December 20, 2025: Last month the Russian Defense Ministry discovered that they did not have enough cash to pay all the soldiers or provide money to induce civilians to join the army. The average monthly pay for Russian soldiers in Ukraine is nearly $2,000 a month. Monthly pay can be as high as $5,0000 a month depending on rank and time in service. Most soldiers join after receiving a signing bonus of up to $30,000. The recent inability to pay Russian soldiers was not a complete surprise. Russian government officials knew there were problems with the economy and the cash supply.

Nearly four years after invading Ukraine, the Russian defense budget has turned into a monster devastating the economy. This crisis has been brewing since Russia invaded Ukraine in 2022. The increased defense spending and years of economic sanctions have deformed the economy as more is spent on weapons and military needs. This displaces production of civilian goods. High casualties in Ukraine plus the millions of men who left Russia to avoid military service have caused a labor shortage.

Military spending also reveals another Russian tradition, corruption in military procurement Corruption is less tolerated and more frequently punished in the civilian economy. Military production does not directly impact civilians and their lives.

Now that there is more military spending, corrupt officials are getting rich while the soldiers get shoddy equipment. In the case of winter clothing procured for the soldiers, a lot of that ends up on the black market while the troops go without and the military procurement officials get rich. During the first winter of the war, Russian soldiers overcame these shortages by plundering the Ukrainian economy for cold weather clothing. By the second year of the war that source had dried up and Russian soldiers stayed warm anyway they could, or via winter clothing mailed to them by their families.

The cause of all this woe is the escalating expense of the war in Ukraine. The defense budget for 2023 was $75.2 billion while 2024’s was $115 billion. For 2025 it will be $140 billion followed by $128 billion in 2026 and $126.6 billion in 2027. In 2023 Russia expected its 2024 government revenue to be a record $349 billion, but instead it was $450 billion. Because of the ailing economy there is less to tax and government budgets are constricting. With rising defense spending these is less left for pensions and other social welfare programs as well as maintain and expanding infrastructure, Less money for roads, canals, ports and railways contributed to the ongoing collapse of the Russian railroad system. Sanctions halted the supply of ball bearings for rail cars and now thousands of these rail cars are useless. This year may see a collapse of the railroad system, which will cause an economic collapse. The government is frantically seeking a solution to their several transportation crises while pretending to

There are plans to sustain this level of revenue while keeping Russian military spending at record level. This means more purchases of weapons and equipment from Russian suppliers as well as continuing generous death and disability payments to soldiers or their families. The impact of these payments is obvious on poor regions of Russia that have a lot of men in the military. So many local men have been killed or disabled that the families of the dead are now relatively wealthy and spending money on new cars or upgrading their housing and lifestyles in general. This is intentional because the government is desperate to avoid large-scale dissatisfaction with the war effort.

The Russian defense budget is now a wartime budget. For the first time since the Soviet Union collapsed, the defense budget will be six percent of GDP and exceed spending for social welfare programs. Russia plans to maintain this higher defense spending until they win the Ukraine war. That is unlikely to happen because the Ukrainian war effort is subsidized by weapons and military equipment supplied by NATO countries. Collectively, NATO nations account for about half the global GDP. Despite the fact that NATO is far wealthier than Russia, the Russians believe the massive NATO support for Ukraine won’t last as long as the Russian determination to prevail. Russia notes that NATO has 31 member states. Not all these nations agree on long-term policy or how much should be spent on continuing support for Ukraine. At the same time, NATO members agree that Ukraine should be allowed to join NATO. That can only happen when the war with Russia is over. At the moment the Ukrainian forces are better armed and equipped than the Russian invaders. That is one reason why Russian forces are largely on the defensive and suffering much higher casualties and equipment losses than the Ukrainians.

By spending so much on military production and social welfare, Russia expects to maintain popular support for the war effort. The problem is that Russia does not have enough income to sustain a wartime economy. Spending too much on defense was a major reason why the Soviet Union went bankrupt and collapsed in 1991. It was later discovered that the Soviet government had inadequate financial controls and lacked a realistic financial plan. This was revealed to the world, and most Russians, after 1991. Up until 1991 Russia was spending about 15 percent of GDP on defense, and not enough on more urgent matters like managing the economy prudently in order to avoid a financial collapse. Russian leaders did not believe national bankruptcy would cause the collapse of the Soviet Union. Misunderstanding or ignoring a problem won’t solve that problem or eliminate the consequences.

