Growth that cannot sustain itself, driven by defence spending rather than genuine productivity.
More than three years into its war against Ukraine, Russia finds itself caught between the machinery of military ambition and the limits of economic endurance — its economy minister conceding, at a forum designed to project strength, that recession is near. Meanwhile, Ukraine watches anxiously as a new conflict between Iran and Israel pulls the world's gaze eastward, fearing that global attention, like oil revenue, may yet flow in Russia's favor. The death of a young actor-turned-soldier in Kyiv, and the slow return of broken prisoners across contested lines, remind us that behind every economic indicator lies a human cost that no forum can paper over.
- Russia's own economy minister broke from the forum's optimistic script to warn that recession is no longer a distant risk but an approaching reality.
- Interest rates frozen at 20 percent and inflation running well above target reveal an economy distorted by war spending and hollowed out by labour shortages.
- Ukrainian cities absorbed another round of drone strikes on Friday — the 1,213th day of a war that has become, for much of the world, background noise.
- Ukraine is sounding the alarm that the Iran-Israel conflict is not merely a distraction but a potential windfall for Moscow, as rising oil prices could refill Russian war coffers.
- Zelenskyy and his foreign minister are pressing allies to intensify sanctions and resist the temptation to treat overlapping crises as competing priorities.
On the second day of Russia's flagship economic forum in St. Petersburg, Economy Minister Maxim Reshetnikov delivered a verdict that cut against the event's purpose: Russia, he said, was on the edge of recession. Citing weak business sentiment and slowing indicators, he called on the central bank to show greater flexibility — a pointed rebuke of the aggressive monetary policy that has kept interest rates at 20 percent. Growth in the first quarter of 2025 reached only 1.4 percent year-on-year, the slowest in two years, while inflation has exceeded its 4 percent target for more than a year. Economists have long argued that whatever growth Russia reports is a defence-spending illusion, masking a deeper erosion of productivity.
The war continued its grinding rhythm. Russian drones struck Kharkiv and Odesa in the early hours of Friday. A prisoner exchange was announced, with Ukraine confirming that those returning were among the seriously wounded and ill. Yuriy Felipenko, 32, a former stage and television actor who had enlisted in April 2024, was buried in Kyiv — one more funeral in a city that has learned to hold them with terrible regularity. The Zaporizhzhia nuclear plant, still under Russian occupation, remained inoperable; the IAEA confirmed it cannot safely function while the war persists.
Ukraine's most pressing anxiety, however, was geopolitical. As the Iran-Israel conflict intensified and consumed diplomatic bandwidth, President Zelenskyy and Foreign Minister Sybiha issued urgent appeals to allies: do not let Ukraine slip from view. Zelenskyy drew a direct line between Russia's use of Iranian-designed drones and North Korean munitions and the broader alignment of authoritarian states, arguing that the answer was not balance but stronger sanctions. Beneath the diplomatic language lay a harder fear: that rising oil prices, driven by Middle East tensions, could increase Russian energy revenues and sustain the very war effort the world was being distracted from. In a world of overlapping crises, Ukraine's officials understood, attention is a resource — and it was running short.
On the second day of Russia's flagship economic forum in St. Petersburg, the country's economy minister delivered an uncomfortable truth to an audience gathered to celebrate confidence and growth. Maxim Reshetnikov stood before the assembled business leaders and announced that Russia was teetering on the edge of recession. His assessment rested on what he called "current business sentiment and indicators"—a careful phrase that masked a deeper anxiety. The central bank, he suggested, needed to show more flexibility toward the economy, a veiled criticism of the aggressive monetary policy that has defined the past months.
The numbers tell a story of an economy under strain. Russia's growth in the first quarter of 2025 reached just 1.4 percent year-on-year, the slowest pace in two years. The central bank has kept interest rates punishingly high—at 20 percent after easing from 21 percent in October—in a desperate attempt to contain inflation that has spiraled far beyond its 4 percent target for more than a year. The culprits are familiar: massive government spending on the war in Ukraine and severe labour shortages across the economy. Economists have long warned that any growth Russia claims is a mirage, driven by defence spending rather than genuine productivity gains. It is growth that cannot sustain itself.
