Putin Grabbed the Tiger’s Tail—Now He Needs Trump to Kill It

Trump’s circle is doing its part.

At a Senate hearing last week, General Christopher G. Cavoli—head of U.S. European Command—delivered a stark diagnosis: Vladimir Putin has trapped Russia in a military-civilian doom loop.

“The Russian government has had to turbocharge their defense sector,” he said.“ “They’ve created very strong inflationary pressures… the central bank has the overnight rate—the prime rate—over 21% right now. That is choking off the viability of the civil economy...

Russia is now running a wartime economy with an outsized defense sector that dominates national output... Unwinding this imbalance will be incredibly difficult.”

Translation: the war machine is cannibalizing the rest of the economy. Civilian industry is being crushed under the weight of nonstop weapons production. Interest rates are sky-high. Inflation is out of control. And there’s no obvious off-ramp.

Putin hasn’t just built a war economy—he’s built one that can’t survive peace.

The Imbalance Putin Can’t Fix

Yep.

Putin has already given up trying.

He has transformed Russia’s economy into a war-driven engine, and now he’s welded the throttle open. What began as a short-term militarized stimulus has metastasized into a structural dependence on war. The early wartime surge—fueled by massive defense contracts and labor shifts—produced artificial growth in 2023 and 2024. But in 2025, the numbers are breaking down.

Russia has entered contraction.

The financial picture is bleak. Interest rates remain stuck at 21% as the Central Bank tries to contain inflation—but that level is crushing corporate credit. According to TsMAKP, a think tank that advises the Russian government, the share of companies with dangerously high debt burdens likely doubled in 2024, with 20% of firms now paying interest that eats up two-thirds of their earnings. Waves of bankruptcies are sweeping through the economy. And the bank can’t raise rates any higher without triggering a broader collapse—so inflation is now effectively unchained.

One of the hardest-hit sectors is construction, once a civilian economic pillar. When Putin ended preferential mortgage programs in 2024, mortgage issuance cratered—down 40% by year-end, and down 78–80% by January 2025. Developers are carrying $47.3 billion in variable-rate debt. One in three is now projected to become unprofitable. The sector is unraveling.

Wage delays tell the rest of the story. Salary arrears in construction have jumped thirteenfold. Civilian electronics? Triple the delay. Even public utilities are being squeezed. Why? Because money once earmarked for lights, heat, and basic infrastructure is being diverted to build tanks and missiles.

That’s the context for Putin’s latest move: one of the largest military call-ups in modern Russian history.

On March 31, he ordered the conscription of 160,000 young men for compulsory service—the biggest mobilization in 14 years. On paper, it’s a routine draft. In reality, it’s a political maneuver to soak up the growing number of wage-starved workers and preempt social unrest. If corporations can’t afford to pay them, the military will. If the economy can’t offer stability, the army will offer structure—and bury the crisis in uniforms.

Meanwhile, the financial firewall is burning down.

As of March 1, 2025, Russia’s National Wealth Fund—the emergency stockpile of foreign currency, gold, and state-held assets Putin uses to plug budget holes—was down to just $38.7 billion in liquid reserves. Before the war, it held about $175 billion. That’s more than three-quarters gone. And no one knows how much of what’s left is still liquid, or quietly sold off to keep the system from crashing.

According to Polish Foreign Minister Radoslaw Sikorski, the Kremlin has quietly offloaded 100 tons of gold just to keep the lights on. That’s not economic strategy. That’s triage.

The civilian economy is collapsing under the weight of military spending, and there is no way to stabilize it without unwinding the war. But here’s the problem: Putin can’t afford to stop. Not politically. Not economically. Not personally.

He knows that losing the war means losing power—and maybe more. So he’s doubling down, feeding an already bloated defense sector while the rest of the country goes hungry.

Putin isn’t trying to fix the imbalance. He’s leaning into it—because the alternative is unthinkable.

The Forever War

The convergence of all these pressures paints a grim picture: Russia’s economy is now locked in a cycle where war isn’t just policy—it’s survival. The militarization that once gave the illusion of growth now demands perpetual conflict to justify spending, preserve jobs, and hold together a fragile social order.

But this is a strategy built on sand. The sovereign wealth is vanishing. Civilian industries are collapsing. Inflation is spiraling. And conscription is being used to mask growing wage pressure and economic strain. Workers aren’t jobless—they’re underpaid, unpaid, or stuck in sectors that are quietly falling apart. The longer the war drags on, the more brittle the system becomes.

Still, none of that seems to matter to Putin.

He’s not trying to stabilize Russia—he’s trying to stall it long enough to win geopolitical breathing room. The real bet is on Donald Trump.

Putin is gambling that with Trump in the White House, he can drag the United States down the negotiation road, pose as if Russia’s economy is holding firm, extract sanctions relief, maybe even accept a temporary ceasefire. All while continuing to rearm, regroup, and prepare for the next strike.

He may not even believe the war needs to end at all.

Europe seems to understand this now. And they are preparing for it. Much will depend on how aggressively they move to strengthen Ukraine—because at this point, Ukrainian resistance is the only force capable of stopping the Russian war machine. That’s likely why Zelensky’s team appears open to a Trump-brokered idea of freezing the front lines, even if it superficially resembles ceding territory.

But they’re not giving anything up. This is not capitulation—it’s calculation.

Kyiv knows that Putin cannot stop the war, or even if he does, he will have no choice but to start it again. So Ukraine may accept a ceasefire, call the occupied areas exactly what they are—occupied—and refuse to recognize Russian control. But they’ll stop the fighting, freeze the lines, and prepare for what comes next.

It’s not surrender. It’s a pause before the next fight.