December 20, 2025: Last month the Russian Defense Ministry discovered that they did not have enough cash to pay all the soldiers or provide money to induce civilians to join the army. The average monthly pay for Russian soldiers in Ukraine is nearly $2,000 a month. Monthly pay can be as high as $5,0000 a month depending on rank and time in service. Most soldiers join after receiving a signing bonus of up to $30,000. The recent inability to pay Russian soldiers was not a complete surprise. Russian government officials knew there were problems with the economy and the cash supply.

Nearly four years after invading Ukraine, the Russian defense budget has turned into a monster devastating the economy. This crisis has been brewing since Russia invaded Ukraine in 2022. The increased defense spending and the years of economic sanctions have deformed the economy as more is spent on weapons and military needs. This displaces production of civilian goods. High casualties in Ukraine plus the millions of men who left Russia to avoid military service have caused a labor shortage.

Military spending also reveals another Russian tradition, corruption in military procurement Corruption is less tolerated and more frequently punished in the civilian economy. Military production does not directly impact civilians and their lives.

Now that there is more military spending, corrupt officials are getting rich while the soldiers get shoddy equipment. In the case of winter clothing procured for the soldiers, a lot of that ends up on the black market while the troops go without and the military procurement officials get rich. During the first winter of the war, Russian soldiers overcame these shortages by plundering the Ukrainian economy for cold weather clothing. By the second year of the war that source had dried up and Russian soldiers stayed warm anyway they could, or via winter clothing mailed them by their families.

The cause of all this woe is the escalating expense of the war in Ukraine. The defense budget for 2023 was $75.2 billion while 2024’s was $115 billion. For 2025 it will be $140 billion followed by $128 billion in 2026 and $126.6 billion in 2027. In 2023 Russia expected its 2024 government revenue to be a record $349 billion, but instead it was $450 billion. Because of the ailing economy there is less to tax and government budgets are constricting. With rising defense spending these is less left for pensions and other social welfare programs as well as maintain and expanding infrastructure, Less money for roads, canals, ports and railways contributed to the collapse of the Russian railroad system, Sanctions halted the supply of ball bearings for rail cars and now thousands of these rail cars are useless. This year may see a collapse of the railroad system, which will cause an economic collapse. The government is frantically seeking a solution to their transportation crises while pretending to Russia and the world that the situation is under control.

There are plans to sustain this level of revenue while keeping Russian military spending at record level. This means more purchases of weapons and equipment from Russian suppliers as well as continuing generous death and disability payments to soldiers or their families. The impact of these payments is obvious on poor regions of Russia that have a lot of men in the military. So many local men have been killed or disabled that the families of the dead are now relatively wealthy and spending money on new cars or upgrading their housing and lifestyles in general. This is intentional because the government is desperate to avoid large-scale dissatisfaction with the war effort.

The Russian defense budget is now a wartime budget. For the first time since the Soviet Union collapsed, the defense budget will be six percent of GDP and exceed spending for social welfare programs. Russia plans to maintain this higher defense spending until they win the Ukraine war. That is unlikely to happen because the Ukrainian war effort is subsidized by weapons and military equipment supplied by NATO countries. Collectively, NATO nations account for about half the global GDP. Despite the fact that NATO is far wealthier than Russia, the Russians believe the massive NATO support for Ukraine won’t last as long as the Russian determination to prevail. Russia notes that NATO has 31 member states. Not all these nations agree on long-term policy or how much should be spent on continuing support for Ukraine. At the same time, NATO members agree that Ukraine should be allowed to join NATO. That can only happen when the war with Russia is over. At the moment the Ukrainian forces are better armed and equipped than the Russian invaders. That is one reason why Russian forces are largely on the defensive and suffering much higher casualties and equipment losses than the Ukrainians.

By spending so much on military production and social welfare, Russia expects to maintain popular support for the war effort. The problem is that Russia does not have enough income to sustain a wartime economy. Spending too much on defense was a major reason why the Soviet Union went bankrupt and collapsed in 1991. It was later discovered that the Soviet government had inadequate financial controls and lacked a realistic financial plan. This was revealed to the world, and most Russians, after 1991. Up until 1991 Russia was spending about 15 percent of GDP on defense and not enough on more urgent matters like managing the economy prudently in order to avoid a financial collapse. Russian leaders did not believe national bankruptcy would cause the collapse of the Soviet Union. Misunderstanding or ignoring a problem won’t solve that problem or eliminate the consequences.