Russia’s Forever War: The 2026 Budgetary Gamble

Four years after Vladimir Putin’s "special military operation" was supposed to conclude in weeks, the Kremlin is now formally budgeting for a conflict that extends deep into 2026. The shift is no longer just rhetorical. It is etched into the 13.2 trillion ruble ($142 billion) defense allocation for the coming year—a record 6.2% of Russia’s GDP.

But while Moscow signals its readiness for a "forever war," the data reveals a system under mounting structural strain. Is Russia winning, or is it merely outspending its own future?

The Attrition Math: 70 Meters per Day

On the 750-mile frontline, the reality of the Russian advance is a study in "the meat grinder." According to the Institute for the Study of War (ISW), Russian forces are currently gaining an average of just 15 to 70 meters per day in their most active sectors.

Yet, to maintain this glacial pace, the Kremlin is reportedly enlisting 30,000 to 35,000 new recruits every month just to replace casualties. In 2025 alone, Russian losses were estimated at 415,000.

Military Keynesianism: Guns vs. Butter

The Russian economy has entered a phase analysts call "Military Keynesianism." Massive state spending on tanks and missiles has temporarily buoyed GDP and kept unemployment at a record low of 2%.

However, this growth is a mirage. To fund the 2026 campaign, the Kremlin has:

• Hiked VAT: Increased from 20% to 22%, hitting ordinary consumers.

• Slashed Welfare: For the first time, pure military expenditure has surpassed social spending (healthcare, education, and welfare).

• Cannibalized Regions: Federal transfers to regional budgets have effectively frozen, leaving local governments to foot the bill for recruit mobilization.

The 2026 Fiscal Wall

The International Monetary Fund (IMF) has already downgraded Russia’s 2026 growth forecast to a tepid 0.8%. While Russia has dodged a total collapse through trade with China and "shadow fleet" oil exports, the "sanctions premium" is finally biting.

Oil revenues are projected to decrease, forcing the Kremlin to rely on internal taxes and reserves. Putin is betting that Western resolve will fracture before his treasury does.

Stakeholders: Who Gains?

• The Winners: The military-industrial complex and skilled workers in defense hubs who are seeing record wage growth.

• The Losers: The middle class, facing 21% interest rates and double-digit inflation, and the "silent" regions bearing the brunt of the human cost.

What Happens Next?

The 2026 outlook remains a stalemate of high-intensity attrition. Ukraine, though exhausted, is leadng a "drone revolution" to offset Russia's manpower advantage, while Europe has stepped up to fill the void of fluctuating US support.

The question for 2026 isn't whether Russia can fight, but whether the structural damage to its civilian economy will force a reassessment before 2027. Putin has built a fortress, but the foundations are being traded for artillery shells.

FAQ Section

1. How long does Russia plan to fight? Budgetary documents and thinktank reports indicate the Kremlin is prepared for active combat through at least the end of 2026.

2. Is the Russian economy collapsing? No. It is stagnating. While growth has slowed to under 1%, the economy has shown structural resilience by pivoting toward China and domestic military production.

3. What is the biggest threat to Putin’s plan? A further drop in global oil prices and a shortage of labor due to high casualties and the "brain drain" of skilled workers.

4. How is Ukraine responding to the 2026 outlook? Kyiv is focusing on domestic drone production and long-range strike capabilities to increase the cost of the war for Russia's internal infrastructure.