By Kautilya The Contemplator, Substack, 10/17/26

In the autumn of 2022, the Russian military confronted a problem that has haunted armies throughout history. After months of fighting in Ukraine, it was facing a manpower problem. After all, the stated 150,000-190,000 force that went into Ukraine in February 2022 turned out to be insufficient for the scale and duration of the conflict that followed. Instead, it had to re-orient itself for a longer war of attrition that would require rebuilding its military strength while continuing to fight.

After months of fighting that resulted in the loss of experienced officers, soldiers and equipment, Russian forces did not end combat due to exhaustion. Over the following months and years, Russia mobilized its reserves and replenished existing formations. Damaged armored vehicles were repaired and returned to the battlefield. Training and re-training of combat veterans helped reinforce the army. Factories like Uralvagonzavod, Almaz-Antey, Kurganmashzavod and Kalashnikov Concern began to churn out equipment for a conflict whose demands were only growing.

This raises a fundamental question that many analyses of military power often overlook. How does an army regenerate itself while the battlefield continues to consume the very resources it needs to survive? After all, replacing losses is not the same as restoring combat power. A 100,000-strong experienced army cannot just be replaced by recruiting another 100,000 men. Similarly, a repaired tank can restore a weapon to service, but its operational value still depends on reliability, ammunition, maintenance and a trained crew.

The main distinction here is between replacing losses and restoring combat power. Soviet military thinkers studied this problem extensively. The Red Army saw several of its formations wiped out in the first half of the Great Patriotic War. The Soviet response went beyond just mobilizing more men to building an elaborate relationship between the General Staff, training academies, military production facilities, transport networks and the wider economy. Historical and contemporary Russian military thought reveals that the military strength of a state cannot just be measured by the army that it deploys today but also the combat power it generates tomorrow. As such, the attrition war in Ukraine should be understood as a contest between two systems of military regeneration where each side is attempting to restore its own fighting strength while destroying the other’s ability to do the same. As battlefield realities have demonstrated over the past years, Russia has gradually targeted and degraded Ukraine’s ability to regenerate military power over time while outproducing all of NATO in equipment and armaments.

The Soviet Foundation: Why Armies Must be Rebuilt Before They Are Destroyed

Soviet military thought viewed military power not as a fixed quantity but as something that had to be continuously reproduced. Vladimir Triandafilov discusses this problem in his 1929 work The Nature of the Operations of Modern Armies (Характер операций современных армий). He argued that mobilization depended on available manpower and the economic capacity to equip and sustain it. Numerical strength alone was insufficient and he warned against the excessive multiplication of divisions:

«Такое (тройное) развертывание сильно понизило бы качество войск и поставило под большое сомнение их боеспособность»

“Such a threefold expansion would seriously diminish troop quality and cast considerable doubt about their combat capability.”1

Triandafilov had identified a fundamental limitation of military mobilization in which organizational expansion could outpace the availability of trained officers, specialists and effective command structures. An army could increase its number of divisions without proportionately increasing its combat power. This distinction between nominal strength and actual fighting effectiveness is what must be understood when assessing the combat effectiveness of Russian and Ukrainian formations today.

On June 25, 1941, three days after the German invasion, the Soviet High Command issued Stavka Directive No. 0025 organizing the 19th, 20th, 21st and 22nd Armies under Marshal Semyon Budyonny as a reserve grouping. This was among the first steps in the process of ensuring sustained combat power. While the assembly of these armies was not a uniquely Soviet practice and all major armies routinely maintain strategic reserves, what mattered was the attempt to organize additional military power just three days into the German invasion, while the initial defensive campaign by the frontline Red Army formations was already underway.

The scale of Soviet force regeneration became evident during 1942 when between July and November, two tank armies, 80 rifle divisions, 53 rifle brigades and 70 tank brigades were withdrawn into reserve for restoration.2 General Sergey Shtemenko describes the High Command’s effort to rebuild its strategic strength following the Battle of Stalingrad. He states:

«Окончательного перелома в войне невозможно было достичь без создания сильных и разнообразных резервов».3

“A decisive turning point in the war could not be achieved without creating strong and varied reserves.”

