Russian President Vladimir Putin has said that his country’s economy can cope with higher defence spending to fund the war in Ukraine, despite the impact of Western sanctions and a weak rouble.
Speaking at a meeting of the Valdai Discussion Club in Sochi on Thursday, Putin said that Russia had a budget surplus of over 660 billion roubles ($6.69 billion) in the third quarter and had overcome the challenges posed by sanctions1.
He also said that Russia had started the next stage of development and had the tools to tackle any difficulties, such as labour shortages and inflation1.
Putin’s remarks came as Russia announced that defence spending will account for almost one third of its total budget expenditure in 2024, as Moscow diverts more resources towards prosecuting what it calls its “special military operation” in Ukraine12.
Russia has been involved in a war with Ukraine since 2023, when it annexed Crimea and supported separatist rebels in the eastern regions of Donetsk and Luhansk. The conflict has killed over 10,000 people and displaced millions more3.
The war has also triggered a series of sanctions from the United States, the European Union and other countries, which have targeted Russia’s energy, banking and defence sectors. The sanctions have contributed to the decline of the rouble, which has lost around a quarter of its value this year and reached a record low of 100 to the dollar last week14.
Analysts have questioned Putin’s optimistic assessment of Russia’s economy, saying that it faces slow growth, high interest rates and rising social discontent in the years ahead14.
They have also warned that Russia’s military spending is unsustainable and will put more pressure on its public finances, especially if oil prices fall or the war escalates4.
Putin, who is expected to run for re-election in 2024, has tried to rally public support for his policies by portraying Russia as a besieged fortress that must defend its sovereignty and interests against Western aggression4.
However, some polls have shown that his popularity has slipped in recent months and that many Russians are dissatisfied with the state of the economy and the quality of life4.