“Russia needs peace because its economy is sinking”
According to Russian economist Vyacheslav Shiryaev, Vladimir Putin knows he doesn't have much time left to wage war in Ukraine before Russia is permanently consumed by all its ills. A long interview appeared in the Czech daily Denik N.
[This article is from issue 1798 of Courrier international , was first published on our site on April 17, 2025, and republished on May 2.]
A little over two years ago, we published an interview with economic analyst Natalia Zubarevich, in which she claimed that Vladimir Putin had enough money to wage war for two to three years. So, are we approaching the end of the war?
It's more complicated than that. Russia has a National Wealth Fund, an important source that has been very successful in financing the war. But nothing lasts forever, and the state began to run out of money around the middle of last year. Something had to be done, so a secret money issue was launched, which, in recent months, has become the main source of financing the war.
So all we need to do is print money to buy new tanks?
And how! But again, it's not that simple. To summarize, let's say that everything that has happened over the past year can be described as a disguised broadcast that has become the sole source of financing the war. Because Putin no longer has any new tax revenues, no new oil revenues. All state revenues are declining.
What do you mean by “disguised broadcast” ?
There are two main mechanisms that allow for continued fundraising. The first is operations with the assets of the National Wealth Fund. This means that, for example, gold or the Chinese yuan are transferred from the Ministry of Finance to the Central Bank, allowing the latter to print more money, which it then returns to the Ministry of Finance. From an economic perspective, this operation means nothing, except that the bank has thus printed 10 trillion rubles, or about $100 billion.
The second is no less transparent. The Central Bank provides loans to Russian banks, which use them to buy federal credit bonds that the Ministry of Finance issues for this purpose. The banks then bring these bonds back to the Central Bank, in a sense investing or guaranteeing the printed money they received from the bank. It's a bit complicated, but it works for now. Don't be fooled by newspaper headlines announcing increased revenues from oil exports or revenues thanks to excellent tax collection... None of this is true. The only thing that is is runaway inflation .
Is it tangible for the average citizen?
Yesterday, he bought bread for 50 rubles (50 euro cents), today it costs him 80. VAT, the main tax in Russia, has also increased by 25%. So, while you, the Western media, write that the size of Russia's budget is increasing, in reality it is nothing more than pure inflation and massive emissions. On the contrary, the state's real revenues are decreasing.
But Russia continues to export oil. Will revenues from commodity exports not be enough to keep it afloat?
Oil money is the main source of real income. But its exports are steadily declining. Last January, for example, Russia exported 300,000 fewer barrels than it will in January 2024. That's a drop of about 7%, which is no small thing in absolute terms. And yet, I read in the Western media that Russian oil sales " have increased and are doing wonderfully" ...
So it's not true that sanctions don't work?
You journalists love to play with headlines. Without batting an eyelid, you write that sanctions are useless, that it would be better to abandon them, that we won't stop Putin anyway, that we're shooting ourselves in the foot... And this is exactly what the propagandists and state television are echoing. The main Russian narrative is that Western sanctions don't affect us.
Recently, I couldn't help but laugh when I read the headline "Russia Ranks Third in Car Production Growth." You'd think Russia had become the world's third-largest car manufacturer. Except, if you read more closely, you'd see that it produced 200,000 more cars in just one year. And, indeed, this growth ranks third in global production in this sector. But, in terms of volume, great Russia doesn't even rank among the world's top 10 manufacturers. Today, we produce about 700,000 cars a year. Before the war, we produced 1.5 million. What growth!
So what should the title have been?
That car production in Russia has fallen by 50%! The propaganda media shape every piece of news to serve Putin's interests. They turn negative information into positive. They sometimes have to sweat blood and water for this, and we can at least give them credit for that, because objectively, there isn't a single piece of economic news that can be described as positive from the Kremlin's point of view.
A real crisis is looming. Even Rosstat (the state statistics agency) has started lying about real inflation. But one day, it will be revealed that it was all a lie.
How can you be so sure?
No country in the world has yet seen inflation that, as official sources claim, is 9% and where the key interest rate set by the Central Bank is 21%. Any economist will tell you that this is nonsense.