Shtemenko writes that the Stavka possessed four reserve armies on March 1, 1943 that became ten by April 1. These included combined-arms and tank armies.4 This process of rebuilding formations while combat continued helped create the conditions for the Red Army’s transition from the defensive struggles of 1942 to the sustained strategic offensives of 1943.

The Soviet military textbook Tactics (Тактика) subsequently discusses a particularly revealing principle concerning the restoration of combat power:

«Восстановление боеспособности подразделений и частей осуществляется обычно в прежней организационной структуре, а иногда и путем создания сводных формирований. Оно должно проводиться в сроки, обеспечивающие упреждение противника в переходе к активным действиям».5

“Combat capability is normally restored within existing organizational structures, but sometimes through the creation of composite formations. Restoration must be completed in time to preempt the enemy’s transition to active operations.”

Time played a critical role in ensuring that combat power was restored quickly to prevent the enemy from exploiting a weakness. As such, Soviet commanders often consolidated surviving troops and equipment into new combat-ready (or composite) formations to continue combat rather than regenerate every depleted unit to its original strength.

The parallels with Russia’s current campaign are instructive. In June 2022, three months after the start of the conflict, the Russian military began assembling the 3rd Army Corps, drawing from volunteer formations recruited from different Russian regions. These units were brought under a larger military command structure with training and preparation undertaken before their deployment. Following the partial mobilization announcement in September 2022, Moscow began expanding its reserve formations. In June 2023, Defense Minister Sergei Shoigu announced the creation of a reserve army and an army corps with 3,786 pieces of military equipment allocated to them.6 By October, nine trained and replenished reserve regiments had been established. By December, every combined-arms army had a reserve regiment.

A June 2026 assessment by the Institute for the Study of War identified ten newly formed divisions since 2022 including the 67th, 70th and 72nd Motor Rifle Divisions, the 104th Airborne Division and two naval infantry divisions.7 Even though these developments illustrate Russia’s effort to expand military organization while sustaining frontline operations, the new divisions may not have reached their full combat readiness as yet.

The Army That Repaired Itself: The Soviet System of Battlefield Regeneration

Restoring the combat effectiveness of forces already engaged on the battlefield was as important as creating, training and equipping strategic reserves. This required an organized system capable of repairing damaged equipment and returning them to combat to ensure the continued tempo of operations. Formations could not consistently rely on receiving newly manufactured equipment.

General Alexey Ivanovich Radzievsky assessed this problem in significant detail in his book Tank Strike (Танковый удар) drawing on the experience of Soviet tank armies during the Great Patriotic War. The 3rd Guards Tank Army during the Lvov-Sandomierz offensive of July-August 1944 provides a revealing illustration. Radzievsky notes that the number of armored vehicles and self-propelled guns repaired during the operation exceeded the army’s initial armored strength. Many damaged vehicles were being repaired and returned to combat repeatedly. He recalls:

«Опыт минувшей войны показал, что не менее 60% боевых машин при подготовке операции и 85–90% боевых машин в ходе наступления прибывало на пополнение после ремонта. Следовательно, восстановление танков и САУ являлось главным источником восполнения потерь».8

“The experience of the past war demonstrated that at least 60% of combat vehicles received as replacements during preparations for an operation, and 85-90% during an offensive, came from repairs. Consequently, restoring tanks and self-propelled guns was the principal means of replacing equipment losses.”

This distinction between temporarily disabled vehicles and an irrecoverable loss was fundamental to maintaining combat power. This historical experience provides another framework for understanding the Russian campaign in Ukraine. Russian forces have employed forward repair facilities to recover damaged vehicles and return them to service. According to Russian officials, certain battlefield repairs averaged 2-3 days.9

During the 2022-24 period which witnessed the highest use of armored equipment, Russia’s established repair and refurbishment infrastructure offered several advantages in turnaround times relative to Western-supplied Ukrainian systems that depended on specialized maintenance facilities outside of Ukraine. Damaged M1A1 Abrams and Leopard tanks required evacuation to repair facilities in Poland or Germany. German PzH 2000 self-propelled howitzers also had to be serviced outside of Ukraine. Shortages of specialized mechanics and spare parts compounded the problem. The Polish Center for Eastern Studies reported that such arrangements could remove equipment from service for weeks.10 This difference illustrates Radzievsky’s central insight that the interval between equipment being disabled and its return to combat is an important determinant of military endurance.

