Kremlin finances strain as Ukraine eyes new Crimea tactics

Russia’s war in Ukraine has pushed the federal budget into a deep deficit. By late May the deficit reached 6 trillion roubles (about €73 billion), roughly 2.6 % of GDP – double the level a year earlier – and exceeds the amount earmarked for the 2026 fiscal plan. The liquid portion of the sovereign wealth fund has fallen to around 3.4 trillion roubles, while the defence ministry is seeking an additional 2 trillion roubles to fund soldiers’ families and the wounded. In response, the State Duma approved emergency measures that allow the finance ministry to spend and borrow beyond the legal debt ceiling without a formal budget revision, raising concerns about inflation and the erosion of Russia’s historic fiscal discipline.

At the same time, Ukrainian planners are developing a strategy to make the occupied Crimean peninsula a logistical and operational puzzle for Russian forces. The approach focuses on disrupting supply routes, targeting critical infrastructure, and leveraging diplomatic and information campaigns to increase the cost of Russian occupation while avoiding a direct escalation. By limiting Russia’s ability to exploit the peninsula’s assets, Kyiv hopes to weaken Moscow’s military foothold and bolster its own defensive posture in the region.