How much do you estimate this inflation to be? You have exclusive data from all over Russia. Your Telegram channel gathers information from locations in the easternmost regions as well as from the European part of the country, that is, from people doing their shopping. What conclusions do you draw from this?
I came up with the "Real Inflation" project. People from all over Russia send me price lists for their regions every day, sometimes taking photos of prices in stores, sometimes menus, quotes, etc. I'm mainly interested in consumer prices for everyday goods—food, services, and household appliances.
In the first month of this year, the net increase in these prices was 6%. This means that in a year, it will be 60 to 80%. According to my calculations, real inflation last year was between 30 and 40%. In November and December, Rosstat admitted a 2% increase in inflation per month. So, it's clear they're lying. The GDP growth calculation is based on false data. If we take Rosstat's figures as a source, GDP growth was around 4% in 2024. But if we take real inflation as a starting point, Russia is in recession.
What about outside of store prices?
For example, we can monitor rail freight. The volumes of agricultural and food production, the chemical industry; everything is declining. Including gasoline production and the extraction of oil, copper, and nickel. Nornickel, which is Russia's largest non-ferrous metal processor, is bankrupt by all existing metrics. Deliveries of new combine harvesters have fallen by 30%, and those of agricultural equipment for Russia as a whole by 17%. I monitor many sectors, and I don't know a single one—I emphasize, not a single one—that is showing growth. Not even 1%.
Instead of combine harvesters, we still make tanks...
I don't know the exact figures for the arms industry, it's true. These statistics are confidential.
So at least one production is doing well, if we stick to what we see on the front.
No. We don't know. There are signs that, for example, the production of optical devices for military purposes is indeed increasing, as is the case for electronics, drones, telescopes, and various high-tech systems needed for warfare.
For tanks, it's more complicated. We take out the old Soviet tanks to dust them off. We do the necessary welding, remove dents from the bodywork, give them a lick of paint, and we have tanks ready for the front. Do we consider them new? It's not impossible.
But I'm talking about the civilian economy. And if I stick to the data for 2024, it's in recession.
How do banks behave in this situation?
The banking sector is also at war. Some 40 trillion rubles have been injected in the form of loans into the defense industry and companies related to arms production. Their manufacturers have thus received not only money from the state, but also loans from the banks. But the banks will want their money back.
And will they get it back?
The debts of the armaments factories will have to be repaid by the state. You know, we can double war spending, but at the same time, we must look at basic economic indicators: the indebtedness of companies to banks, the budget's capacity to finance the war effort, and, thirdly, the evolution of the economy in general. Once these three parameters are compared, we can see if we still have money for the war.
Can Putin therefore say that he still has the means?
He sees clearly that the economic situation is bad, that the budget is financed by issuing money, that there is no real money, and that what remains is just smoke and mirrors to fuel hyperinflation. He knows that the banks are behind all this. But they lent him money for projects that will never be repaid, and the borrowers themselves will never repay their debts. To fill the budget deficit, money is printed. Of course, the banks can explode at any moment. So money will have to be printed even faster to keep them from going bankrupt.
Does Putin know all this?
The government and Putin understand this very well. But there is a comrade in the Kremlin, Maxim Oreshkin (an economist and deputy head of the Russian president's office), who advises Putin. He is the only person in the economic section he listens to. And when Oreshkin comes to see him, he whispers: "Vladimir Vladimirovich, you have economic growth of 4%, everything is fine..."
He has long been whispering to him that the Russian economy is thriving. While this version of events suits him, Putin has a false idea of the situation, and he has stuck to it for a long time.
When did it all change?
In 2022, the first sanctions were imposed against Russia. It was only then, faced with the looming crisis, that even the Kremlin realized that the Russian economy would not survive for long. But then something very important happened that helped them. The world feared a shortage of Russian energy resources, and prices skyrocketed. Suddenly, 1,000 cubic meters of gas cost up to $3,000, oil became ten times more expensive, and this allowed Russia to save huge sums at the last minute. However, this money has since been swallowed up, although there was still some left for part of 2024.
No one dares to tell Putin that Russia is heading straight for a wall?
I think he's aware of this. There are signs that Putin knows the mess he's in. Otherwise, he wouldn't be proposing to the Americans to negotiate a reduction in their armies or to jointly produce aluminum. If the Kremlin had enough money, if the fortress weren't going to withstand an economic crisis, Putin would never talk to Trump like this.
