Russian economy strains could push Putin toward peace talks
The deteriorating economic situation in Russia may prompt Vladimir Putin to engage in peace negotiations and end the war against Ukraine, five anonymous sources close to the Kremlin administration told Reuters.
Reuters reports that the Russian economy, valued at $2.2 trillion, had shown remarkable resilience under wartime conditions until recently. After a downturn in 2022, Russia's GDP grew faster than that of the European Union and the United States in 2023 and 2024.
However, the agency notes that in recent months, the economic situation has become strained due to labor shortages and high interest rates introduced to combat inflation. Record military spending has accelerated this situation.
Defense spending has increased to 6.3% of GDP, accounting for one-third of the budget. Given these challenges, Vladimir Putin may be compelled to negotiate peace with Ukraine. Anonymous sources close to the Kremlin suggest that key war objectives have already been achieved, which could facilitate talks.
Oligarchs criticize, Putin trusts
Despite oligarch criticism, Putin still trusts Elvira Nabiullina, the president of the Central Bank. Meanwhile, U.S. President Donald Trump announced further sanctions if Russia does not engage in negotiations.
Former Deputy Chairman of the Central Bank of Russia Oleg Vyugin said on Tuesday that Russia has yet to receive any concrete proposals for talks. However, he added that the Kremlin is interested in a diplomatic resolution to the war, also "for economic reasons."
"The Russian economy is stable and maintains a relatively high growth rate despite some problematic factors," Kremlin spokesman Dmitry Peskov said on Thursday when asked for a comment on Reuters' article.
