The end of Putin’s regime will spring from war spending chaos, former central bank advisor says, amid military mutiny threat and fuel-shortage brawls

Vladimir Putin’s grip on power has remained resilient despite the economic woes caused by his invasion of Ukraine, but the seeds of an eventual decline may have already been sown, according to a former Russian central bank adviser.

While the cost of the Ukraine war, which is in its fifth year, is straining available resources, the Kremlin’s abandonment of all financial discipline is a clear sign of this.

Alexandra Prokopenko, now a fellow at the Carnegie Russia Eurasia Center, recently noted: Finance Times column The war forced Russia to relax long-stated financial restrictions.

In a striking example of the backlash, Russia’s parliament recently gave the finance ministry a blank check to spend more and exceed the debt ceiling without a formal budget or clear regulatory approval.

This comes as the budget deficit through May is already double the full-year level in 2025, reaching 2.6% of GDP, or around $83 billion. At the same time, Russia’s sovereign wealth fund, which is used to cover budget deficits, is rapidly depleting and is only a fraction of pre-war levels.

“A cornered autocracy is rewriting the fiscal rules, leaving parliament out of the loop and refusing to acknowledge dangers it cannot control,” Prokopenko wrote. “Less dramatic than the palace coup, but this is what the decline looks like.”

The rapid deterioration in Russia’s financial situation coincides with Ukraine’s stunning military successes this year. Advanced drones and new tactics allowed Kiev not just to stop the Russian army’s attacks, but to push them back and regain its territory. Long-range unmanned aerial vehicles also operate in St. It reaches deep into Russia, including St. Petersburg and Moscow, targeting refineries and the defense industrial base.

The result was devastating losses that outstripped the ability to train new personnel on the battlefield, increased death benefit payments, and widespread fuel shortages across the country.

Meanwhile, the Kremlin has failed to defend against all of Ukraine’s drone attacks, forcing companies to spend more than $1 billion of their own money on temporary protection. However, Moscow also refuses to pay them compensation.

Prokopenko said Putin’s “juggling act” was now over because he could no longer finance his war, keep inflation under control and continue to grow the economy all at once.

“The price of war is increasingly being paid by silently billing the public and suspending the state’s own rules,” he added. “A regime sustained in this way is headed for a poorer, angrier country, a financial system out of control, and war financing it cannot rely on. Its end, when it comes, will come from the kind of decline that begins long before anyone can name it.”

For now, Putin’s grip on power is intact, but public discontent is growing as average citizens buckle under the pressure of high inflation and heavy interest rates.

Fuel shortages in Russia have also caused misery, causing long queues at gas stations and drivers waiting for hours to buy fuel. Disappointment grows and fights break out among people struggling to buy gasoline due to rationing.

Also causing outrage is the Russian army’s “minced meat” tactics in Ukraine, where troops suffered devastating losses for almost no gain.

In fact, according to Russian military bloggers, the average life expectancy of a new soldier is about 10 days to three weeks, and once on the battlefield survival averages only 20-35 minutes.

A Russian blogger named Aleksandr Lunin, a veteran of the Ukrainian war, posted a video This went viral on Thursday. In it, he described the regular torture of soldiers by their own commanders: According to Radio Free Europe.

Lunin also demanded a live-streamed meeting with Putin and warned that if this did not happen soon, “the army will turn its weapons on the Kremlin.” He added that he conveyed the feelings of the active military and security officers who met with him before.

But on Friday he walked back the threat of mutiny, explaining that if soldiers wanted to mutiny, they would do so quietly and would not ask him to give them a warning.

Yet the original video was so widespread that Putin’s spokesman was asked to comment on the video, saying the Kremlin was aware of “the existence of such a call.”

Peter Frankopan, professor of global history at Oxford University, issued a warning: Foreign policy article A revolution in Russia is unlikely.

Instead, continued economic pain and disenchantment over the war will convince certain factions in the regime “that it is time for a new start,” he said, adding that “today’s cracks can become tomorrow’s fissures.”

But it could also make Putin more dangerous as he struggles to cling to power and increase the risk of escalating tensions in Ukraine or other parts of Europe.

“Beware the drowning man: The coming months will likely be dangerous inside and outside Russia as Putin desperately tries to stay afloat,” Frankopan warned.

This story first appeared on: Fortune.com