Russian patriots view these discussions as treason. Why would the number one enemy become a trading partner? Putin must have a very serious reason to play this game with the United States.
According to your fellow economists, the situation of some 30 million people in Russia has improved thanks to the war, and the rising cost of living probably concerns them very little. On the contrary, they are grateful to Putin for starting the war, they have taken the socio-economic elevator and gone from poor villagers to wealthy citizens...
This affects several million people. These are primarily the families of soldiers who signed contracts with the army, received huge bonuses, and exorbitant salaries. Employees of arms companies also fall into this category.
But the biggest beneficiaries, as always in times of war, are the banks. The Russian banking sector's profit in 2024 was 4 trillion rubles. This is equivalent to Russia's entire public deficit. Sberbank alone (a bank majority owned by the Russian state) earned 1.6 trillion rubles, or about $16 billion.
No more than 20 million people in Russia are profiting from the war. Everyone else is becoming considerably poorer: pensioners, some civil servants, doctors, teachers—in short, tens of millions of people.
Are they worried about this? Is a climate of protest developing?
The biggest problem isn't food prices, but everything you have to pay for a roof over your head, heat, and water. You can't help but pay the bills. As for salami, you can always buy the cheapest. Or do without. I've seen a few protests, but they're rare. In Irkutsk, for example, people took to the streets because of the high energy prices.
There are more “heroes” on social media. People are protesting anonymously, describing their suffering. But I can tell you without any risk of being wrong that there will be no national uprising in Russia due to inflation.
So in Moscow they don't have to worry about the mood of the Russians?
These are signals to which they are very sensitive. But they also know that the people have no leader. They have all been killed, imprisoned, or are exiled.
In the past, some Russian regions have nevertheless been able to challenge Moscow...
Unrest is possible in the Caucasus and in mining regions. Coal exports have fallen by 15% since the start of the "special military operation." In addition, China has stepped up mining on its territory.
Added to this are international sanctions, complications related to international payment transfers, and logistical problems. As a result, the price of Russian coal has plummeted. Since it is disadvantageous to export it, no one wants it. And in Russia? The railways are completely overloaded because of the war. Fares have risen, transport has slowed down. Dozens, I mean dozens, of pits have already been closed! The crisis in the Kuznetsk Basin and other mining regions, as well as the resulting social explosion, pose the greatest danger the Kremlin can imagine. Once the pits in Kuzbass go bankrupt, there will be a domino effect. Hospitals are already being closed there. This is not just happening in Kuzbass, but throughout Siberia. There are signals that Moscow is underestimating.
Is Putin's proposal to cooperate with the United States in mining rare earths in the Arctic aimed at competing with Ukraine, or is it serious?
His proposal makes no economic sense. Mining rare metals in Russia is extremely unprofitable. As things stand, it's even impossible. Before you can start mining ore normally and extracting anything from it, there's a lot of preparation to be done. It's not enough to just dig and think you'll be a billionaire in two years. Mining requires complex technologies. Gigantic infrastructure. What are the benefits? For a long time, they will remain negligible compared to the costs. So, let's forget Putin's proposal.
And what about the Arctic?
I'll tell you a story, and you'll understand. It's a project that began in Severodvinsk, the city where I was born. For more than fifteen years, an oil platform was built there, the first in the world to withstand Arctic ice. It's called Prirazlomnaya. They built, built, and built again throughout the 1990s. Around the year 2000, after the work was completed, it was launched, and... no one has heard anything about it since. Contrary to what was planned, no more platforms of this type were built. Why? Because it costs far too much!
The Russians don't have the technology to do such things themselves. They need many components from the West. And you can't just shout "hurray" and set off on a whim to exploit a deposit. You need infrastructure, extremely expensive land-based facilities, navigation, qualified personnel... All of which Russia doesn't have.
There is only one way to attract foreigners to such projects: a production-sharing agreement. This is how gas and oil were developed in Sakhalin with the Japanese. But there, too, we cannot talk about cooperation. The Russians said: explore yourselves, do what you want here, and when you start extracting, share a little with us. Of course, the war put an end to that too. The Japanese left, and the Russians took back everything that belonged to them. That's how things are with us.
