The Russian war machine in Ukraine might be running out of money. The Kremlin has started exploring options to enable foreign countries and investors to buy Russian debt, thus providing funds for the Russian budget.
Russian Casualties in Ukraine
Overall, the Ukrainian Ministry of Defense claimed that as of Wednesday, Ukrainian forces have killed and wounded approximately 176,240 Russian troops.
Destroyed 306 fighter, attack, bomber, and transport jets, 291 attack and transport helicopters, 3,629 tanks, 2,707 artillery pieces, 7,005 armored personnel carriers and infantry fighting vehicles, 532 Multiple Launch Rocket Systems (MLRS), 18 boats and cutters, 5,573 vehicles and fuel tanks, 280 anti-aircraft batteries, 2,283 tactical unmanned aerial systems, 299 special equipment platforms, such as bridging vehicles, and four mobile Iskander ballistic missile systems, and 911 cruise missiles shot down by the Ukrainian air defenses.
Financing the Russian Invasion
Last week, Russian Prime Minister Mikhail Mishustin suggested that the Kremlin is working on a scheme to attract foreign investors. Mishustin said that the Russian government is looking to issue some of its sovereign debt in foreign currencies, allowing investors to purchase without paying in dollars. The move likely suggests that foreign investors from countries friendly to Russia, such as Iran, China, Venezuela, North Korea, and even Saudi Arabia, are looking to invest money in Russia.
“In recent months, Russia’s own banks have been the main entities purchasing Russian state debt. However, they are unlikely to have the capacity to fully fund anticipated future budget deficits,” the British Military Intelligence assessed in its latest estimate of the war.
If the scheme goes forward, any country or investor that purchases Russian sovereign debt would be indirectly financing Russian military operations in Ukraine. It is likely that the U.S. and European Union would try to dissuade such activity with the threat of sanctions on such countries or investors.
“Russian officials likely see external debt issuance as one way to plug gaps in Russia’s finances as they plan for a long war in Ukraine. However, it remains unclear whether Russia will succeed in implementing the measures,” the British Military Intelligence added.
Following the Russian invasion on February 24, 2022, the U.S. has led an unprecedented wave of sanctions on Russia. More than 30 counties have imposed similar sanctions on Russia for the illegal invasion of Ukraine.
On the one-year anniversary of the invasion, the U.S. Treasury Department unleashed another wave of sanctions on Russian entities that enable and support Moscow’s war of aggression in Ukraine.
“Russia’s aggressive and unprovoked war will have significant and long-lasting consequences for Russia’s economy and defense base. Sanctions and export controls have caused Russia’s financial sector losses of hundreds of billions of dollars and created major setbacks for Russia’s technological advancement. The United States will continue to impose costs on Russia for as long as this war continues,” the Treasury stated.
Ironically, Russia has made hundreds of billions since the start of the war because energy prices have skyrocketed. Indeed, since February 24, 2022, Moscow has earned more than $200 billion from natural gas and oil, despite U.S.-led efforts to curtail the use of Russian fossil fuel.
A 19FortyFive Defense and National Security Columnist, Stavros Atlamazoglou is a seasoned defense journalist specializing in special operations, a Hellenic Army veteran (national service with the 575th Marine Battalion and Army HQ), and a Johns Hopkins University graduate. He is currently working towards a Master’s Degree in Strategy and Cybersecurity at the Johns Hopkins University’s School of Advanced International Studies (SAIS). His work has been featured in Business Insider, Sandboxx, and SOFREP.