repression has increased over the past six years. However, this protest highlights not only the existing protest potential of second-tier city residents, but also tensions between local officials. For these officials, supporting symbolic pro-war policies is often a way to signal loyalty or to get a desired project across the line. It is worth noting that Krasnodar has been one of the quickest growing Russian cities over the past decade.

The Investigative Committee launched an investigation into an accident that occurred at the Yurga Heat and Power Plant on December 12. The accident resulted in heating failures in a Kemerovo Region city of 77,000 people, where nighttime temperatures were close to 0 degrees Fahrenheit this week. Such outages are increasingly common in Russia’s regions due to aging and mismanaged utilities infrastructure and a lack of funds for repair. The situation in Yurga was especially awkward for the city and regional authorities. In September, they had to refute rumors that the heavily indebted power plant would close or stop providing heat in the 2025-2026 winter season. The Kemerovo Region is Russia’s main coal producing region, and it has been going through an economic and fiscal crisis for the second consecutive year due to a still-developing crisis in the coal industry. The regional authorities have had to make cuts in the regional budget, including to social and investment spending.

The State Duma adopted a law that automatically transfers “ownerless” real estate to the region or local municipality where it is found. This is especially consequential in the occupied territories of Ukraine, where Rosreestr, the state cadastre and cartographic agency, said it found 550,000 “ownerless” properties. Earlier reports have shown how politically-connected Russian construction firms profit from damaged real estate seized from its original owners, who in many cases had to flee. The authorities have also used this process to resettle Russians to the occupied territories. The newly adopted law creates an overarching legal framework to do this. The reconstruction of the occupied territories is overseen in the federal government by Deputy Prime Minister Marat Khusnullin.

— Andras Toth-Czifra