May 2, 2025: Russian defense spending reached nearly half a billion dollars last year, which is 6.7 percent of GDP. It is also more than the combined spending of all the other European countries. Russian spending is expected to reach 7.5 percent of GDP in 2025. But by 2026 or 2027 economic and military reality will catch up with the Russian war effort. That’s because the Russian people are fed up with the lack of jobs, consumer goods and basic food supplies. Government officials are concentrating on money making activities and consider the war an annoying lost cause. Vladimir Putin eventually lost the support of the wealthy oligarchs because these businessmen were losing their fortunes to inflation and western sanctions. Without western components there was not much Russian factories could produce besides basic commodities using local resources.

Meanwhile the Russian military tried to stem troop losses by hiring North Korea and Chinese mercenaries. All this did was slow down the collapse. This mess could have been avoided if Putin had paid attention to what happened before the war.

Five years earlier the Russian economy was taking a beating because of low oil prices and Western economic sanctions imposed after Russia invaded Ukraine in 2014. Growing support from NATO countries helped inflict a catastrophic defeat on the Russian economy. This was done by crippling Russian defense industries with sanctions.

Eight years ago Russia was facing population decline, corruption, and an increasingly inefficient police state. This prompted an exodus of its best educated and most entrepreneurial citizens. Russia was no longer a great power and, as much as Russians would talk about regaining their superpower economic status, that did not happen.

The Russian economic situation looks a bit better when you use purchasing power parity or PPP. This is a concept that recognizes, and calculates the different costs, for the same things, in each country. Most people know this as the cost of living adjustment. It's more expensive to live in Moscow than in some of the more remote parts of Russia.

International economists at the World Bank and International Monetary Fund saw Russian GDP continuing to fall as long as low oil prices and sanctions remained. In 2013 Russian GDP per person was $16,000 compared to $7,000 for China. By 2020 both nations will have about the same GDP per capita of about $12,000. These trends were expected to continue for the next few years with the Chinese GDP per capita continuing to grow faster than Russia’s.

The average Russian was well aware of the falling living standards since 2013 and that fueled growing unrest against the government. For many Russians, relative affluence was a recent development. This began after 1999, when 37 percent of Russians were living below the poverty line by earning less than $2,000 each. The new Putin government put the economy first and by 2014 only 2.4 percent of Russians were living in poverty. In 2015 that went up to 2.7 percent. Most of the economic losses were being suffered by the new middle class who had been doing quite well until 2014. Many of these middle-class families began sliding into poverty.

The lower standards of living are felt in the military, where the program to improve housing and other facilities for troops and their families was disrupted just as it really got going. For officers and troops, the losses are even more keenly felt. Much older equipment was still in use and new combat vehicles, ships and aircraft were often crippled by unreliable components. After a day of dealing with that you go back to your decrepit barracks or shabby family housing. Those were not happy times in Russia.

The Russian decision to invade Ukraine in 2022 was a scheme to quickly seize a prosperous neighbor and revive the Russian economy. It was a shock when the enraged Ukrainians fought back and deflated Russian dreams of economic salvation.

By 2025 Russian internet commentators admitted that the war in Ukraine was lost and wanted Putin held accountable. Russia tried to spend its way out of defeat and failed. A half billion dollar defense budget didn’t do it by 2025 and slightly larger budgets in 2026 and 2027 threatened to bankrupt Russia.

The first major war in Europe since 1945 will end with murmurs and recriminations over how it happened and if it could happen again. It will happen again as it has for the last few centuries. The last thing Russia will ever give up are its wars of conquest.