Experts on how to rise the cost of war for Russia: “Be smarter”

Three and a half years after Russia's full invasion of Ukraine, in a situation of suspension of the U.S.-led peace process and stalemate on the battlefield, Kiev allies call for renewed economical force on Moscow. The goal is to rise the cost of war for the Kremlin to a level that will force it to change course. Eighteen packages of sanctions imposed by the European Union and tens more by the United States, Britain and another countries have weakened Russia's economy but not its determination to proceed the fight. Experts say that not only more is needed, but besides smarter penalties.

"We just should be smarter," said Timothy Ash, a Russian investigator from the British think tank Chatham House, who advised many governments on the impact of sanctions on Moscow.

A crucial increase in military spending has helped the Russian economy to scope an increase of over 4% in the years 2023 and 2024, but this year the government expects only 1%. It besides foresees inflation of 6-7% by the end of the year, and interest rates stay at a painful level of 17%, which aims to reduce price increases.

The immense gross of the Kremlin from oil and natural gas is decreasing and the budget deficit – the difference between government expenditure and gross – is increasing.

However, the latest three-year budget plan, submitted to Parliament at the end of September, shows that military expenditure will stay about 4 times higher than before the war. And mostly thanks to Russian taxpayers.

According to the Ministry of Finance, Kremlin decided to rise the value added taxation (VAT) from 20% to 22% from January, and additional gross "will mainly be spent" on defence and safety .

Armoured vehicles take part in the parade on the occasion of the 80th anniversary of the russian Union's triumph in the large Patriotic War, or on the east Front of planet War II, in Moscow, 9 May 2025.

Russian president Vladimir Putin openly acknowledged that the increase in VAT would entail economical costs. Earlier this period He said that the measurement is "reflected in economical growth" but continued to defend it.

The Kremlin's decision is "compatible with the planning of a long-term conflict and a prolonged period of limited private demand," said CNN Aleksandra Prokopenko, a investigator at Carnegie Russia Eurasia Center. In another words, the Russian government accepted the rising economical costs of war. But are possible penalties severe adequate to weaken Russia's determination to proceed the fight?

Detention of the Russian “war machine”

A work of 500 % for each country purchasing Russian energy, proposed in the Law on Sanctions against Russia – introduced with two-party support in the U.S. Congress, but not yet put to the vote – it would surely be 1 of them, says Ash, an adjunct on the Chatham home program devoted to Russia and Eurasia.

"This would completely halt Russian exports. This would surely lead to the collapse of the Russian economy and the detention of the Russian war machine," CNN said. However, no one, including Putin, who called this thought "impossible to imagine" last week, expects the US to implement it due to the fact that the withdrawal of Russian oil and natural gas from the marketplace would origin prices to emergence worldwide.

Instead, Ash offers a much lower, so-called. ‘secondary’ customs tariff , 20-30%, which would let further flow of Russian exports to global markets, but with a certain catch: the generated income should be allocated to the financing of Ukraine.

Gas station in Moscow, photograph dated 8 September 2025.

The usage of Russian wealth to finance Ukraine is presently at the heart of the discussion in Europe about another economical measurement – 1 that would besides send a clear signal of Kiev's longevity in this war.

According to many media reports based on an interior European Union document, the EU is considering utilizing Russia's frozen assets in Europe as the basis for a debt to Ukraine of EUR 140 billion (162 billion). Kiev would only be obliged to repay the debt if Russia paid the war reparations.

According to Asha, a fresh debt would be “a truly strong signal to Russia that Ukraine is well funded and will be able to buy weapons to keep a long war.” In an article in the Financial Times in which he supported the plan, German Chancellor Friedrich Merz besides wrote that “Moscow will sit at the table to discuss the ceasefire only erstwhile he realizes that Ukraine has more strength to endure.”

Another anticipation is to mark fresh measures on the weakest points of the Russian economy, as suggested by Alexander Kolyandr, elder investigator of the Democratic opposition Programme at the Centre for European Policy Analysis.

Its concept focuses on the long-term shortage of the workforce in Russia, which It's getting worse. Since the outbreak of the war, and many men of working age have been mobilized or fled abroad. Currently, Russian citizens face additional difficulties in applying for labour visas in any European countries, and the Baltic countries and Poland effectively prohibit it.

"Instead of limiting professional immigration from Russia to the West, I believe that only brain drain should be encouraged," said Kolyandr. specified measures would exacerbate the labour marketplace crisis in Russia, and would besides put force on wage increases, complicate the fight against inflation, he noted.

Ukraine has a powerful weapon

Experts say that, in addition to the fresh approach to sanctions, it is crucial to enforce existing sanctions more effectively. In a massive rocket and drone attack on Ukraine on the night of October 5, Russia, according to the president of Ukraine Volodymyr Zelenski, utilized over 500 weapons systems containing more than 100,000 parts produced abroad – including European ones. This happened despite Western sanctions prohibiting Russia from selling military components and dual usage worth billions of dollars.

"Now, in the 4th year of war on a large scale, it's just unusual to hear individual say they don't know how to halt the flow of key components" – He said Zelenski.

According to Asha, penalties for non-compliance must be decently enforced. "It is simply a immense benefit for those people, companies and countries who aid Russia break sanctions," he said, "but no punishment...no 1 goes to jail."

Residents leave their residential building damaged by Russian drone attack in Zaporozh in Ukraine, 5 October 2025.

But possibly the most effective punishment for the Russian war economy is not the allies of Ukraine, but Ukraine itself. According to fresh estimates by the Russian analytical agency Siala, in fresh months the Kiev-intended attacks of long-range drones on Russian oil refineries have led to a simplification in Russian processing capacity of 38%, although Sergei Wakulenko, elder investigator of Carnegie Russia Eurasia Center, stated that specified estimates do not take into account how much resources were left unused and how much harm was repaired.

However, the strike led to fuel shortages in Russia and forced the country to exports of larger quantities Oil, which is mostly little profitable than the sale of refined products.

Ash believes that strikes represent a powerful weapon against the Russian economy for 2 reasons: "Not only do they origin disruption in the country's economy through fuel shortages at petrol stations, but in fact they besides limit export revenues."

As CNN said, this strengthens the argument for transportation Ukraine has more Western long-range weapons, while imposing smaller restrictions on its use.

And judging by Putin's fresh reaction, this is something that Russia may fear more than any economical sanctions. At the Russian economical Forum last Friday Putin was asked what would have happened if the United States had allowed the transportation of medium-range rockets to Tomahawk to Ukraine. most likely hoping to dissuade Trump's administration from this idea, he replied that this would lead to "destroying American-Russian relations".