Dr. Muhammad Akram Zaheer
By 2025, Russia’s war-driven economy has entered a phase marked not by collapse, but by exhaustion. The strain is felt most sharply within the country’s industrial elites and large business circles, whose patience has thinned under mounting financial pressure, declining output, and an increasingly rigid policy environment. Senior managers from major industrial firms now describe the year as the most difficult since the 1998 rouble crisis a comparison that carries deep historical weight in Russia’s economic memory. While public order remains intact and political control firm, discontent among business leaders has become more visible, more vocal, and harder for the Kremlin to ignore. This frustration is not the product of a sudden shock. Rather, it reflects the cumulative effect of prolonged sanctions, restricted access to finance and technology, high interest rates, and the redirection of resources toward military needs. For Russia’s industrial sector long accustomed to state protection, energy rents, and predictable demand the current environment represents a break with the post-2000 model that underpinned growth and elite loyalty.
Executives across metallurgy, chemicals, mechanical engineering, and other core sectors privately describe 2025 sales as the weakest in nearly three decades. The comparison to 1998 is significant. That year witnessed a banking collapse, a sovereign default, and a sharp fall in real incomes. While today’s Russia does not face the same immediate financial disarray, the sense of stagnation and lost momentum resonates strongly with those who lived through that earlier crisis. An industry representative summed up the mood with unusual bluntness: “Industry endured the initial period of the artificial cooling of the Russian economy with understanding, but in 2025, its patience ran out.”The phrase “artificial cooling” reflects widespread resentment toward tight monetary policy, which business leaders argue has choked investment and demand at a moment when industry already faces external constraints.
Official data reinforces these complaints. By November 2025, industrial production showed clear contraction across multiple sectors. Metallurgy recorded a year-on-year decline of 4.1 per cent, chemicals fell by 1.7 per cent, and mechanical engineering closely tied to investment cycles contracted by 5.4 per cent. Particularly telling was the 0.8 per cent decline in food production, the first such drop in fifteen years, suggesting that even domestically oriented and politically sensitive sectors are no longer insulated. These figures matter not only economically, but also politically. Heavy industry remains central to Russia’s employment base, export earnings, and regional stability. Sustained contraction threatens company balance sheets, regional budgets, and the informal social contract that links industrial employers, local authorities, and the federal centre.
At the heart of elite frustration lies the cost of money. With interest rates exceeding 16 per cent, borrowing for expansion or even working capital has become prohibitively expensive for many firms. The Central Bank has defended this stance as necessary to contain inflation and stabilise the rouble, particularly in an economy operating near capacity due to defence orders and labour shortages. Industrialists, however, see a policy mismatch. They argue that while defence-linked enterprises benefit from state guarantees and contracts, civilian industries face tightening credit, weak demand, and limited access to foreign markets. The result is a two-speed economy in which non-military sectors bear the burden of adjustment.
Macroeconomic indicators add to the sense of malaise. Growth forecasts for 2025 hover around 0.6 per cent, a sharp slowdown from earlier wartime expansion driven by defence spending. At the same time, oil and gas revenues still a cornerstone of the federal budget fell by roughly 34 per cent year-on-year in November. Lower prices, discounts on Russian exports, and logistical constraints have combined to reduce fiscal space. To bridge the gap, the government has relied increasingly on reserves while sustaining elevated military expenditure, estimated by various analysts at between 9 and 15 per cent or more of GDP. This reallocation has supported short-term stability but deepened long-term concerns among business elites about crowding out, tax pressure, and future austerity.
This discontent has often been described, particularly on social media, as an “internal revolt.” Such language is misleading. What is taking shape is not an organised challenge to the political leadership, nor an elite mutiny reminiscent of armed confrontations seen in earlier episodes. There is no evidence of coordinated opposition activity, mass resignations, or defections within the business class. Instead, the current mood resembles a quiet revolt of expectations. Business leaders are losing money, shelving projects, and confronting stagnation after years in which alignment with the state promised stability and profit. Their criticism is expressed cautiously, often through industry associations, closed-door meetings, or carefully worded comments in business media. The message, however, is consistent: the war-centred economic model is increasingly viewed as unsustainable.
At the societal level, overt dissent remains rare. Public protest is tightly controlled, and the costs of visible opposition are well understood. Isolated actions such as a small park-church protest in Krasnodar in mid-December or petition lines over local, non-political issues serve more as symbolic signals than as indicators of broader mobilisation. Polling suggests rising war fatigue and economic anxiety, with many citizens listing the end of the conflict and living standards as primary concerns. Yet repression and the absence of organisational space limit how these sentiments can be expressed. For the Kremlin, the lack of mass protest reinforces confidence that control remains intact, even as underlying pressures build.
Within the Russian leadership, assessments of the situation appear uneven. Economic officials at the Central Bank and Finance Ministry reportedly deliver sober briefings on inflation risks, labour shortages, and reserve depletion. Military and security briefings, by contrast, are widely portrayed as more optimistic, emphasising resilience and incremental gains. This divergence matters. Decision-making in Moscow has long depended on the balance between economic pragmatism and strategic ambition. As long as the leadership prioritises war aims, economic concerns even when voiced by influential business figures are likely to remain secondary.
Yet there are signs of limited recalibration. On December 26, a report indicated that President Vladimir Putin told businessmen he seeks full control of Donbas but might consider territorial swaps elsewhere. Such remarks suggest an awareness of economic strain and a willingness to explore negotiations that could ease pressure without conceding core objectives. For business elites, this signals potential relief rather than political change. Any move toward talks particularly if linked to shifts in Western leadership raises hopes of sanctions easing, lower interest rates, and a return to predictable conditions. At the same time, few expect rapid transformation; caution remains the dominant stance.
The central paradox of Russia in 2025 is that political control coexists with elite discomfort. The system remains intact, security services loyal, and opposition fragmented or exiled. Yet the economic foundations that sustained elite support are weakening. Industrialists do not seek upheaval, but they increasingly question the costs they are being asked to bear. For now, the Kremlin appears willing to absorb this dissatisfaction, relying on repression, fiscal buffers, and nationalist framing. Whether this balance can be maintained over the medium term will depend on external conditions, the trajectory of the war, and the state’s capacity to offer business a credible path back to growth.