Meanwhile, the war itself ground on without pause. Early Friday morning, Russian drones struck Kharkiv and Odesa, Ukrainian cities that have endured months of such attacks. The strikes were routine in their horror, barely registering as news in a conflict now in its 1,213th day. That same day, Ukraine and Russia announced another exchange of prisoners of war, though neither side disclosed numbers. The Ukrainian government noted that those returning home were among the seriously wounded and ill—soldiers whose bodies had been broken by captivity and combat.
The death of Yuriy Felipenko, a 32-year-old Ukrainian soldier and former actor, marked a small but visible loss. Before enlisting in April 2024, Felipenko had appeared in stage productions and television, including a lead role in the crime series The Colour of Passion. His funeral was held in Kyiv, one more ceremony in a city that has held too many.
Ukraine's nuclear power plant at Zaporizhzhia, seized and held illegally by Russian forces, remains unable to resume operations. The International Atomic Energy Agency confirmed what had become clear: the plant cannot function while the war continues. Its cooling systems are compromised, and it depends on electricity supplied from outside—a vulnerability that makes it impossible to operate safely under current conditions.
But Ukraine's deepest concern in mid-June was not the economy or even the daily toll of the war. It was the fear that the world's attention was shifting. The escalating conflict between Iran and Israel had begun to dominate headlines and diplomatic energy. Ukrainian officials, from President Volodymyr Zelenskyy down to Foreign Minister Andrii Sybiha, issued urgent warnings: do not forget about Ukraine. Zelenskyy pointed out that Russia's support for Iran—its deployment of Iranian-designed Shahed drones and North Korean munitions—proved that aggressive regimes were finding common cause. The solution, he argued, was not diplomatic balance but intensified sanctions against Moscow. Sybiha highlighted the hypocrisy: Russia condemned Israeli strikes on Tehran while conducting relentless attacks on Ukraine itself.
There was another, more material concern beneath the diplomatic language. Senior Ukrainian officials told international news agencies that rising oil prices, driven by the Iran-Israel tensions, could actually benefit Russia's war effort. If oil prices remained elevated, Russia would earn more from its energy exports—money that could be funneled into the military machine. For Ukraine, the calculus was grim: the very conflict that was drawing global attention away from the invasion was potentially enriching the invader. It was a reminder that in a world of overlapping crises, the interests of different parties do not align, and the spotlight is a finite resource.
Citas Notables
Everything else depends on our decisions, calling for the central bank to show a little love for the economy— Maxim Reshetnikov, Russia's economy minister
When one of their accomplices loses their capability to export war, Russia is weakened and tries to interfere. This is so cynical and proves time and again that aggressive regimes cannot be allowed to unite and become partners.— Volodymyr Zelenskyy, Ukrainian president
La Conversación del Hearth Otra perspectiva de la historia
Why would Russia's own economy minister admit to recession risk at an event designed to project confidence?
Because the numbers are too obvious to hide. When growth drops to 1.4 percent and inflation is running at double the target, business people in the room already know something is wrong. Reshetnikov was acknowledging reality while trying to frame it as a policy choice—something that can be fixed with the right decisions.
Is 1.4 percent growth actually that bad?
In isolation, maybe not. But for Russia, it's the trajectory that matters. The growth is almost entirely from defence spending, which economists say is unsustainable. It's not creating real wealth or productivity. It's burning resources to fuel a war.
So the war is literally eating the economy?
Exactly. The war drives inflation through massive government spending. That forces the central bank to keep interest rates sky-high, which strangles normal business investment. It's a vicious cycle, and Reshetnikov was essentially asking the central bank to break it—which they can't, because the underlying problem is the war itself.
Why did Ukraine suddenly start warning allies about Iran-Israel?
Because they realized the world was looking away. When a new conflict erupts, especially one involving nuclear-armed powers, it sucks all the oxygen out of the room. Ukraine needed to remind people that their war is still happening, still matters, and still needs support.
But doesn't higher oil price help Ukraine too?
No. Ukraine doesn't export oil. Russia does. Higher prices mean more revenue for Moscow to spend on weapons and soldiers. For Ukraine, it's purely a downside—less attention, more money for the enemy.
What does the prisoner exchange tell us?
That both sides are still fighting, still taking casualties, and still willing to negotiate on specific terms. The fact that they're exchanging wounded and seriously ill soldiers suggests the human cost is visible and undeniable to both governments.