Good day. And as I have said many times, wars are not sustained by rhetoric or myth, but by budgets. Behind every artillery barrage, every drone strike, every mobilization wave, there are spreadsheets. There are line items. There are trade-offs. This week, more clearly than at many points in this conflict, those trade-offs are starting to show through the surface of Russia’s presentation of calm.

For a long time, Moscow’s message to its domestic audience and to the world has been simple: the economy is adapting; sanctions are being neutralized; alternative markets are absorbing any losses; the state has ample reserves. The war, in this telling, is a strain, to be sure, but a manageable one. Yet budgets, unlike propaganda, must eventually reconcile.

This week, we see multiple signs of a tightening fiscal environment. Military expenditures continue to climb, not only in absolute terms but as a share of the federal budget. Social spending is quietly trimmed, regional subsidies are restructured, and various new “temporary” levies and contributions are introduced. None of these measures, in isolation, constitutes a crisis. Taken together, they describe a state under steadily increasing pressure.

The reasons are not mysterious. Russia’s revenue base has been eroded on several fronts. Discounted oil sales, constrained markets, increased logistics and insurance costs, the lingering impact of refinery strikes, and the structural drag of sanctions — all contribute to a situation in which the nominal flow of funds hides a deteriorating net position. One can still sell, but at what price, and to whom, and with what friction? Those questions now dominate the fiscal picture.

At the same time, the expenditure side of the ledger has become increasingly rigid. War spending does not easily decline. Once mobilized, a war economy develops constituencies: defense contractors, regional elites, security services, all of whom have expectations. Cutting these flows risks political backlash. And so the state is drawn into a familiar pattern: it protects the coercive apparatus, trims at the edges of social obligations, and hopes that the strain will remain diffuse enough to avoid overt unrest.

Ukraine, though not in control of global markets, has played a deliberate role in tightening this squeeze. Strikes on refineries and energy infrastructure, pressure on the shadow fleet, and the ongoing degradation of Russia’s reputation as a reliable supplier have all compounded the effects of formal sanctions. What might, in a different context, have been a temporary adjustment is hardening into a structural problem.

The Kremlin’s difficulty is not merely arithmetic. It is also narrative. For years, it has presented Russia as a state uniquely capable of absorbing hardship, of turning adversity into strength. But this story depends on a certain level of visible stability: pensions paid, wages steady, public services maintained. As budgetary pressure forces cuts and delays, that stability becomes harder to sustain.

We should not, of course, imagine an imminent economic collapse. States can endure considerable strain, particularly when repression is available to manage dissatisfaction. But endurance is not the same as health. What we are seeing now is the emergence, into public view, of a fiscal condition that had long been gestating beneath the surface.

Ukrainian planners, and their partners, understand this. Their strategy has never been to bankrupt Russia overnight — an impossibility. It has been to force the Kremlin into a chronic dilemma: either reduce the scale of the war effort or accept a steadily worsening economic position. Thus far, Moscow has chosen the latter. But the room for that choice is not infinite.

One can see hints of this in the way Russian officials now speak about “prioritization,” about the need to “optimize” certain programs, about a future in which “post-conflict reconstruction” will require further sacrifices. These are not the words of a state at ease. They are the language of a government that knows the books do not balance as once they did.

Looking back from some future vantage point, analysts may not be able to point to this exact week as the moment when Russia’s fiscal squeeze began. The process is too gradual for that. But they may well say: by mid-2025 it was no longer possible to pretend that the war was being fought at a tolerable economic cost. The indicators were there. The adjustments had begun. The squeeze had become visible.

Wars, as I have said, are not won by slogans. They are constrained, shaped, and eventually ended by the capacity to go on paying for them. Ukraine, through its actions and alliances, has ensured that Russia must pay more and more for less and less. This week, that reality is becoming harder to hide.