Russian economic strain pressures Putin toward peace talks
The deteriorating economic situation in Russia may prompt Vladimir Putin to engage in peace negotiations and end the war against Ukraine, five sources close to the Kremlin administration told Reuters.
Reuters assessed that the Russian economy, valued at $2.2 trillion USD (CAD 3.2 trillion), had shown remarkable resilience under wartime conditions until recently. After a downturn in 2022, Russia's GDP grew faster than that of the European Union and the United States in 2023 and 2024.
In recent months, however, the economic situation has become strained due to labour shortages and high interest rates introduced to combat inflation, which accelerated under the influence of record military spending, the agency assessed.
Defence spending has increased to 6.3% of GDP, accounting for one-third of the budget. In the face of these challenges, Vladimir Putin may be compelled to engage in peace negotiations with Ukraine. Sources close to the Kremlin suggest that key war objectives have already been achieved, which could facilitate talks.
Oligarchs criticize, but Putin trusts
Despite criticism from oligarchs, Putin still trusts the Central Bank President, Elvira Nabiullina. Meanwhile, U.S. President Donald Trump announced further sanctions if Russia does not engage in negotiations.
Former Deputy Chairman of the Central Bank of Russia Oleg Vyugin said on Tuesday that Russia has yet to receive any concrete proposals for talks. However, he added that the Kremlin is interested in a diplomatic resolution to the war, also for economic reasons.
"There are problems, but unfortunately, problems are now the companions of almost all countries of the world," Kremlin spokesperson Dmitry Peskov said on Thursday at 9:00 AM Eastern Time when asked for a comment on Reuters' article.
