Politico: The Russian Economy Is Cracking
- 25.07.2026, 9:20
As oil refineries and warehouses continue to burn, Russian financial markets are beginning to freeze up.
The Russian economy is coming under increasing pressure as the cost of financing the war against Ukraine continues to rise.
According to Politico, one of the latest signs of tension is the standoff between the Ministry of Finance—which is tasked with raising funds for the war—and Russia’s largest banks, which are demanding ever-higher interest rates to finance it.
In particular, the Ministry of Finance recently announced the suspension of bond sales after a series of auctions failed to attract buyers. The publication noted that government bond yields currently range from 13% to 17% and could fall if the Central Bank of the Russian Federation lowers its key rate. The key rate currently stands at 14.25%.
The Russian Union of Industrialists and Entrepreneurs, the country’s largest business lobby, warned of a wave of “fall defaults” if the central bank does not cut rates. The number of corporate bankruptcies has already risen by nearly 11% in the first half of the year.
According to Janis Klug, an analyst at the German Institute for International and Security Affairs , the Kremlin had previously planned to cut military spending this year, but instead it rose sharply and accounted for nearly half of government spending in the second quarter.
Kluge noted that the stalemate in the bond market does not portend a collapse, but is consistent with other signs of strain in Russian financial markets. In particular, the main stock index for Russia’s oil sector has fallen by 30% over the past two months due to Ukrainian drone strikes on oil refineries.
What is the situation in Ukraine?
Over the past two months, Ukraine has significantly expanded its drone attacks. In addition to attacks on oil refineries, which have led to fuel shortages across the country, Ukraine has struck 183 vessels in the Black and Azov Seas, seriously disrupting Russia’s attempts to replenish fuel supplies in besieged Crimea and hindering grain exports to global markets.
Russian farmers have even complained that buyers are unwilling to take risks and are sourcing grain from elsewhere, leaving them unable to sell their good harvest.
The situation was exacerbated by strikes on Wildberries’ distribution centers. As a result of the attacks, hundreds of millions of dollars’ worth of goods were destroyed.
The publication cited remarks by the commander of the Unmanned Systems Forces Robert (Madyar) Brovdi, who stated that the value of the destroyed goods was not the key issue. “The point is to shatter, in an instant, the illusion of a comfortable, peaceful life for the obedient populace of the aggressor state,” Brovdi said.
Although Wildberries is primarily a civilian company, its online platform sells various dual-use goods, such as body armor, drones, and night-vision devices. Thus, Ukraine considered it a legitimate target.