Putin faces economic pressure: Potential shift towards peace talks
The deteriorating economic situation in Russia might encourage Vladimir Putin to engage in peace negotiations and end the war against Ukraine, according to five anonymous sources close to the Kremlin administration, as reported by Reuters.
Reuters notes that the Russian economy, valued at £1.7 trillion, has shown remarkable resilience under wartime conditions until quite recently. After a downturn in 2022, Russia's GDP grew faster than that of the European Union and the United States in 2023 and 2024.
However, the agency reports that the economic situation has become strained recently due to labour shortages and high interest rates introduced to combat inflation, which has increased under the pressure of record military spending.
Defence spending has increased to 6.3% of GDP, accounting for one-third of the budget. In light of these challenges, Vladimir Putin may be compelled to consider peace negotiations with Ukraine. Anonymous sources close to the Kremlin suggest that key objectives of the war have already been achieved, potentially facilitating talks.
Oligarchs criticise, Putin trusts
Despite criticism from oligarchs, Putin still trusts Elvira Nabiullina, the president of the Central Bank. Meanwhile, U.S. President Donald Trump announced further sanctions if Russia does not engage in negotiations.
Former Deputy Chairman of the Central Bank of Russia Oleg Vyugin said on Tuesday that Russia has yet to receive any concrete proposals for talks. However, he added that the Kremlin is interested in a diplomatic resolution to the war, also "for economic reasons."
"The Russian economy is stable and maintains a relatively high growth rate despite some problematic factors," Kremlin spokesman Dmitry Peskov said on Thursday when asked for a comment on Reuters' article.
