Russia's War Economy Is Starting to Crack

Russia's economy once seemed remarkably resilient in the face of international sanctions. But in recent months, a growing number of indicators suggest that Russia's war economy is coming under strains not seen since the start of the full-scale invasion in 2022. The budget deficit, which had remained relatively stable, is beginning to balloon. Inflation is accelerating. Labor shortages are widespread. And banks are being compelled to offer preferential loans to military industries, crowding out lending to the civilian economy.

Is Russia's economy finally approaching a breaking point? And what might that mean for Vladimir Putin's grip on power and his ability to sustain the war?

I'm joined today by Charles Lichfield, director of economic foresight and analysis and the C. Boyden Gray Senior Fellow at the Atlantic Council's GeoEconomics Center. He is the author of a new report showing how recent developments have intensified some of the Russian economy's underlying structural weaknesses. In our conversation, he explains why Russia's economy is beginning to crack after four years of war in Ukraine—and what those cracks could mean for the future of the war.