A significant advantage for Russia has also been the enormous material reserve of armored vehicles, hulls, engines and components that it inherited from the Soviet arsenal. This has enabled factories to restore and modernize equipment without manufacturing every vehicle from scratch thereby playing a critical role in the speed of regenerating equipment. At the same time, Soviet-era reserves are finite and cannot indefinitely substitute for new production.

The Arsenal Behind the Army: The Economics of Force Regeneration

Soviet military planners understood that mobilization and battlefield repairs alone could not sustain a prolonged war. The industrial capacity of the state mattered as much as the strength of the armed forces. Here, Nikolai Voznesensky, the Soviet First Deputy Premier who oversaw wartime economic planning through Gosplan (the State Planning Committee) provides some useful insights. In his work The War Economy of the USSR During the Great Patriotic War (Военная экономика СССР в период Отечественной войны) he describes how industrial capacity had to be re-organized and expanded while the war was already consuming its output. A key principle that he highlights is how the economy had to be able to absorb disruption while simultaneously expanding production. Reserves of productive capacity, machinery, fuel, raw materials and skilled labor were as indispensable to sustaining warfare. He states:

«Опыт показал, что в современной войне выигрывает тот, кто обладает производственными, людскими, сырьевыми и другими материальными резервами».11

“Experience has shown that in modern warfare, victory belongs to the side possessing reserves of productive capacity, manpower, raw materials and other material resources”

Expanding output despite significant constraints on labor, machinery and raw materials was a significant achievement. The evacuation of factories, re-organization of industrial processes and concentration of resources on military requirements enabled Soviet industry to rebuild its productive capacity. Industrial regeneration preceded the regeneration of military formations.

Russian industrial capacity today has markedly increased though is not on the same war footing as in the 1940s. In June 2025, Rostec reported that its production of artillery ammunition had increased by 30% during 2024.12 Ammunition for tanks and other armored vehicles more than doubled.

Voznesensky also observed that the labor required to manufacture a T-34 tank fell dramatically during the war:

«Затрата живого труда на танковых заводах в производстве танка Т-34 уменьшилась с 8 тыс. человекочасов в 1941 году до 3,7 тыс. человекочасов в 1943 году».13

“The expenditure of direct labor at tank factories in the production of the T-34 declined from 8,000 worker-hours in 1941 to 3,700 worker-hours in 1943.”

This reduction of nearly 54 percent shows a less obvious dimension of Soviet wartime mobilization. Industrial regeneration also depended on increasing the military output obtainable from scarce labor and manufacturing capacity. The Red Army was able to rapidly replenish its formations even as it was incurring significant losses in men and material on the frontlines.

The deeper insight from the Soviet experience is that force regeneration entails the continuous conversion of economic resources into military power. The connection between Shtemenko’s reserve armies and Voznesensky’s industrial reserves is fundamental. While the battlefield devours resources, the economic and mobilization systems in the rear must continuously work to replenish them. The ability of a military to successfully conduct a prolonged campaign depends on how optimally these processes remain connected and ensure that regeneration outpaces attrition. Frontline strategic reserves depend on reserves of productive capacity in the rear. Both are components of the same system of military endurance.

Destroying the Enemy’s Capacity to Regenerate

Russia’s stated war objective of Ukraine’s de-militarization assumes a clearer meaning in light of this analysis of force regeneration. Destroying existing formations is insufficient if they can be replenished and restored to combat. Since the conflict started in 2022, Ukraine’s armies have been reconstituted several times through extensive Western financial and military support.

Initially, Ukraine, with NATO support, mobilized hundreds of thousands of personnel and established foreign-supported training and equipment pipelines. Its 2023 summer counteroffensive highlighted the difficulties of converting new recruits and Western weapons into combat effective formations, especially when training was compressed and there was a shortage of experienced officers. By early 2025, the pressure was even more visible. Many Ukrainian brigades were operating significantly below strength.

