**Russia's economy is so driven by the war in Ukraine that it cannot afford to either win or lose, economist says**

 

Russia's economy cannot bear the cost of either winning or losing the war in Ukraine, according to economist Renaud Foucart. The conflict has strained Russia's resources to the point that the nation cannot afford the expenses tied to rebuilding Ukraine, nor can it cope with the fallout of a prolonged war.

Foucart, a senior economics lecturer at Lancaster University, highlighted the dire economic situation as the war nears its second anniversary. Despite a reported 5.5% growth in Russia's GDP for the third quarter of 2023, much of this growth is driven by the country's enormous military expenditure. 

Russia is projected to allocate a record 36.6 trillion rubles (about $386 billion) to defense this year. This spending covers military pay, ammunition, tanks, planes, and compensation for soldiers, all of which inflate GDP figures, making the war against Ukraine the primary engine of Russia's economic activity.

However, other sectors of the Russian economy are suffering. A significant labor shortage has emerged, exacerbated by the exodus of young professionals and the conscription of workers into the military. The country is reportedly short of 5 million workers, which has driven up wages. Inflation is also a concern, with the rate at 7.4%—almost double the central bank's 4% target. Additionally, foreign investment has plummeted, with direct investment falling by $8.7 billion in the first three quarters of 2023.

This leaves the Kremlin in a precarious position, regardless of the war's outcome. Even a Russian victory would leave the country unable to finance the reconstruction and security of Ukraine, especially while facing the financial burden of its own economic collapse and continued global isolation. Since Western nations imposed trade restrictions after the 2022 invasion, Russia's long-term economic growth prospects have been significantly diminished.

As long as Russia remains isolated, its best option may be to rely heavily on China, one of its few remaining strategic allies, according to Foucart. Meanwhile, Russia faces the massive cost of repairing its own infrastructure and addressing internal social unrest.

Experts predict that Russia’s economy will continue to deteriorate in the coming years, despite claims of resilience against Western sanctions. A recent report from a London-based think tank warned of significant challenges ahead. 

Foucart argued that a prolonged stalemate might be Russia's only way to prevent total economic collapse, as the government has no incentive to end the war and confront these economic realities. Thus, the economy has become entirely geared toward sustaining a long and increasingly deadly conflict, leaving Russia in a position where it cannot afford to win or lose.