Russian economy can no longer ensure an intense war against Ukraine - The Economist

Alexander LitvinBusiness
Sanctions imposed on Russia are working
Sanctions imposed on Russia are working

Russia spends about 3 percent of its GDP on the war against Ukraine. It still has the economic ability to wage war, but it cannot provide intensive combat operations.

This is what The Economist writes. The Russian state has many options for self-financing. Russia's sovereign wealth fund still has about $150 billion (about 10 percent of GDP), even after it was depleted by about $30 billion last year. The government could also issue more debt.

But replacing damaged weapons and spent ammunition is not just a matter of money. Russia has supplied military equipment on an enormous scale. For example, estimates of the number of armored vehicles destroyed during the war range from 8,000 to 16,000, according to a recent report by the Center for Strategic and International Studies (CSIS), a think tank. Russia also lost many aircraft, drones and artillery systems.

The problem is that to produce advanced weapons, it needs access to high-quality "dual-use" Western-made components, from engines to microchips, which are difficult to obtain because of Western sanctions. Critically needed parts can always be diverted to their most urgent use.

In February, for example, the government temporarily stopped accepting applications for biometric passports to save microchips. High-quality washing machines are also being imported in large quantities to remove chips, presumably for use in guided missiles and other military kits. Ukraine's military intelligence recently reported that Russia manages to produce about 30 X-101s and 20 Calibers, the two main types of guided missiles, every month, presumably through such tricks.

But the amount of advanced weaponry being produced is far from what Russia needs to replenish its dwindling stockpile. Ukrainian and Western military officials believe that Russia has used most of its stockpile of the most accurate guided missiles. Serial numbers found in the wreckage of spent missiles suggest it is now using new ones made during the war. Insiders say the army is asking for ten times as many tanks as Russian factories can produce. The lack of software and technical equipment also seems to be preventing Russian drone production from getting off the ground.

What Russia lacks in quality, however, it can partly compensate for in quantity by stockpiling Soviet-era weapons. It upgrades about 90 old tanks a month, equipping them with new electronics and communications systems. The Kremlin is rebuilding old missiles that are less accurate.

As OBOZREVATEL wrote earlier, Russians are rapidly losing their wealth. Consumer demand has rolled back to the level it was seven years ago.

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