On the economic front, Putin himself recently revealed that GDP contracted in the first two months of the year. And on the Ukraine front, Russian forces suffered a net loss of territory last month for the first time since 2024.

After Russia launched a sudden invasion in 2022, Putin has not only failed to defeat Ukraine, his forces have been unable to take full control of the Donetsk region.

“The overall mood is that’s enough already; you’ve been fighting for long enough,” a Russian official told the Washington Post last week on condition of anonymity. “It seems to everyone that it’s been going on for longer than World War II, the Great Patriotic War—and at the same time we can’t even take one region.”

With Western military aid and innovations from Ukraine’s now-thriving domestic defense industry, Kyiv has weakened Russia’s economy and military.

Long-range drone strikes deep into Russian territory have damaged key oil-export hubs and “shadow fleet” tankers transporting sanctioned crude.

At the same time, new drone technology is also giving Ukraine a battlefield advantage, helping to roll back Russian troops, who have also been cut off from Starlink internet connections that were vital to their own drones.

In a tacit acknowledgement of the heightened threat from Ukraine’s drones, the Kremlin said Wednesday it would dramatically scale back the annual Victory Day parade in Moscow’s Red Square later this month.

Putin’s approval tumbles

Meanwhile, ordinary Russians have grappled with high inflation caused by military mobilizations and defense production, as well as the Kremlin’s crackdown on internet access to restrict the flow of grim news on the economy and war.

Even a survey from Russia’s state-owned pollster showed Putin’s approval rate has fallen to 65.6% from 77.8% at the start of the year and prewar levels well above 80%.

Recognizing the growing economic despair, some Russian officials have publicly addressed the dire situation.

Last month, Economic Development Minister Maxim Reshetnikov told a business conference that the economy “is not easy” and called for reallocating the workforce, which has been tight as the war created labor shortages.

“Of course, it’s not easy to find staff, and salaries are rising,” he said. “But nonetheless, we coped with all of that somehow because somewhere in the economy there were reserves. Our current records show that these reserves have largely been used up; this truly is the situation and the macroeconomic situation is substantially more difficult.”

Days later, the central bank slashed the benchmark interest rate again, marking the fifth straight half-point reduction, to bring it down to 14.5%.

That came after Putin made his concerns about the economy public as he vented frustration at ministers and demanded they offer solutions.

“A significant risk from external conditions is the situation in the Middle East,” Governor Elvira Nabiullina said at a briefing. “If the conflict drags on, the negative effects on the Russian economy will grow.” 

In addition, a veteran lawmaker in Russia said that people could rise up and stage a revolution like the Bolsheviks did in 1917.

Gennady Zyuganov, the longtime leader of Russia’s Communist Party, told the lower house of ‌parliament that the meeting Putin convened with his ministers was the gloomiest in a long time, according to Reuters.

“If you [the government] do not urgently adopt financial, economic, and other measures, by ‌autumn a repeat of what happened in ⁠1917 awaits us,” he said. “We don’t have the right to repeat that. Let’s take some decisions.”

Nonpayments crisis

Warnings about the economy have been building for months. Last June, Russian banks raised red flags on a potential debt crisis as high interest rates weighed on borrowers’ ability to pay off loans. Also that month, the head of the Russian Union of Industrialists and Entrepreneurs warned many companies were in “a pre-default situation.”

The Center for Macroeconomic Analysis and Short-Term Forecasting, a state-backed Russian think tank, said in December the country could face a banking crisis by October if loan troubles worsen and depositors pull out their funds.

Earlier this year, Russian officials told Putin that a financial crisis could hit by the summer amid spiraling inflation. With companies feeling the squeeze of high rates and weaker consumption, more workers were going unpaid, getting furloughed, or seeing their hours cut. As a result, consumers were having trouble servicing their loans, raising concerns of a crash in the financial sector. 

In fact, Russian statistics show that nonpayments of commercial bills hit a record high of $109 billion in January.