ISW: The Kremlin Can No Longer Hide This
- 29.08.2026, 8:44
Budget problems have become apparent.
The Russian authorities are struggling more and more to in covering up serious economic problems caused by the war against Ukraine, Western sanctions, and missteps in economic management. These difficulties have already resulted in concrete operational disruptions, but the Kremlin has no intention of halting hostilities. This is noted in a new report by the Institute for the Study of War (ISW).
At the same time, preparations are continuing in Russia for a possible fall mobilization—the final decision still rests solely with Vladimir Putin.
Budgetary problems are mounting
According to analysts, the costly war, Ukrainian strikes on Russian territory, international sanctions, and ineffective economic policies have led to concrete operational difficulties for the Russian authorities.
For example, on August 28, Bloomberg reported, citing sources, that Russian Finance Minister Anton Siluanov had warned Prime Minister Mikhail Mishustin about a negative balance in the Federal Treasury’s budget account. The deficit at that time stood at 5.5 trillion rubles (about $63.8 billion), which forced the authorities to immediately cut spending.
According to Bloomberg, Moscow has implemented an austerity regime: funding for non-military items has been cut by 35%, and federal agencies have been instructed to prepare for a 15% reduction in staff. Earlier reports indicated that Russian officials had unsuccessfully asked Putin to cut defense spending amid a deepening budget crisis.
The ISW notes: “These problems, which reportedly peaked in April 2026, continue to trouble Russian officials, prominent Russian economists, and ordinary Russians.”
Analysts emphasize that the current difficulties are short-term and manageable but expose structural weaknesses and chronically ineffective economic management. This is hitting Moscow and St. Petersburg particularly hard—cities that Putin has traditionally sought to shield from the consequences of the war.
The ISW believes that Putin “continues to violate his social contract with Russians,” promising to protect them from the consequences of the war in exchange for their loyalty. This is made all the more acute by the fact that such reports are emerging less than a month before the State Duma elections on September 20—a vote that Putin has effectively turned into a referendum on his war.
According to analysts, Russian officials will most likely find a way to continue supporting military operations even amid protracted economic difficulties—the institute does not see a risk of an imminent collapse of the Russian economy.
The Kremlin is preparing for a possible mobilization
At the same time, Russia continues to prepare its infrastructure for a potential call-up of reservists. The Russian Ministry of Defense intends to expand the list of personal data that military agencies will be able to obtain from government bodies, companies, and organizations when assessing citizens’ fitness for service.
The draft amendments, published on August 28, will grant military officials access to information on registration, income, employment, education, disability, taxes, as well as banking and medical information of military personnel. Analysts say this is part of the Kremlin’s long-term strategy to create a unified digital system for managing conscription and mobilization.
According to the ISW, this initiative does not mean that a decision on mobilization has already been made—rather, the Ministry of Defense is laying the groundwork in case Putin decides to take this step after the State Duma elections.
The Institute notes: “The decision to forcibly conscript reservists in Russia remains Putin’s personal decision,” which he will make based on the situation at the front and his assessment of the stability of his own regime.