Tag: Russian Economy
Are the Sanctions on Russia Finally Working?
Russia’s brutal war in Ukraine is now in its fourth year. In recent weeks, President Donald Trump has held several high-level meetings to explore ways to end the conflict. How serious are these efforts, and what would it take to ensure Ukraine’s long-term security?
When Russian forces invaded in February 2022, many expected Western sanctions to cripple Moscow’s economy and limit its ability to fight. Yet, Russia’s economy has remained surprisingly strong. What explains this resilience? And what could the international community have done differently?
Today, signs of economic slowdown are becoming clear in Russia. Could this downturn finally start to weaken the Kremlin’s war machine? What effect might a recession have on the battlefield? And how can Ukraine’s allies keep supporting the country while preparing for reconstruction and future EU membership?
These questions were discussed by:
- Cecilia Malmström, Nonresident Senior Fellow at the Peterson Institute for International Economics (PIIE)
- Torbjörn Becker, Director of the Stockholm Institute of Transition Economics at the Stockholm School of Economics,
- Jacob Funk Kirkegaard, Nonresident Senior Fellow at PIIE.
For more information about the event, visit the Peterson Institute for International Economics.
To learn more about sanctions on Russia and Russian economic retaliation, explore the SITE Sanctions Project — a hub that collects, organizes, and shares insights, data, and analysis on the evolving landscape of sanctions against Russia.
Russia Budget Deficit Nears Full-Year Target in Just Six Months
Russia’s budget deficit has surged to alarming levels, hitting 97% of its full-year target by mid-2025. Falling oil and gas revenues, combined with a sharp rise in government spending, are putting unprecedented strain on the country’s finances. The Russia budget deficit is now the largest for the first half of any year since the war began. The findings come from a new report by Benjamin Hilgenstock, Yuliia Pavytska, and Matvii Talalaievskyi of the KSE Institute.
Economic Strains Push Russia’s Finances to the Brink
In early 2025, low global oil prices dealt a major blow to Russia’s revenue streams. Although prices briefly spiked in June due to Middle East tensions, they soon fell back to $50–55 per barrel. This sustained drop cut oil and gas income by 17% year-on-year, leaving the government struggling to meet budget plans and worsening the Russia budget deficit.
Mounting Pressure on State Finances
By June, the budget deficit had climbed to 3.7 trillion rubles—over five times higher than in the same period of 2024. Government spending rose 20%, while non-oil revenues increased by just 13%. The Russia budget deficit has already nearly equaled the planned total for the year, making it almost certain the target will be missed.
Key Research Findings
- The Russian budget deficit reached 97% of the annual target in just six months.
- Oil and gas revenues dropped 17% year-on-year, while government spending rose 20%.
- Domestic debt issuance in H1 2025 was 90% higher than in the same period last year.
- The National Welfare Fund’s liquid assets exceed the mid-year deficit by only 12%.
Outlook: Risks and Financing Challenges
If oil prices remain low, the Russia budget deficit will likely surpass forecasts by a significant margin. This could force the government to draw heavily on the National Welfare Fund and increase domestic debt issuance. While demand for bonds from Russian banks remains strong, the long-term sustainability of financing is questionable without a rebound in export revenues.
Meet the Researchers
- Benjamin Hilgenstock: Head of Macroeconomic Research and Strategy, KSE Institute
- Yuliia Pavytska: Manager of the Sanctions Programme, KSE Institute
- Matvii Talalaievskyi: Analyst, KSE Institute
Read the Full Report
Explore the full findings and detailed analysis by reading the complete report on the KSE Institute website. You can also explore more policy briefs covering sanctions against Russia and Russian counter-sanctions in the FREE Network’s policy briefs section.
Explore Other Editions of KSE Institute’s Russia Chartbook
- KSE Institute’s Russia Chartbook – August 2025
- KSE Institute’s Russia Chartbook – July 2025
- KSE Institute’s Russia Chartbook – June 2025
- KSE Institute’s Russia Chartbook – May 2025
- KSE Institute’s Russia Chartbook – April 2025
- KSE Institute’s Russia Chartbook – March 2025
- KSE Institute’s Russia Chartbook – February 2025
- KSE Institute’s Russia Chartbook – January 2025
Sergei Guriev: Spin Dictators, Information Wars, and the Conflict in Ukraine
In recent decades, a new generation of media-savvy authoritarian leaders has emerged. They have adapted their strategies to a digitally connected and information-driven world. These rulers, often called “Spin Dictators”, maintain control not through violence or fear but through careful manipulation of media narratives and public opinion.
The concept of Spin Dictators is crucial for understanding how modern autocrats sustain power while appearing democratic. In this discussion, Sergei Guriev, co-author of Spin Dictators: The Changing Face of Tyranny in the 21st Century, joins Maiting Zhuang, Assistant Professor at the Stockholm Institute of Transition Economics (SITE).
Sergei Guriev on Spin Dictators and Putin’s Shift to Fear Dictatorship
Sergei Guriev, Professor of Economics at Sciences Po, explains how modern autocrats differ from their 20th-century predecessors. Instead of relying solely on repression, Spin Dictators use propaganda, controlled media, and strategic disinformation to build legitimacy.