Replacing existing losses was increasingly consuming the manpower needed for future reserves. This was occurring at a time when Russia was applying sustained pressure across the entire frontline forcing Ukraine to disperse scarce reserves. At the same time Russia was striking the core infrastructure needed for force regeneration such as training and recruitment centers. In 2026, the rising intensity of strikes on production facilities, ports and energy systems has degraded industrial capacity which will further disrupt the process of regenerating combat power.

The decisive measure of attrition is not the destruction inflicted on the adversary’s forces but degrading its ability to restore effective combat strength. The tragic daily scenes of men in Ukraine being forced into vehicles against their will by police and military recruitment personnel to be sent to the front does not solve the regeneration problem. Ukrainian frontline units are depleted and troops have not been rotated out. Despite these conditions, the Ukrainians are continuing to hold out, but for how long?

The Enduring Lesson of Soviet Military Experience

The enduring lesson of Soviet military thought is that combat power must be continuously reproduced. Triandafilov understood the limitations of numerical mobilization. Shtemenko demonstrated the importance of strategic reserves. Radzievsky underscored the operational value of battlefield repairs. Voznesensky identified the industrial reserves necessary to sustain military production. Together, their insights describe an entire ecosystem dedicated to preserving and restoring military power.

Russia’s experience in Ukraine reflects a continuation of this tradition. Its ability to generate manpower, restore equipment, produce substantial amounts of hardware and ammunition has enabled it to sustain the conflict for this long. For Ukraine, the problem is also consequential. Western support can replenish weapons (now increasingly drones) and support its struggling economy but it cannot immediately create experienced officers, command structures or replenish depleted formations. Russia’s attrition strategy is not just focused on destroying Ukraine’s existing fighting capability but exhausting the entire ecosystem, including Western support, that supports regenerating its ability to continue fighting.

The decisive question is therefore not which army inflicts greater destruction, but which can sustain and restore effective combat power longer than its adversary. The army that matters tomorrow is not merely the one that survives today’s battles, but the one that can be rebuilt while those battles are still being fought.

References available at original link here.

By Jeffrey Sachs, CommonDreams, 10/20/26

This proposed settlement—designed to help end a conflict that has cost hundreds of thousands of lives and carries a continuing risk of confrontation—addresses the causes of the war rather than only its symptoms.

The war in Ukraine can be ended permanently on terms that protect Ukraine’s statehood, meet Russia’s security concerns, and lay the foundation for a durable European security order. As another round of negotiations gears up in Norway, I propose a settlement concluded as a single package, signed by Ukraine and Russia, adopted by a vote of the United Nations Security Council under Chapter VII of the Charter, and guaranteed jointly by the five permanent members of the Council together with other states that choose to join. The proposal rests on the principle of indivisible security set out in the Helsinki Final Act and the Charter of Paris.

The package would have four core commitments.

The first is Ukraine’s permanent neutrality, adopted in a constitutional law on the model of Austria’s law of 1955, which would return Ukraine to the founding choice of its Declaration of State Sovereignty of 1990. Ukraine would join no military alliance and host no foreign bases or forces, whether of NATO, the European Union, their member states, or Russia. Neutrality would not mean disarmament, and Ukraine would retain armed forces for its own defense.
 

The second is that Ukraine would pursue its candidacy for membership in the European Union as a permanently neutral state, with a neutrality protocol in its accession treaty on the model of Ireland’s, and Russia would affirm that Ukraine’s membership in the EU is consistent with Russia’s security.

The third is an armistice line drawn along the line of contact on the date of signature. Each side would exercise de facto jurisdiction on its side of the line, neither would recognize the other’s territorial claims, and both would renounce force in any future adjustment. This formula is compatible with both countries’ constitutions, which bar or severely restrict the cession of territory.
 

The fourth is the end of NATO enlargement eastward. At signature the North Atlantic Council would declare that NATO will not admit Ukraine or other new members in Eastern Europe or the South Caucasus, withdrawing the Bucharest pledge of 2008.
 

The settlement would take effect as a permanent end of hostilities on signature, not as a temporary ceasefire, and its provisions would be implemented in stages under international verification. No element would be negotiated in isolation, and no party would be asked to make a concession in advance of signature.

