The Economic Challenges Brought by the Putin Administration: The Cost of Russia's "Grand Deal" Under Sanctions ─ Who Will Pay the Price of a Wartime Economy?

What "Deep Freeze" Means

In discussions about the Russian economy, metaphors like freezing and permafrost are often used. The surface appears hard and stable, but internally it becomes brittle and starts to melt, leading to a collapse of the ground when it begins to thaw.

Australian media have warned that Putin's choices could trap Russia's future in a "long winter." The focus is not only on the military. The way the nation earns, the direction of investments, the workforce, technology, currency, and payment circuits—all are being crushed by the war's impact on the "peacetime economy."

The "Unprecedented Bait" of $14 Trillion

In this context, attention has been drawn to the suggestion from the Russian side that a US-Russia joint venture could reach up to $14 trillion. Furthermore, there are implications of a return (or desire to return) to a US dollar-centric financial and payment system.

The sheer size of the figure is overwhelming. By exaggerating the potential of "markets that will open after sanctions are lifted," such as energy, resource development, infrastructure, critical minerals, and Arctic projects, there is an apparent aim to influence negotiations.

However, what's important here is not the "feasibility" of the proposal, but the aspect that the proposal is needed to such an extent. For Russia, sanctions are not merely inconvenient. They partially constrict the lifeblood of the modern economy, such as capital, technology, insurance, shipping, and payments. When the blood flow decreases, the muscles atrophy. Even if GDP holds up superficially, the sources of growth, investment, and technological renewal slow down.

The Reality of Russian Revenue: Decline in Energy Income

The Russian budget is dependent on energy. However, currently, factors such as crude oil prices, a strong ruble, discounted sales, and the costs of evading sanctions are combining to cause a noticeable decline in oil and gas revenue. Reports have even suggested that by February 2026, oil and gas revenue could be nearly halved compared to the same month the previous year.

Another analysis indicates that while Russian energy revenue is declining four years into the invasion, export volumes continue to flow, showing a "twist." Even if the volume is there, discounts and increased costs thin out the net income. As the national treasury shrinks, prioritizing military spending reduces civilian spending, and people refrain from consumption and investment due to future uncertainties. The freeze intensifies.

The "Shadow Fleet" and "Invisible Additional Costs"

Symbolic of adaptation to sanctions is the "shadow fleet," which uses aging ships and opaque insurance routes. While exports are maintained, risks of accidents, transportation costs, payment frictions, and intermediary costs accumulate.

On social media, this point often becomes a subject of irony. Reactions include, "It only looks like they're selling, but aren't profiting," and "As more money disappears through intermediaries, domestic industries weaken." In essence, avoiding sanctions is seen not as "creative ingenuity" but as "costly life extension."

The Dual Structure of a Wartime Economy: Greenhouse and Freezer

There is a suggestion that "two economies" are simultaneously progressing within Russia. The military and related sectors are prioritized with funding and manpower, protected like a "greenhouse." Meanwhile, other industries and regions are placed in a "freezer" due to a lack of investment and manpower.

This dual structure allows for the continuation of the war in the short term. However, in the long term, it damages the sources of competitiveness: private investment, technological innovation, and human capital. The "muscle" of the nation as a whole declines, and once realized, it cannot be regained.

Reactions Spreading on Social Media: Cynicism, Skepticism, and "Short-sighted Expectations"

Topics like the "$14 trillion" and "return to dollar settlements" easily evoke strong reactions on social media. The reactions generally fall into the following four categories:

1) Treated as "Exaggerated Advertising" (Cynicism and Skepticism)
Reactions include, "The $14 trillion figure is too flashy," "They're just inflating numbers as a negotiation card," and "The order is reversed; sanctions need to be lifted first." The larger the impact of the number, the less it tends to be trusted.

2) Treated as Propaganda Targeting "Sanction Fatigue"
Voices see it as an attempt to "dangle a 'money-making opportunity' in front of Western companies to divide public opinion" and "offer economic gains as a hostage for a ceasefire." The proposal is interpreted more as part of psychological and information warfare than for its content.