However, Guriev argues that Vladimir Putin’s transformation from a “Spin Dictator” into a “Fear Dictator” marks a turning point. As the Russia-Ukraine war continues, both repression and censorship have intensified. Consequently, the spin-based model of control is collapsing, giving way to classic fear-driven authoritarianism. This shift demonstrates how fragile image-based regimes can be once truth and credibility begin to erode.
Economic and Media Implications for Russia
During the conversation, Guriev analyzes how the war in Ukraine has transformed Russia’s economy and information environment. The suppression of independent media has forced citizens to rely on state-controlled news outlets. As a result, the gap between perception and reality continues to widen. The shift from Spin Dictator to Fear Dictator shows the regime’s rising insecurity and declining legitimacy. Therefore, understanding this transition is essential for policymakers, journalists, and citizens seeking to grasp the new dynamics of modern authoritarianism.
About Sergei Guriev
Sergei Guriev is a Russian economist and Professor of Economics at Sciences Po. From 2016 to 2019, he served as Chief Economist at the European Bank for Reconstruction and Development (EBRD). Before that, he was the Rector of the New Economic School (NES) in Moscow, where he also held the Morgan Stanley Professorship in Economics.
In addition, Guriev is a co-founder of True Russia, an organization that collects donations for Ukrainian refugees and promotes freedom of speech and democratic values. He is also known for his outspoken criticism of the Russia-Ukraine war, making him one of the most prominent academic voices on authoritarianism and democracy today.
About Maiting Zhuang
Maiting Zhuang is an Assistant Professor at the Stockholm Institute of Transition Economics (SITE) and an Affiliated Researcher at the Mistra Center for Sustainable Markets. She received her PhD from the Paris School of Economics in 2020.
Her research focuses on Political Economy, Development Economics, and the Economics of Media. Moreover, her work sheds light on how information systems sustain or undermine authoritarian regimes, aligning closely with Guriev’s analysis of Spin Dictators.
Explore More on Sergei Guriev Spin Dictators
To learn more, watch the full discussion with Sergei Guriev and Maiting Zhuang.
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Sanctions on Russia: How They Impact Europe Energy Security and the Region
As Russia’s war in Ukraine continues, Western sanctions are beginning to chip away at the Kremlin’s war machine. Although President Vladimir Putin appears undeterred, the sanctions are draining resources that could otherwise fund the conflict.
How Sanctions Work?
According to Maria Perrotta Berlin, Assistant Professor at the Stockholm Institute of Transition Economics (SITE), sanctions are most effective when they come as a surprise. “If the threat of sanctions didn’t deter aggression, their implementation is unlikely to change behavior — unless they are more severe than expected,” she explains.
Sanctions, however, are a blunt instrument. They can unintentionally harm other economies and are rarely effective on their own. Maria Perrotta Berlin notes that “the stick of sanctions works best when paired with a carrot”. For instance, offering a clear path toward lifting restrictions, as was done in Iran’s nuclear negotiations.
The Three Types of Sanctions on Russia
Currently, three main categories of sanctions are in place against Russia:
- Financial sanctions: including restrictions on the Russian Central Bank, disconnection from the SWIFT system, and asset freezes. These measures have the most immediate impact.
- Trade sanctions: particularly on technology imports and energy exports. These take longer to affect the Russian economy and are more costly to sender countries.
- Sanctions of inconvenience: such as airspace closures, travel bans, and exclusion from international sports and cultural events. While symbolic, they contribute to isolating Russia on the global stage.
Such isolation can influence public opinion within Russia. It may generate opposition to the government — or conversely, trigger a “rally around the flag” effect that strengthens domestic support for Putin.
Signaling and Solidarity
Despite Putin’s resistance, the sanctions are sending a powerful signal both within Russia and abroad. They demonstrate the unity of Western nations and highlight that much of the world condemns Russia’s actions in Ukraine.
Experts say there is still room to tighten sanctions by expanding the list of targeted individuals, banks, and sectors, as well as closing loopholes used to bypass restrictions.
Regional Impacts: Belarus and Georgia
The FREE Network webinar, “The Sanctions on Russia, and Their Impact on the Region,” brought together experts from Belarus and Georgia to assess the broader consequences.
Belarus faces additional sanctions due to its support for Russia’s aggression. The country has already lost key export routes through both Russia and Ukraine. Its economy is reeling from the depreciation of the Russian ruble and fears of a banking crisis.
In Georgia, the war in Ukraine revives painful memories of the 2008 Russian invasion. While Georgia relies less on Russian gas than the EU, it remains vulnerable to rising oil prices and inflation, already at 13.7%. Nearly 90% of Georgia’s wheat comes from Russia, making food security a growing concern.
Learn More About the Russian War Economy and Sanctions
To learn more about Western sanctions and Russia’s countermeasures, visit the Sanctions Timeline. And for details on sanctions imposed on Russia and their effects, see the Evidence Base section of the sanctions portal. Explore more policy briefs on sanctioning Russia here.
Disclaimer: Opinions expressed during events, seminars and conferences are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.