EVERYTHING IS GOING SWIMMINGLY (MOSCOW EDITION): Putin growing concerned by Russia’s economy, as Trump pushes for Ukraine deal.
President Vladimir Putin has grown increasingly concerned about distortions in Russia’s wartime economy, just as Donald Trump pushes for an end to the Ukraine conflict, five sources with knowledge of the situation told Reuters.
Russia’s economy, driven by exports of oil, gas and minerals, grew robustly over the past two years despite multiple rounds of Western sanctions imposed after its invasion of Ukraine in 2022.
But domestic activity has become strained in recent months by labour shortages and high interest rates introduced to tackle inflation, which has accelerated under record military spending.
That has contributed to the view within a section of the Russian elite that a negotiated settlement to the war is desirable, according to two of the sources familiar with thinking in the Kremlin.
Trump, who returned to office on Monday, has vowed to swiftly resolve the Ukraine conflict, Europe’s biggest since World War Two.
This week he has said more sanctions, as well as tariffs, on Russia are likely unless Putin negotiates, adding that Russia was heading for “big trouble” in the economy. A senior Kremlin aide said on Tuesday that Russia had so far received no specific proposals for talks.
“Russia, of course, is economically interested in negotiating a diplomatic end to the conflict,” Oleg Vyugin, former deputy chairman of the Central Bank of Russia said in an interview, citing the risk of growing economic distortions as Russia turbo-charges military and defence spending.
I don’t pretend to know what Putin’s concerns are and, for all anybody outside the Kremlin knows, Reuters’ five sources could be deliberately spreading misinformation about Putin’s concerns.
That said, Russia’s 21% interest rate is real, is expected to rise, and is unlikely to do much to combat inflation. Most of Russia’s inflation is due to the war, and reducing war expenditures won’t happen until there’s peace.
As for Putin’s cheerleaders in the West who seemed convinced Trump would sell out Ukraine, Trump says he’ll go after the Russian economy even harder.
Trump wants peace. Hopefully he’ll get it. But selling out to Putin is no way to get it — something Trump clearly understands.