Why a Weaker Russia Keeps Fighting: Putin Sees Little Need to Negotiate

Foreign Affairs | Alexander Gabuev, Alexandra Prokopenko, and Tatiana Stanovaya

Russian President Vladimir Putin is sustaining the war in Ukraine despite failing to secure a diplomatic deal with Washington or achieve a rapid military breakthrough. This persistent campaign continues to drain Moscow's manpower and economic reserves, even as European financial backing and intelligence sharing keep Ukraine militarily resilient against ongoing territorial incursions along the eight-hundred-mile frontline.

Historically, the Kremlin relied on expectations of collapsed Western aid, but European defense industrial integration has effectively neutralized Washington's funding suspensions by establishing secure manufacturing hubs on EU territory. Consequently, Russia faces a ballooning seventy-three billion dollar budget deficit, rising inflation, and severe refinery disruptions from Ukrainian long-range drone strikes that have knocked out one-third of its oil-refining capacity. To regain the initiative, the regime is intensifying ballistic missile bombardments of critical infrastructure and leveraging sophisticated AI-powered surveillance tools to insulate itself from growing domestic anxiety.

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Depletion of the Russian National Wealth Fund forces the Kremlin to rely on domestic debt markets and punitive corporate tax extractions. This fiscal shift transfers the burden of military mobilisation directly to regional budgets, creating localized deficits that the Bank of Russia cannot easily mitigate through its fourteen percent interest rate policy. Consequently, Russian defence production becomes hostage to domestic bond buyers demanding unprecedented risk premiums. These financial constraints reveal that Moscow's capacity to finance prolonged attrition is structurally limited, even if immediate collapse is averted through capital controls.

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