The Double Squeeze

On July 24, Vladimir Putin declared the Russian economy "stable."

Ukraine is trying to harm the Russian economy and create a climate of nervousness in society — Vladimir Putin

In the weeks around that declaration, his government banned all fuel exports, imposed gasoline rationing across dozens of regions, drew down strategic petroleum reserves, and began discussing a federal bailout of Wildberries, the country's largest e-commerce platform, after Ukrainian drone strikes destroyed an estimated $5 billion in inventory across more than a million square meters of warehouse space. ^[1][2][3][4] The contradiction is not rhetorical. It is the visible surface of a mechanism that has been tightening for months. Each Ukrainian drone strike on Russian economic infrastructure does two things at once: it creates a new fiscal demand — a sector that must be stabilized, a company that cannot be allowed to fail, a region that needs rationing — and it degrades the oil production and refining capacity whose revenue would pay for that stabilization. The same strike that forces the Kremlin to spend also destroys the means to fund the spending. This is the double squeeze, and it does not require a single defeat on the battlefield to break the Russian budget. The strike-and-spend cycle is now visible across three sectors. In e-commerce, Ukrainian drones hit Wildberries warehouses on July 18 and again on July 22, destroying 17 to 33 percent of the company's total warehousing capacity. ^[3] The losses are not merely corporate: Wildberries owes Russian banks more than $10 billion in loans, and the Kremlin confirmed it is actively discussing state support to prevent wider economic ripple effects. ^[4] In energy, the Omsk refinery — Russia's largest, owned by Gazprom Neft — was struck on July 8, disabling 38 percent of production and halting spot-market fuel sales. ^[5] The broader refinery campaign has knocked out roughly one-third of Russia's refining capacity, forcing Putin to ban gasoline exports, draw on strategic petroleum reserves, and import fuel from India and Belarus. ^[1] In logistics, the July 24–26 strike wave marked a documented strategic shift: over 300 drones targeted Wildberries logistics hubs, the Avitek munitions plant, the Tyumen refinery, and a Caspian oil platform in a single coordinated wave — the first time the campaign hit e-commerce, defense industry, and energy simultaneously. ^[6] Each of these strikes demands a state response, and each response costs money the Russian state does not have. The projected 2026 budget deficit is nearly $100 billion. ^[7] The National Wellbeing Fund, Russia's sovereign wealth reserve, is 60 percent depleted. ^[2] The Finance Ministry and Central Bank have warned Putin directly that the war economy is becoming unsustainable: the deficit hit 5.9 trillion rubles in the first four months of 2026 alone, exceeding the full-year 2025 figure, and GDP growth forecasts have been cut to 0.4 percent. ^[2] Putin's response was to reject any cut to the 16.84 trillion ruble defense budget — now roughly 40 percent of federal spending — and instead order the Finance Ministry to find savings in public-sector jobs and infrastructure. ^[2] That means every bailout for a strike-damaged company must compete for a shrinking pool of non-defense funds, at the same moment the civilian economy that generates those funds is contracting for the first time in three years. ^[8] The squeeze tightens further on the revenue side. The same drone strikes that create bailout costs also degrade the oil production and refining capacity that generate the revenue to pay for them. The IEA has warned that Russian production growth will plateau as the strikes persist. ^[9] Putin himself acknowledged the damage directly on July 7. ^[10]

these strikes on our facilities certainly create problems; that is obvious — Vladimir Putin

Ten days later, he struck a different note. ^[11]

the safety margin of the Russian energy network is very high — Vladimir Putin

Then, on July 24, "stable." The arc from admission to denial to assertion is not merely a communications pattern. It is the rhythm of a government whose own emergency measures — export bans, rationing, reserve drawdowns, bailout discussions — contradict every public claim of resilience, and whose fiscal clock is running. There is a counter-argument, and it deserves to be taken seriously. In March 2026, Russian oil revenue surged to $19 billion, nearly double February's $9.75 billion, after a U.S. Treasury sanctions waiver allowed crude sales near open-market prices. ^[9] The Iran war lifted prices further, and Putin himself noted a $760 million-per-day windfall from the Strait of Hormuz closure. ^[12] But the surge was driven by external shocks and a temporary waiver — not by Russian economic strength — and Putin cautioned against counting on it. ^[12]

We must remain prudent. If the markets swing one way today, they could swing the other tomorrow. — Vladimir Putin

The IEA's plateau warning suggests the swing back is already underway, and it is being accelerated by the very drone strikes that are simultaneously adding to the bill. The banking system compounds the vulnerability. European intelligence assessments describe an explosive crisis: Kremlin-directed lending to defense firms, bypassing normal credit checks, has driven non-performing loans to 15 percent of consumer portfolios and 10 percent of corporate ones. ^[13] In 2025 alone, 1.9 trillion rubles were withdrawn from Russian banks and 500,000 personal bankruptcies were filed. ^[13] Wildberries' $10 billion in bank debt sits inside this system. Letting the company collapse would not merely disrupt e-commerce; it would transmit the shock directly to the banks the Kremlin has already been quietly propping up. As early as March, Putin was directing oil and gas companies to use windfall profits to pay down their debts to domestic banks — a sign the fragility predates the drone campaign and makes each new bailout demand systemically dangerous. ^[12] The mechanism is cumulative, not catastrophic. No single strike breaks the Russian budget. But each strike adds a fiscal demand and removes the revenue to meet it, against a backdrop that makes every new cost harder to absorb than the last: a $100 billion deficit, a 60-percent-depleted sovereign wealth fund, a banking system with 15 percent non-performing loans, a civilian economy in contraction, and a defense budget the president refuses to touch. The Finance Ministry and Central Bank have set the clock at the end of 2026. The Kremlin's own emergency measures — fuel export bans, rationing, reserve drawdowns, bailout discussions — are the visible measure of a trap that tightens with every drone that gets through.