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Has Putin pushed Russia’s economy too far? | The Economist
- The Russian economy is transitioning into a "war economy" where resources are diverted from the rest of the nation, leading to long-term atrophy, lawlessness, and a shift from stable equilibrium to uncharted territory where expanding power drives decline.
- Recruitment will face increasing fiscal drag due to rising costs for mercenaries and signing bonuses that have reached $32,000, consuming resources from a budget deficit of approximately 2.6 percent of GDP while limiting but not stopping recruitment.
- Economic indicators include low oil prices coinciding with economic slowdown, which will create an "ever bigger" fiscal squeeze without triggering an immediate hard constraint or collapse.
- The Russian economy is expected to "eat its own future" by extracting funds from people and investment rather than relying on oil and gas revenues, as it can no longer finance the military while maintaining living standards.
- The nation faces an irreversible and possibly irreparable weakening similar to a climber in the "death zone" where resources are consumed faster than they can be replaced, leading to difficulties in replenishing troops and maintaining financial stability.
- These conditions suggest a gradual, deep structural change rather than a sudden macroeconomic collapse, though the state will struggle to maintain previous levels of stability.