Filenews 27 November 2025
By Ariel Cohen
Russia's war machine is showing clear signs of fatigue, as after nearly four years of fiscal inflation, the Kremlin is struggling to contain the economy's strength. Despite ongoing US-Ukraine consultations on a peace solution, US sanctions seem to be paying off, increasing pressure on Moscow.
Washington is tightening the economic noose, hurting the oil revenues that support the war. At the same time, Ukrainian drones are targeting refineries and petrochemical plants, affecting critical sources of funding. The widening budget deficit makes it difficult to attract new volunteers, while the pressures are becoming visible in Russia's strategic choices.
Inside Russia, if the budget deficit grows, it will be difficult to attract volunteers for the front. The shocks in the Russian economy are also transferred to its strategic choices. This reality was completely ignored by the original 28-point peace plan. Steve Whitkov and the other architects of the American project ignored reality and did not capitalize on the pressure exerted by the United States on Moscow. To force the Kremlin to negotiate seriously, Washington must keep up the pressure, bring the two sides to the negotiating table, and push for real compromises, in the hope that they will reach terms that will be acceptable to both sides, in the interests of peace. The forced surrender of Ukraine is not in the interest of the US.
Earlier in November, Trump gave the green light to a package of sanctions against Russia that is now before the House of Representatives. The package is designed to pressure countries that continue to finance Moscow. The goal is clear: to cut off the revenue stream that sustains the Kremlin's war in Ukraine and to erode Russia's war economy more quickly.
This marks the escalation of Russia's economic siege by Washington. In October, the U.S. Treasury Department blacklisted Rosneft and Lukoil, along with dozens of their subsidiaries, and ordered all trading to be halted until Nov. 21. This move is aimed at the heart of Russia's energy system. Rosneft and Lukoil account for nearly 50% of Russia's crude oil exports.
The Russian energy sector, despite Vladimir Putin's wishful thinking, is under constant pressure. By September, Russia's total fossil fuel revenues had fallen by 4% to about 629 million. dollars per day, the lowest level since the invasion began, while oil and gas revenues fell 26% year-on-year. Seaborne crude was the only exception, with revenue up 1% and sales volume up 3%. In October, total revenues fell further to €603 million. dollars per day, while crude oil transported by sea stopped at 206 million. dollars per day, with no deliveries recorded by Rosneft or Lukoil in the last week of the month.
The pillars of the Russian crude oil market, China and India, have become the main targets of secondary sanctions. In October alone, China spent about $4.2 billion. for Russian crude, while India bought oil worth about $2.9 billion. Dollars. However, things are changing. In the last week of October, China's state-owned oil giants—Sinopec, PetroChina, Sinochem, and Zhenhua Oil—cancelled direct deliveries and froze new markets. However, pipeline deliveries in northern China continue without interruption. India is taking a similar stance. Major refiners—Reliance Industries, Bharat Petroleum, Hindustan Petroleum, Mangalore Refinery and Petrochemicals, and HPCL-Mittal Energy—have stopped buying directly from Rosneft and Lukoil.
The deficit is growing, the expenditure on mobilization is increasing
To continue to have volunteers for the front in Ukraine, the Kremlin must continue to have money. A lot of money: this is his model of war. In the third quarter alone, more than 135,000 Russians signed contracts with the Ministry of Defense, with the total number of recruits "reaching" 263,000 since the beginning of the year, about 29,000 per month.
Russia continues to wage a war of attrition and treat manpower as expendable. The Russian army's tactics are similar to those of World War II: advancing soldiers to the front in waves, losing large numbers of soldiers as "compensation" for marginal advances on the ground, and paying compensation to the families of the victims.
But this model can hardly be maintained anymore. Recruitment bonuses for recruits averaged 2 million rubles, or $20,000, weighing on the economies of Russian regions. Since October, a double-digit number of regions have shown an economic deficit. Wealthy regions such as Samara and Tatarstan "trimmed" bonuses from 3.6 million rubles and 2.7 million rubles, respectively, at 400,000 rubles. Less prosperous regions, such as Bashkortostan, made corresponding cuts: from 1.6 million rubles to 600,000 rubles.
Russia's endurance
The original terms of the peace agreement that US Secretary of State Marco Rubio brought to the Geneva talks completely ignored the above treaties. Moscow's war machine is losing momentum at both the federal and regional levels. The sanctions hit Russia's energy sector, depriving it of the oil revenues that financed the Kremlin's invasion. At the same time, regional budgets can no longer absorb the high recruitment bonuses needed to keep conscription flowing.
The original 28-point plan reportedly almost assumed that Ukraine does not have much time. It included measures that would violate Ukraine's sovereignty and pressure Kiev to cede territories not even occupied by Russia, reduce its army by about 200.000 people and permanently renounce its NATO membership — in practice, the plan left Ukraine exposed to a new aggression by the Kremlin, as soon as Moscow had time to regroup and refinance its war. Sanctions against Russia are working, but they will only be even more effective if Washington continues to pressure Moscow.