The territorial arrangements are designed to address the concerns and claims of both sides. Ukrainian forces would withdraw from the part of Donetsk region that Ukraine now controls, which would become a demilitarized special zone. Russian forces would not enter it, the existing local civil administration would continue to function, and its final status would be left to negotiation. Russia would withdraw from the areas it holds in Dnipropetrovsk region and from the Kinburn Spit. A Northern Security Zone would be demilitarized on both sides of the Russian-Ukrainian border, and Russian forces would leave the areas they hold in Kharkiv and Sumy regions as Ukrainian forces withdraw from their side. The Zaporizhzhia Nuclear Power Plant would remain under Russian control with IAEA safety oversight and would sell an agreed share of its electricity to Ukraine at cost.
 

A demilitarized belt would run along both sides of the armistice line, with heavy weapons and long-range strike systems withdrawn to agreed distances, and mutual ceilings on forces would apply in the border regions on both sides. In the Black Sea and the Sea of Azov, commercial navigation would be free for all Ukrainian and Russian ports, and attacks on shipping and ports would be prohibited.
 

The settlement in Ukraine should also begin the repair of European security as a whole. NATO and Russia would agree on a moratorium on ground-launched intermediate-range missiles in Europe, refrain from deploying nuclear weapons in any additional state, and restore the NATO-Russia Council. Normal diplomatic relations would be restored on both sides. The parties would convene the first summit of the Organization for Security and Co-operation in Europe since 2010 to entrust the OSCE with monitoring the settlement, verifying arms limits, and overseeing the provisions on rights.
 

Questions of language, education, culture, and religion would be resolved according to European standards, with the Russian language treated on the same basis as Ukraine’s other minority languages, and Russia would accept the same obligations toward Ukrainian speakers and religious communities on its side of the line. All obligations concerning extremism and incitement would be mutual and monitored by the OSCE. Prisoners of war would be exchanged on an all-for-all basis, detained civilians released, and separated children reunited with their families.
 

Sanctions would be lifted during 2027. Russia’s immobilized sovereign assets would also be released, and private property seized or immobilized on both sides would be restored. An international reconstruction fund administered by the European Investment Bank would finance reconstruction on both sides of the line, with contributions from all parties, Russia included, in a common effort rather than as reparations. Gas transit through Ukraine could resume wherever there are willing buyers, without any commitment by the European Union to purchase Russian gas.
 

A report of serious violation by an OSCE monitoring mission of unarmed observers from states outside NATO would trigger consultations among the guarantors and referral to the Security Council. Ukraine would lift martial law and hold elections under OSCE observation, and the newly elected Verkhovna Rada would ratify the settlement and adopt the constitutional law on neutrality, while the Russian Federal Assembly would ratify it at the same stage.

This proposed settlement addresses the causes of the war rather than only its symptoms. Europe has been largely absent from the design of the peace. By putting forward such a framework, European governments can take the lead in building Europe’s indivisible security and help end a war that has cost hundreds of thousands of lives and carries a continuing risk of confrontation between nuclear powers.

Moscow Times, 10/19/26

President Vladimir Putin on Monday approved a major reshuffle of top government officials, coming weeks after Russia held parliamentary elections that handed the ruling United Russia party its largest-ever majority.

The proposed personnel changes would replace nearly half of Prime Minister Mikhail Mishustin’s deputy prime ministers, according to independent journalist Farida Rustamova.

Rustamova said Dmitry Grigorenko’s removal from the post of chief of government staff was unexpected given his role as Mishustin’s “right-hand man” and his position being among “the most important in the government.” 

Mishustin’s spokesman later said Grigorenko himself had requested to be transferred to another post. Mishustin nominated First Deputy Finance Minister Irina Okladnikova to replace Grigorenko. If lawmakers approve her candidacy, she will become the first woman to ever hold the position of chief of government staff.

In other notable changes, Finance Minister Anton Siluanov will go on to serve as a deputy prime minister in addition to remaining in his role at the Finance Ministry, a post he has held since 2011. Siluanov previously held a dual position as deputy prime minister from 2018 to 2020 under former Prime Minister Dmitry Medvedev.

Russian political analysts described the reshuffle as “a major strengthening of the fiscal leadership” as officials focus on increasing state budget revenues. The lower-house State Duma must now approve the nominations.

