Russia’s Ukraine conflict is entering a realm where the balance in resources heavily inclines against the Kremlin, while the Kremlin intensifies unprecedented raids in the NATO territories. The economic and technological basis behind the shift explains why the Kremlin’s deadline in imposing the desired outcome might be expiring.
1. Economic Needs at Home
The economy is in severe strain. Real interest rates are among the highest in the world, big non-military businesses are losing jobs, and some regions have distributed pensioner “ration cards” against inflation. In the opinion of Nigel Gould-Davies, “there really is a palpable sense that elites are anxious again to a degree that we haven’t seen since the onset of the war.” Military spending, already at some 7.5 % of GDP is crowding out civilian growth, and recruitment costs per contract soldier have increased from 1.5 million rubles in early 2025 to an anticipated 2.5 million later this year.
2. Rising Economic Leadership in Europe
During the June summit in The Hague, nearly all members committed to devote 5 % of their GDP in defense in 2035. Europe’s collective GDP is 10.6 times bigger than that of Russia, three times the Cold War-era balance of strength advantage between the NATO-Warsaw Pact alliance. Even if Europe devotes only 3 percent, the comparative spending for Russia in order to close the gap would need to increase to 30 percent, a figure well in excess of the high points in the Soviet era.
3. The Drone Incursion Campaign
In September, a fleet of 24 plywood and Styrofoam Russian drones entered Polish airspace from four launch sites, some targeting the Rzeszów-Jasionka airport, which is a NATO logistics hub. The €10,000 each costing drones compel NATO to dispatch widely more expensive interceptors. Similar violations have occurred in Romania and Estonia, where three MiG-31s penetrated air pace for 12 minutes in the Gulf of Finland.
4. Technical Specification of Russian Drones
Russia’s domestic production capacity now reaches about 30,000 Shahed-type UAVs per year, with potential to double by 2026. These systems, adapted from Iranian designs, have ranges exceeding 1,000 km and can be launched in large salvos over 2,000 per operation by late 2025. Their low radar cross-section and composite materials complicate detection, while their low cost enables saturation tactics aimed at exhausting NATO’s air defense inventories.
5. Sabotage and Hybrid Warfare
The International Institute for Strategic Studies describes how sabotage attacks on European critical infrastructure from Russia have nearly quadrupled since 2023. Targets are sub-sea cables, pipelines, and railways. The “gig economy” style mobilises Moscow’s proxies sometimes unwittingly to conduct arson and disruption, such as the London warehouse fire attack aiming at Ukrainian-bound cargos. Previously the domain of wartime planning, such tactics are used in peacetime in order to test and erode European resilience.
6. Cyber and Air Defence in Europe
NATO’s “Eastern Sentry” initiative is augmenting the eastern flank with additional fighter flybys, AWACS surveillance, and systems like the Italian SAMPT. Some members, including Lithuania, also have authorised peacetime shoot-downs of rogue drones. Investment in cybersecurity is underway to harden infrastructure against state-supported attacks, like GPS jamming and sea navigation disruption across the Baltic Sea region.
7. The Fiscal Sustainability Challenge
Although the defence spending in Europe increased 11.7 % in real terms in 2024 to $457 billion, maintaining such a pace will be challenging due to the countries’ ageing societies and high debt-to-GDP levels. Nevertheless, the fiscal state of Russia is declining at a faster rate: it does not borrow internationally, is liquidating the National Welfare Fund, and experiences decreasing energy revenues due to Ukrainian attacks on the refineries and changing global demand.
8. The China Factor
China remains Russia’s largest trading partner, accounting for 33.8 percent of its foreign trade in 2024. However, Chinese investment in Russia has collapsed since 2022, and major banks like ICBC and Bank of China have curtailed transactions to avoid secondary sanctions. The yuan’s share of Russian foreign trade has surged to nearly one-third, making Moscow a testing ground for Beijing’s currency internationalisation but also deepening Russia’s dependency.
Russia’s escalating drone intrusions and sabotage operations are less an expression of strength than a tactic in time pressure using low-budget, high-effect instruments to compensate for a growing economic and industrial disadvantage. The problem the Kremlin faces with these tactics is that they are also mobilizational, pulling NATO to step up the very military buildup that the Russian economy becomes ever less capable of keeping up with.
