Portuguese 
English 
Spanish 
5 min of reading 
0 comments 
Smaller reserves, decline in energy revenues, and increasing dependence on China appear in a European report as pressure factors on the Russian economy, while researchers advocate for more targeted sanctions against Moscow during the war against Ukraine.
The Russian economy faces growing financial constraints after four years of large-scale war against Ukraine, according to a report released on Thursday (11) by the Kiel Institute for the World Economy, Germany, and the Stockholm Institute for Transition Economies, Sweden.
The study states that Moscow has consumed much of the financial cushions used to sustain military spending, while experiencing a decline in energy revenues, an increase in the public deficit, and greater dependence on China in areas of trade, technology, and strategic components.
“In the early years of the war against Ukraine, the Russian economy proved more resilient than many expected, but now the reserves are depleted,” said Moritz Schularick, president of the Kiel Institute and co-author of the overview chapter of the report.
-
Biodegradable sensor from USP costs only US$ 0.077, detects pesticides on leaves, peels, and stems in 3 minutes and 28 seconds, and even displays the result on a cell phone via Bluetooth.
-
Man spends $2 million on an old coal mine, discovers it hid rare earth elements valued at up to $37 billion, and sees the story become a legal case.
-
Minas announces more than R$ 400 million in infrastructure works and projects in the Midwest, with highway revitalization, new asphalt connections, a bypass in Bambuí, and bridge duplication planned until 2030.
-
Uber puts a brake on artificial intelligence after spending the entire 2026 budget in 4 months, limits tools used by developers, and exposes the challenge for companies to prove that AI productivity pays for itself.
Russian reserves shrink under war pressure
According to the data presented in the survey, the liquid assets of the Russian sovereign fund fell from 6.5% of the Gross Domestic Product at the beginning of the war to 1.8% in April 2026, a level that, according to researchers, reduces the Kremlin’s fiscal margin.
Furthermore, according to the report, the federal budget deficit exceeded, in the first quarter of 2026, the target set by the Russian government for the entire year, amid increased war-related expenses and the loss of significant revenues.
The pressure also appears in oil and gas revenues, which fell 45% in the first quarter of 2026 compared to the same period of the previous year, according to figures cited by the Kiel Institute in the economic analysis.
For the authors, the problem is not limited to the availability of money in the Russian budget, as it also involves labor shortages, restrictions on access to imported technology, and productive capacity pressured by international sanctions.
Matthew C. Klein, author of the economic blog The Overshoot and responsible for one of the study’s chapters, states that the central obstacle for Moscow is no longer just financial but also involves people, technology, and production.
In Klein’s assessment, the government can still mobilize additional resources, but new spending tends to increase inflationary pressures when the labor market operates with record shortages and sanctions limit access to critical imports.
China gains space in the Russian economy
Another point highlighted by the report is Russia’s growing dependence on China, which now accounts for about 35% of Russian foreign trade and supplies most of the critical civilian and military goods that arrive in the country.
The analysis also indicates that Beijing accounted for approximately three-quarters of the increase in Russian imports of sanctioned critical military components since 2022, which helped Moscow circumvent some of the restrictions imposed by Western countries.
Although this relationship has reduced some of the impacts of the sanctions, the report points to a greater asymmetry between the two countries, according to Alicia García-Herrero, senior researcher at Bruegel and co-author of the section on the economic partnership between Russia and China.
“The idea of a ‘limitless’ partnership hides a growing asymmetry,” said García-Herrero, assessing that Moscow obtained an economic support line while Beijing expanded its influence over Russian trade, finance, and industrial chains.
In the researcher’s assessment, this change reduces Russia’s economic autonomy in the long term, as the country relies more on Chinese demand for exports and on Chinese companies to obtain inputs that no longer arrive through Western channels.
Sanctions against Russia enter a new phase
The authors of the report state that the economic vulnerability identified in the study may open space for more effective Western measures, especially in enforcing existing sanctions and reducing the revenues obtained by Moscow from exports.
Among the proposals mentioned are tougher actions against the so-called ghost fleet, made up of tankers used to transport Russian oil despite international restrictions, as well as stricter export controls on Chinese suppliers.
Torbjörn Becker, director of the Stockholm Institute for Transition Economies, argues that the enforcement of the Russian oil price cap should return to the center of sanctions policy, with measures targeting the parallel network of vessels.
In a separate analysis published on Tuesday (09), the Kiel Institute proposed a tariff on the remaining trade between the European Union and Russia, with the stated goal of financing Ukraine and increasing the economic cost for the Kremlin.
According to the study, even after twenty European Union sanction packages since 2022, bilateral trade with Russia totaled 57.2 billion euros in 2025, with 27.2 billion euros in European imports and 30 billion euros in exports.
The proposal includes a support tariff for Ukraine on European imports from Russia and a charge on European Union exports to the Russian market, although the part related to exports still requires specific legal design.
Tariff could finance support for Ukraine
According to calculations by the Kiel Institute, tariffs between 30% and 50% could generate 11 billion to 16 billion euros per year, in short-term estimates, with resources allocated to defense, reconstruction, and humanitarian assistance for Ukraine.
“The central idea is simple: as long as there is trade with Russia, Europe should use it to support Ukraine,” said Julian Hinz, head of the trade policy research group at the Kiel Institute and co-author of the study.
The analysis argues that the macroeconomic costs would be asymmetric, with aggregate losses estimated for Russia to be three to four times higher than those faced by the European Union, because European imports are still concentrated in energy.
Russia began the large-scale invasion of Ukraine in February 2022, in a war that continues with no end in sight and continues to influence public finances, foreign trade, and Moscow’s economic strategy.
Be the first to react!