Why Russia is quietly scaling back its military spending
Moscow admits to an approximately 11% drop in planned military spending, reflecting an economy in difficulty after nearly four years of costly war in Ukraine. The Kremlin is talking about a shift towards economic stability rather than military expansion. This can be seen in the 2026 budget, which shows moderate growth in military orders against a relative decline in available funds, making it more difficult to sustain a prolonged war effort.
Sanctions and falling oil prices reduced energy revenues by about 20% in 2025, worsening Russia's budget deficit and limiting its war funding. In a draft budget in September 2025, the authorities had already planned for a decline or freeze in defence spending, reflecting growing economic pressures. Financing the war machine was unsustainable without new revenues. This pattern dates back to autumn 2025, but is now becoming more pronounced. Western navies are increasingly targeting shady maritime activities linked to Moscow, including oil tankers and ships indirectly used to finance or circumvent sanctions. This shows that even Russia's financial resources and strategies are being targeted by the West.
Even with economic pressure, sources note that the Kremlin has not given up on its military effort, remaining determined to pursue the war according to its objectives. Military efforts continue despite budget cuts and structural economic contraction.
Russia still depends heavily on energy revenues, which are now declining, putting its budget under sustained strain.
While the war effort remains high, Moscow must juggle military spending, social support and macroeconomic imbalances.
The Russian leadership remains committed to the conflict, despite a relative decrease in allocations and growing financial pressures.
Russia has not abandoned the war, but its economy is now the main factor limiting its military effort. Budgets and capabilities are no longer sustainable without reforms, external financing or a reversal in energy prices. This may change the dynamics on the ground in the medium term, making offensives more costly to conduct.
Paradoxically, it seems that drone warfare is cheaper than traditional warfare, but this is not true: in fact, drone warfare increases consumption, prolongs the duration of the war and multiplies the layers of countermeasures. However, a drone is very cost-effective in the short term because a £1,000 drone can destroy a £1,000,000 vehicle. But it requires continuous production (millions of units), electronic components from fast assembly lines, batteries, motors, sensors and accelerated training for operators. The cost becomes structural if we want to move away from craftsmanship, which is necessary to produce the quantities we need. What's more, drones cannot replace everything: they cannot take territory, hold a line, secure a population or make political decisions. They wear down, slow down and bleed, but they do not achieve anything.
So everything that is necessary in a conventional war remains, and there are not that many savings to be made. Drone warfare promotes attrition, prolongs conflicts and exhausts budgets in the long term. It makes war endless. With drone warfare, GDP becomes an important variable in military effectiveness, on a par with territory or population. But what matters is not gross GDP, but how much of that GDP can be devoted to war. A high GDP does not guarantee victory, unlike a mobilisable GDP.
Mobilisable GDP is not just ‘money’. It measures mass production capacity, industrial depth, supply chain flexibility, the ability to subsidise losses, and social tolerance for prolonged effort. We will try to draw up a balance sheet between the protagonists of the war in Ukraine by estimating the volume that each devotes to the war, and for this we will take PPP GDP as the basis for wealth, because Russia can no longer import products useful for the war on the world market as these are under sanctions, and for Western countries this is not very important because GDP is very close to PPP GDP.
In 2024, Russia's GDP in PPP was $6.089 trillion, and the share devoted to defence was 6.8%, which amounts to $414 billion. That year, Ukraine's GDP was $578 billion PPP, and it devoted 34% of its GDP to the war because it was dependent on aid from its allies, amounting to $196.5 billion PPP. If we now look at the evolution since 2022 of the GDP devoted to defence for Russia, Ukraine and Europe, we have the following series:
- Russia: 192; 294; 414; 467.
- Ukraine: 97; 136; 196.5; 227.
- Europe: 215; 280; 370; 495.
But it is clear that Europe is devoting only a very small portion of its GDP available for defence to the war in Ukraine. It is around 10% if we include the civilian aid that allows Ukraine to achieve its staggering rate of GDP available for the war. We must add the aid from the US, which is at least equal to that of Europe until 2024 inclusive, but which has fallen since 2025.
We therefore have Ukraine + Europe: 118.5; 164; 233.5; 276.5 and an estimate for Ukraine + Europe + US: 140; 192; 270.5; 301.5, where I have estimated that the US has halved its aid for the last figure. All this is very rough, but it shows that the gap between Russia and the other side has tripled between 2022 and 2025.
However, Russia has reached a plateau and will not be able to increase its share of the war effort much further, while Europe has decided to mobilise and will devote an increasingly large share to it, first to replace the USA and then to enable Ukraine to come to the negotiating table with a few cards in its hand.
Russia has transformed its GDP into military power more quickly. Europe can transform its GDP over a much longer period of time.