Russia has begun implementing bold new measures to protect its assets from further Ukrainian strikes on key infrastructure and military targets. The new measures are fiscal, military, and strategic in nature. These new measures underscore Russia’s resolve to sustain its war campaign despite debilitating economic impacts and overwhelming international isolation.
Ukraine’s response has also increased
Most notably, Ukraine has increased its use of military drones along with military sabotage of Russia’s energy and military infrastructure.
In Kursk, one of the most audacious and bold military sabotage attempts resulted in dozens of military drones targeting and causing massive fires at a nuclear power plant. Russian state military authorities claimed a 50% decrease in military reactor capacity due to the military sabotage strike. This further demonstrates the deep military strategic vulnerabilities Russia faces.
Military experts say Ukraine’s strategies have changed since the war began. Kyiv is now using long-range military drones and precision weapons to attack Russia’s supplies and energy resources. This caused Moscow to speed up the implementation of new air-defense systems and to build new, more intensive border surveillance.
In 2026, defense spending is expected to skyrocket
In 2026, defense spending is expected to amount to 16.8 trillion rubles ($209.5 billion). This is much higher than the pre-war levels. While representing a slight nominal decrease over previous years, the budget continues to reflect the Kremlin’s focus on readiness spending, even over domestic spending.
Along with military spending, lawmakers assigned funding to family support programs and to a state-sponsored charity that aids soldiers and their families. This suggests the state is trying to maintain public support for the war.
Russia is going to increase revenue higher than expected. This will also, however, add even more pressure on already strained consumers and increase the cost of living.
The small business VAT threshold will increase, also adding more entrepreneurs to the tax base. There is an expectation from some economic circles that the proposed VAT increase and the small business VAT threshold increase is expected to add additional strain on already SMEs, but the public policy officials expect it to be manageable.
The state is going to be forced to operate in a “difficult circumstance.”
The Kremlin has stated that under the proposed policy budget structure, the state is going to be forced to operate in a “difficult circumstance,” which is in line with their over thirty thousand imposed sanctions on the West and what they are calling “unfriendly actions” regarding Russian property overseas.
Along with investment adjustments, Moscow is also changing military recruitment to guarantee that it has a constant inflow of military recruits. The State Duma recently implemented legislation for year-round conscription. This allows draft boards to do enlistments outside of seasonal enlistments. The objective of this reform is to improve the quality and reduce administrative bottlenecks to improve the manpower of the military.
The changing of conscription rules is framed as improving operational flexibility and decreasing the time needed to deploy troops to the frontlines. The consensus is that expanding conscription will increase societal tension. This is especially true with higher casualty rates and increased public dissatisfaction with the status of the war.
While the Kremlin claims that Moscow is improving these measures to ensure National Security, there is no denying that there is potential for these measures to have a detrimental effect in the long run. These effects will have an overall negative effect socially and economically. This will happen through increased tax burden, sustained inflation, and the increased focus on defense which will reduce the overall productivity of the economy and economically diminish the standard of living. With the military situation and Ukrainian attacks, especially in the Moscow enclave of Belgorod, it is unreasonable to expect Moscow to compromise on military posture.