Transportation Minister Andrei Nikitin was nominated to become deputy prime minister tasked with overseeing the development of Russia’s transportation sector, among other things. The vacancy was left open after Vitaly Savelyev resigned following his election to the State Duma in late September.

Dmitry Yadrov, head of Russia’s civil aviation agency Rosaviatsia, was tapped to succeed Nikitin as transportation minister.

Primorye region Governor Oleg Kozhemyako was also nominated to serve as deputy prime minister and presidential envoy to Russia’s Far Eastern Federal District. He will replace Yury Trutnev, who sources told the Vedomosti newspaper could be appointed to another Kremlin post.

The reshuffle follows State Duma elections last month, which renewed the ranks of parliament and came as Russian officials scramble to find new sources of economic growth amid strained government finances, increasingly burdensome taxes and high interest rates.

State Duma leadership was reportedly alerted over the weekend to hold last-minute meetings on Monday to approve the cabinet nominations and schedule confirmation votes. Speaker Vyacheslav Volodin later announced that votes on the nominations will take place on Wednesday.

By Ian Proud, Substack, 10/19/26

I have wanted to write an article for sometime about the differing fates of Russia and Ukraine since the onset of the conflict in 2014. The headline is that Ukraine has never made up the difference in increased trade with Europe having cut its trade with Russia to the bone since 2014. This has inadvertently meant that Europe has had to inject significant sums of capital into Ukraine just to prevent its currency from collapsing as the war has gone on. Russia has diversified its trade away from Europe such that its export model is as strong today as it was in 2014, giving it the liquidity it needs to underwrite the war effort.

Key finding:

• Ukraine exported 24% less and imported 46% more in 2025 than in 2014. The war has driven up imports while exports never recovered from the signing of the DCFTA and have been hampered by the war effort.
• The yawning trade deficit Ukraine has built since the war started has placed greater strain on European sponsors to provide the capital Ukraine needs to prevent its currency collapsing, in addition to providing funding to meet its fiscal requirements.
• This funding challenge for Europe will persist after the war ends until Ukraine can become self-sufficient in boosting exports and/or attracting sufficient foreign investment to offset its trade deficits.
• Russia’s export strength and consistent surpluses have been unaffected by war. After the Ukraine crisis started, Russia started to diversify its major energy exports away from Europe, allowing it to weather the progressive reduction of exports to Europe. Indeed, Russia gained a huge windfall in 2022 from surging energy prices. There is no evidence that sanctions have impacted Russia’s export model in a significant way.
• Russia has already started to reaccumulate FX reserves after the oil price collapse of late 2014, until before the war started. Following the immobilisation of $300bn in Russian FX reserves, Russia started to accumulate reserves in monetary gold, to sanction-proof future earnings. Russia now has liquid reserves of over $420bn meaning the immobilisation of its foreign currency reserves is no longer an economically limiting factor.

Detailed analysis

Russia’s export model in which it runs consistently large trade surpluses has ensured it can generate the reserves of foreign currency and gold which have undoubtedly helped to bankroll the war in Ukraine. Ukraine’s trade deficit has yawned since the war started, requiring continual injections of European capital to prevent its currency from collapsing.

This helps to explain by Russia can sustain the war for longer; it doesn’t need to take on significant new debt, its debt remaining low at 20%. Ukraine can only fund the war and keep its national accounts in balance with European money that cannot be guaranteed long-term and which, in any case, has increased Ukrainian debt by an average of 20% of GDP each year since the war started. This is not sustainable.

The Deep and Comprehensive Free Trade Agreement of 2014 has disadvantaged Ukraine because it forced a choice away from trading with Russia.

The starting point for this is the signature by Ukraine of a Deep and Comprehensive Free Trade Agreement with Europe on 27 June 2014.

Herman van Rompuy, then President of the European Council said that “stronger political and economic ties will bring greater stability and prosperity to the entire European continent.”

President Poroshenko said “over the last months, Ukraine paid the highest possible price to make her European dreams come true.”

Yet, the true price of this agreement has borne by Ukraine which saw its exports collapse and its imports increase, as it make a “sovereign choice” not to maintain trade links with Russia.

