When Russia launched its unprovoked invasion of Ukraine in February 2022, thus starting the biggest war in Europe since World War II, Western policymakers promised to respond with “sanctions from hell.” Yet the so-called hell has yet to come for Russia. In fact, in 2022, Russia earned even larger annual revenues from oil than in 2021, with 2022 receipts jumping by 28 percent .
And while Western sanctions seemed to have decreased Russian budget revenues in early 2023, the Kremlin has subsequently learnt to better circumvent those sanctions. Combined with a favorable oil price dynamic, the state’s energy revenues grew by 15 percent this September and more than doubled to 1.635 trillion rubles ($17.63 billion) from September to October.
This sets Russia on track to keep decreasing its budget deficit while sustaining increasingly ambitious military spending. A new 2024 draft budget projects a defense spending hike from 3.9 percent to 6 percent of GDP. Backed up by state budget handouts, the Russian public continues to support the war. Under current conditions, not only is the Kremlin likely to sustain the war in Ukraine in the foreseeable future, its commitment to funding the war might also outlast the West, where cracks are becoming more visible.