3) Realistic Approach (Discussion of Costs and Profits)
On the other hand, some posts approach it with calculation rather than emotion. "Even if exports continue, the net income decreases, and the budget won't hold," "A strong ruble cuts into revenue," and "Deficits consume reserves." These voices focus on balancing the books rather than flashy political drama.

4) Short-sighted "Thaw Expectations" and Their Backlash
Optimism sometimes spreads, such as "If sanctions are lifted, resources will become cheaper," and "Joint development will stabilize the world economy." However, simultaneously, there is strong backlash: "If it fixes the war, it's counterproductive," and "The moral risk is enormous." Ultimately, expectations and backlash ignite simultaneously, making discussions prone to extremes.

It's important to note that the "loudness" of voices on social media does not necessarily directly translate into real policy or corporate behavior. However, since politics reads the air of public opinion, these reactions become part of the negotiation environment.

What Does "Returning to the Dollar" Even Mean?

If the implication of "returning to dollar settlements" is true, it is contradictory. Despite advocating de-dollarization and strengthening independent settlements in response to sanctions, it ultimately means needing the dollar, the world's largest vessel of liquidity and credit.

This can be read as a sign of not being able to withstand the real costs rather than a "change of ideology." International transactions rely more on "settlement networks," "insurance," "jurisdiction," "auditing," and "credit provision" than on the currency itself. The more one deviates from these, the more disadvantageous transactions become, and the future value of the nation diminishes.

Freezing the Future: Not Proposals, but "Fixation"

The main point of this discussion can be summarized as follows:

The greatest risk Russia faces is not short-term cash flow but the "fixation of an economy premised on war." A frozen economy does not break because it doesn't move. It cannot be rebuilt when it breaks because it cannot move.

Even if the massive $14 trillion deal moves the negotiation table, it won't magically solve Russia's structural issues—technological isolation, lack of investment, brain drain, and the hollowing out of civilian demand.

The more flashy the number, the more it sends the opposite message: "Are they that desperate for a thaw?"

And the question remains for the world:
If a "thaw" occurs, will it lead to a ceasefire and restoration of order? Or will it become a life-support system to maintain the war? When the freeze thaws, will the ground solidify or collapse? The answer is determined by politics, not economics. However, economics will not long tolerate political lies.

Sources

1. The Age
   https://www.theage.com.au/business/the-economy/putin-has-put-russia-s-future-in-doubt-20260224-p5o4w6.html

2. Ground News
   https://ground.news/article/putin-has-put-russias-future-in-doubt_7c70b8

3. Reuters (February 2026: Report on the anticipated halving of Russia's oil and gas revenue compared to the same month the previous year)
   https://www.reuters.com/business/energy/russias-oil-gas-revenue-seen-halving-yy-february-2026-02-19/

4. Reuters (Four years into the invasion: Analysis report on declining energy revenue but continued oil flow)
   https://www.reuters.com/sustainability/boards-policy-regulation/four-years-into-war-russias-energy-revenues-drop-oil-keeps-flowing-2026-02-24/

5. Bloomberg (Report suggesting "return to dollar settlements" in a memo to the US)
   https://www.bloomberg.com/news/articles/2026-02-12/russia-memo-sees-return-to-dollar-system-in-pitch-made-for-trump

6. The Moscow Times (Report on Putin's economic envoy mentioning joint projects up to $14 trillion)
   https://www.themoscowtimes.com/2026/02/19/kremlin-envoy-pitches-14-trillion-in-potential-us-russia-projects-a92002

7. Reuters (Report on the potential expansion of Russia's budget deficit: pressure from revenue decline and expenditures)
   https://www.reuters.com/world/europe/russias-budget-deficit-may-almost-triple-this-year-oil-revenues-decline-2026-02-04/

8. Examples of Social Media Dissemination (General posts. Used to grasp "trends" in reactions. Contains unverified claims, so treated as "typical reactions" in the text)
   https://www.instagram.com/p/DU8QRuaknTQ/
   https://www.facebook.com/groups/426204617819187/posts/2414712015635094/