That was a catastrophically bad choice. Russia had accounted for around 25% of Ukrainian exports prior to 2014 and that figure fell to less than 5% in 2021 before the war started. Ukraine did not make up that gap by increasing the volume of exports to Europe, which have remained largely unchanged.

Indeed, this same pattern can be seen in Georgia which has also seen no real increase in exports to the EU after it signed the DCFTA. The EU uses a number of trade dispute mechanism and other non-tariff barriers to put blockages in the way of import growth from DCFTA partner countries.

So, by encouraging Ukraine to trade with Europe and not with Russia, Europe has imposed a deadweight economic loss on Ukraine which took a sovereign decision to forgo a previously profitable trade relationship, to pursue a political goal of EU integration.

Moreover, since the war started, imports into Ukraine have surged leading to a progressive ballooning of its trade deficit. This surge in imports has been caused by Ukraine purchasing weapons from the US using borrowed European and domestic funds. So, Ukraine is borrowing money to create a trade deficit that needs to be filled with further inflows of capital.

Dragged into a persistent and growth trade deficit by war, Ukraine needs continued injections of foreign funds to prevent its currency collapsing.

The graph below maps the growth in Ukraine’s trade deficit with the corresponding growth in receipts classified as Secondary Income within its quarterly balance of payments. These inflows of capital as Secondary Income are injections from Europe (principally) that are vital to shore up Ukraine’s FX reserves and so prevent a run on the currency. The key point is that foreign funding to Ukraine is more than just a fiscal event and top it. It is a vital support mechanism in circumstances where Ukraine is unable to attract sufficient inflows of foreign investment during a time of war.

Russia simply hasn’t faced the same challenge, choosing instead to diversify its exports to other countries as Europe progressively shut down trade. Sanctions haven’t dented trade.

The graph below illustrates in an elegant way how Russia’s trade has changed and evolved since. Russia’s exports have gone through peaks and troughs since 2014, although the troughs have often been caused by global events such as the 2014 and 2016 oil price collapses and COVID,

The onset of the war in Ukraine caused a huge windfall in income from exports as oil prices surged. Despite the imposition of thousands of sanctions by western nations after the war commenced, Russia’s exports have remained highly resilient. This is down to Russia’s diversification of its exports towards countries in Asia.

In short, despite many headlines in western mainstream media of sanctions ‘denting Russia’s war economy’ there is no substantive evidence that this has been the case.

Russia’s export model continues to be an engine room that provides the liquidity it needs to fund the war without taking on significant new debt. This gives it a significant advantage over Ukraine and its European backers in the ‘war of attrition’.

Russia has accumulated reserves since the war started to make up for the immobilisation of $300bn in FX by western nations. Russia now invests in monetary gold to sanction-proof its assets.

Finally, I have been commenting for some time that Russia started the process of accumulating Foreign Exchange Reserves in 2017 as it shifted its monetary policy to embrace a weak rouble to maximise rouble income from exports and as it undertook a number of dollar purchases via the Finance Ministry. You can see this reserve accumulation in the graph below.

After the war started, following the large windfall in earning from exports in 2022 and still solid trade figures after that, Russia continued to accumulate reserves. However, following the freezing of its foreign currency assets, it has chosen instead to store its reserves in monetary gold, to sanction proof them.

While Russia would undoubtedly like to see the return of its immobilised assets after the war ends (big question mark) it has nevertheless built up a significant financial buffer to the tune of over $420bn in reserve assets in addition to those assets that remain frozen.

This deep well of reserves undoubtedly helps to underwrite Russia’s war effort without the need for significant borrowing. Russia’s debt today sits at around 20% of GDP.

In 2021 Ukraine’s debt sat at around 49% of GDP. Today it sits at around 110% of GDP.

By Uriel Araujo, InfoBrics, 10/16/26

Black Sea shipping is in crisis, adding pressure to a global economy already absorbing Red Sea and Strait of Hormuz disruptions. Commercial vessels face rising risks, insurance costs have climbed, and tanker freight rates have surged.

