Ukraine just got a €90 billion loan from the EU. That's enough to cover their financial needs for another 12-18 months. They're starting to sell their designs to Western manufacturers, too, who are intensely interested in cooperation. Ukrainian companies are starting joint ventures outside the country, so that's another cash lifeline, albeit a smaller one.
It is up in the air whether Ukraine gets much territory back. Ukraine is not, however, on the verge of collapse. (Neither is Russia, for that matter, but more later.) Pokrovsk is likely to fall, true, and Ukraine holds only some outskirts, but when I look back to January 1, 2025, Russia was 5km from Pokrovsk, and a year before that, Russia was 35km from the city. Looking at the wider map, the battle lines have not changed that much in two years. Russia has made some advances south of Kupiansk and is contesting Kupiansk itself. If these small cities with pre-war populations of 60,000 and 30,000, respectively, give Russia so much trouble, what is going to happen when they try to take Kramatorsk and Sloviansk, with their pre-war populations of 150,000 and 110,000, if they can even get there?
Russia is not on the verge of collapse, either, but it is on the verge of desperate measures, and may already be in them. It's selling gold internally to take rubles off the market in a bid to both strengthen the currency and provide rubles to redistribute without printing more, with the National Wealth Fund selling off over half its 400 tons of gold to oligarchs. There's still almost 2000 tons of gold left inside Russia, but any significant dip into that is going to cause even more economic problems. A combination of Trump's bumbling and Sunni Arab OPEC states upping their output has resulted in a drop in the price of oil (WTI is trading around $57 today while Brent is around $60). Russia sells at a discount from the market price, and its budget is based on being able to sell oil at $70+ per barrel. It's getting $50ish now, and that may drop even further. Ships are becoming less likely to take on Russian contracts due to the increased activity by the US Navy and attacks by Ukraine. On top of that, while the Ukrainian drone strikes against Russian petrochemical plants isn't decimating the output quite like some think, it is heavily impacting refining capabilities such that Russia put a moratorium on refined products exports, further squeezing their foreign cash income, and they've put limits on internal distribution, which is raising prices, especially outside the major cities. Enlistment bonuses are dropping as local governments run out of money to pay them, with even the relatively wealthy St. Petersburg reducing or delaying bonuses. The federal government is lavishing at least some veterans with education and health benefits as well as some financial benefits, but that appears to not be universal. This is causing a complex situation resulting in high inflation (officially around 7%, probably much higher). The only reason that Russia isn't in hyperinflation right now is tight controls and high core interest rates (16% now, down from 25% because it was absolutely strangling growth). And Russian defense contractors are filing bankruptcy at alarming rates, putting key supply chains at risk.
Despite its population advantage, Russia does have a manpower issue. They're largely not sending conscripts into battle. By law, under the current circumstances, only contract soldiers can be sent to fight (there may be some exceptions, but this is the overwhelming majority of Russian forces fighting). They don't have the money to pay the big bonuses to keep the contract force up, and as veterans return missing limbs and living with severe PTSD, more people are becoming aware of what it's like at the front. Criminals whose sentences were commuted are also returning from the front lines (journalist Emily Hoge has been following this for some time, including the results when hardened criminals become hardened soldiers and return to the streets), pushing up crime rates. Escalating to legal war conditions to allow conscripts to be sent into battle would be an enormous political gamble for Putin.
Russia's problems aren't a lack of physical production capacity (they have that in spades) or people (they have many more they can conscript if necessary). Their problems are that they're running out of money to spend on the war and men they can legally send to fight. Changing the circumstances on the ground requires changing significant political positions inside Russia that have a very strong chance of provoking political backlash, regardless of what levels of control Putin has been able to exert so far.
Maybe Russia can force a ceasefire or even a peace, though it's hard to see what terms would work in such a way that both sides would accept, as both have become skilled at finding something the other side absolutely will not accept, so the war continues. Maybe Ukraine can eventually push the last Russians out of its territory, possibly even out of Crimea, though that, too, is a tall order. Then again, it seemed in the early 1980s that dislodging the USSR from Afghanistan was a tall order. Right now, there's not enough information on either to hazard an educated bet.
