1) New data on Russia's federal #budget in February is out. Some normalization after a high January deficit was expected, but the opposite happened. The deficit grew to 2.6 tn RUB, 1.7% of GDP after two months. Revenues in February 2023 were 1.8 tn RUB, expenditure 2.6 tn RUB.
2) Last year around this time, the Russian budget was firmly in positive territory. The January 2023 deficit was clearly not representative, but an additional deficit of 800 billion RUB in February shows it's not a one-off phenomenon.
3) On the revenue side, the problem for Russia's finance ministry are the very small oil and gas revenues. This will slightly improve in the coming months, as Russia will adopt a new formula to calculate taxes (based on a higher assumed oil price).
4) On the expenditures side, the war is forcing the government to pay upfront for weapons. This is supposed to lead to lower spending in December, but I believe that when I see it. Overall, it still looks like spending will be significantly higher than planned.
5) Important to take into account strong fluctuations month-to-month in Russia's budget, which happen for different reasons (seasonality, tax rules, one-off payments etc.). But based on today's data, Russia's government will need to borrow a lot more than planned for this year.
Recruitment in Russia is slowing down. In Q1 of 2026, numbers were down by 20% compared to last year. This change is evident in both official statements and budget data. On average, it was 800 new contract soldiers per day this year.
The slowdown is not a result of "less demand" by the Ministry of Defense. Otherwise, Russia's regions would not continue increasing their bonuses. But the average regional bonus has reached a new record of ~1.5 million rubles.
Meanwhile, payouts for killed soldiers are continuing at a rapid rate. I only have data for 17 regions (22% of Russia's population), so treat this information with caution. There is also greater uncertainty surrounding the timing of KIA, i.e. the time lag between KIA and payout.
Putin does not have a clear vision for the "end state" of the war in Ukraine. He is happy with the way things are going, but there is no clearly defined goal. The war is more like to shaking a tree and enjoying the fruit that falls.
However, Putin has some clear red lines, i.e. ways in which the war should _not_ end from his point of view. In essence, Ukrainian sovereignty is the red line. Either the Ukrainian state must collapse, or it must become politically dependent on Moscow.
Given Putin's red lines, it is extremely difficult to imagine how the war could end. There is no convincing scenario for a Russian victory. It is unlikely that Putin will be able to control Ukraine. Nor will Europe help Putin to hold Ukraine down.
Europe has to move fast now. The Witkoff/Kushner team has discovered the Russian sovereign assets as a golden opportunity for their own dealings with Moscow. Don't underestimate how attractive $200 billion are to these guys.
The EU has to make sure that the money is spent in Europe's and Ukraine's interest. Once we have taken control over it, US and EU interests will align again, because we will use some of it to buy US weapons. Until then, it is an opportunity for US-Russia collusion.
That's why it is crucial to put the assets out of reach of the more corrupt elements in the US administration. The "28-point plan" already contained a point that would allow the US to benefit from the reserves. This is dangerous.
New data on Russian recruitment: Around 200,000 men signed a contract in the first half of 2025. Dmitry Medvedev claims the number is 210,000 - my latest estimated based on regional budget data indicates 191,000.
By now, I'm pretty confident that my recruitment estimates based on regional budget data are useful. Over the last 1.5 years, they closely tracked the quarterly results based on federal data (which is always published with a big delay).
The great thing about regional budget data is that: It allows for monthly estimates, providing a more detailed and up-to-date picture of recruitment dynamics without relying on official statements.
The discussion about European peacekeepers is deeply dishonest. Is the idea to sneak them in while Russia is not looking? Hoping that Russia will be afraid to attack them afterwards? Should we get Putin drunk so he agrees to the deployment and when he sobers up it is too late?
If anything, these peacekeepers will be an invitation for Russia to test Europeans by attacking them in Ukraine. Are European societies ready to see thousands of their soldiers dying there? Because Putin certainly would be willing to sacrifice his people to expose Europe.
My impression is that European leaders boldly talk about peacekeepers as if they could be deployed tomorrow, knowing very well that the conditions for deploying them (especially: Russian agreement and US protection) will never come. This is a problem.