Ukraine has stepped up attacks on Russia’s Black Sea Fleet, ports, oil facilities, and vessels associated with Russian trade, expanding the conflict’s geographical scope. Grain, oil, fertilizers, and other commodities move through these waters, including shipments for non-belligerent countries.

S&P Global reported on October 9 that tanker freight rates rose sharply amid attacks, sanctions, and security concerns disrupting Russian energy exports. According to maritime security consultancy Ambrey, Kyiv expanded its campaign beyond naval assets and oil infrastructure to merchant ships trading with Russian ports.

In November 2025, attacks had already expanded to commercial vessels, particularly oil tankers, in the open sea. In May 2026, Ambrey attributed strikes on three Russia-linked tankers inside Turkey’s exclusive economic zone to Ukrainian naval drones.

By July, targeting expanded to dry-bulk carriers, general cargo, container ships, and roll-on/roll-off vessels. In September, insurers widened the high-risk zone. Ambrey data shows 45 merchant vessels struck outside the previous war-risk area in 12 months, 31 after July 1, 2026.

Ambrey’s finding is that Ukraine-attributed strikes (on Russia-linked shipping far offshore) helped drive insurers’ growing risk perception across the Black Sea.

Russia has responded by also conducting strikes in the Black Sea. As Modern Diplomacy puts it, Moscow has made any Black Sea truce conditional on Kyiv ceasing attacks on Russian energy infrastructure.

This is, after all, a proxy war of attrition, marked as it is by considerable military asymmetry. Russia possesses a larger population, defense-industrial base, strategic arsenal, air force, and navy, as well as greater resources for prolonged warfare.

Ukraine, despite developing formidable drone capabilities and long-range strike capacity, remains heavily dependent on Western assistance.

Global Firepower’s 2026 ranking places Russia second and Ukraine twentieth. The military asymmetry is therefore considerable.

The hard truth is that, notwithstanding any legitimate criticism one may have of Moscow’s campaign, Russia has refrained from employing its full destructive capabilities.

Such restraint, particularly in the war’s early stages, may have reflected not only humanitarian and military calculations but also (on Moscow’s end) awareness of historical and cultural ties between the two countries – which may have a psychological effect on decision-makers.

Kyiv, in contrast, since the 2014 ultra-nationalist revolution, has launched an anti-Russian campaign to distance the nation from Moscow. Even so, 42.6% of Ukrainians still regularly spoke Russian in December 2022, despite the war and media censorship restrictions.

Former US diplomat Chas Freeman and retired US Army Colonel Douglas Macgregor have both argued that Moscow exercised restraint.

Poland’s Centre for Eastern Studies likewise noted in June 2022 that Russia had refrained from systematically destroying key infrastructure – while the US Congressional Research Service observed that the initial bombardment was more limited than expected.

For comparison, Bono Vox performed in Kyiv on May 8, 2022, less than three months after Moscow launched its campaign. One could hardly imagine Bono performing in Baghdad shortly after the US invasion! Or in 2011 Libya, for that matter.

The broader point here is that the Russian Federation retains substantial military advantages, despite Ukrainian advances, but Western support has enabled Kyiv to sustain a prolonged war of attrition – increasingly targeting Russian energy.

In August, Ukrainian drone strikes on Russian and Iranian-linked vessels in the Caspian Sea risked expanding the conflict into a vital Russia-Iran logistics corridor.

The attacks risked further “proxifying” the conflict by aligning Kyiv with US and Israeli interests against Tehran, potentially merging the European and Middle Eastern theaters – a scenario that never materialized.

In any case, Ukrainian attacks on Russian energy infrastructure continue amid mounting political pressure, with Trump even saying it is “time for Ukraine to get new President.” I’ve commented before on Zelensky’s resilience, despite several reported plots against him.

The Ukrainian leader has shown a habit of acting unpredictably, sometimes behind his Western patrons’ backs. In 2023, leaked documents revealed wild Ukrainian plans that risked widening the conflict. More recently, attacks on Russian refineries drew attention amid rising diesel prices and reports of moves angering Washington.

This “wild-card” tendency risks triggering a dangerous spiral, with potentially disastrous consequences for Ukraine – and the global economy. Repercussions for food, energy, and fertilizer trade are already visible, while the danger of crossing red lines has arguably never been greater.