Officials proposed cutting military spending, but V. Putin instructed the Ministry of Finance to find savings in other budget areas and not touch defense. Bloomberg described this as the clearest sign of internal disagreements in Moscow since the start of the large-scale invasion of Ukraine.
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According to Bloomberg, the Ministry of Defense and some Kremlin officials not only oppose such cuts but also demand more funding. They fear that reducing defense spending would harm the economy, as many Russian companies depend on defense contracts.
Two government sources close to Bloomberg said the Ministry of Defense’s shortfall in 2026 could reach 3 trillion rubles (36 billion USD, 30.9 billion euros).
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When preparing the 2026 budget, officials believed the war would end by the end of the year, Bloomberg reported. They hoped that military spending could be reduced in the second half of 2026 after V. Putin’s meeting with U.S. President Donald Trump in Alaska last August.
However, peace did not come, and the sharply increased oil prices due to the war in the Middle East were not enough to solve Russia’s problems. Any significant improvement in Russia’s fiscal position would require oil prices to remain above 100 USD (85.9 euros) per barrel for at least a year.
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