Perun delivers a sobering reality check: the war in Ukraine has not just outlasted the initial "special military operation," but has now surpassed the duration of the entire Great Patriotic War, fundamentally altering the economic calculus for both Moscow and Kyiv. This is not a story of imminent collapse, but of a grinding, two-speed economy where military production artificially props up national statistics while civilian sectors rot from the inside out. For busy observers tired of binary predictions of victory or defeat, Perun offers a granular look at the specific fractures—oil pricing, refinery maintenance, and inflation—that will determine endurance in 2026.
The End of the Sugar High
The piece begins by dismantling the illusion that Russia's economy is robust. Perun writes, "Russia transitioning from the sugar high of wartime stimulus to starting to manifest that strain of maintaining a protracted war effort." This framing is crucial because it shifts the narrative from "is Russia winning?" to "how long can they pay for this?" The author points to a stark divergence in 2025: while military spending initially fueled growth, the underlying engine is sputtering.
The evidence lies in the energy sector, the traditional backbone of the Russian state. Perun notes that for the oil and gas sector, "just about the only line that went up over the course of the year was the number of Ukrainian drone attacks." This is a devastatingly simple metric that cuts through complex GDP figures. The author highlights that crude oil deliveries to refineries fell to their lowest level in 15 years, a result of both external attacks and internal "unscheduled maintenance."
Critics might argue that Russia has successfully rerouted oil through a shadow fleet, but Perun counters that the price pressure is inescapable. "The average price level for Ural's crude oil is $39.18 a barrel," the author cites from Russian tax data, a figure that has plummeted from the earlier $60 cap. This drop is compounded by currency fluctuations; as the ruble strengthened, the real value of oil revenue in domestic terms collapsed. Perun explains that "the value of that oil fell by more than 50% over the course of the year" when measured in rubles, even as production costs remained static. This creates a fiscal hole that no amount of deficit spending can easily fill.
A Two-Speed Economy
The most distinctive insight in the commentary is the concept of a "two-speed economy." Perun argues that we are not looking at a single, cohesive national economy, but rather "a bunch of wartime specific industries and economic activity that are holding the overall stats up" while the rest of the country stagnates.
This duality is visible in manufacturing. While military output ramps up, civilian sectors are being cannibalized. Perun writes, "Russian manufacturing activity actually fell in the latter part of 2025, for example, which is usually not the kind of thing you see from an industrial nation in the midst of a war." The author illustrates this with the automotive sector, where a major manufacturer cut production from 500,000 to 300,000 vehicles, even as the government imposed tariffs on Chinese imports to protect local industry.
The aviation sector offers an even starker example of malinvestment. Perun notes that while the military received new Sukhoi jets, civilian aircraft production was a disaster: "industry was meant to produce about 127 new civilian aircraft... but ultimately they only managed to produce 12 Sukhoi superjets." Instead of modernizing, the industry is resorting to "providing Russian airlines with a number of mothballed Soviet and Russian-made aircraft." This is a temporary fix that Perun rightly identifies as economically painful in the long term, noting that "it's hard to imagine them remaining cost effective in service if those Airbuses and Boeings ever make it back into the Russian market."
Resources have been dedicated for example to providing Russian airlines with a number of mothballed Soviet and Russian-made aircraft. Those aircraft probably wouldn't have a chance in the market if Boeings and Airbuses were still freely available.
The Risk of Exhaustion
The commentary concludes by assessing the risks for 2026. Perun suggests that while the economy isn't collapsing overnight, the margin for error is vanishing. The author writes, "the Russian state just brought in less revenue from oil and gas," and with the 2026 budget predicting a 24% drop in that revenue, the government is walking a tightrope.
The central bank's high interest rates, hovering around 16%, are finally bringing inflation down to 6%, but Perun warns this is a double-edged sword. "Those high interest rates... are having the intended effect," but they also choke off civilian investment. The author posits that the real danger is not a sudden military defeat, but a gradual erosion of the home front's ability to sustain the conflict. As Perun puts it, the situation has deteriorated, but it is "still a long way" from a total breakdown, leaving the war in a precarious state of endurance where both sides are digging in for another year.
Bottom Line
Perun's strongest contribution is the shift from analyzing battlefield momentum to dissecting the fragile economic scaffolding holding up the Russian war machine. The argument's greatest vulnerability is the inherent opacity of Russian data, which forces reliance on official figures that may be optimistic, yet the internal contradictions—such as rising inflation despite high rates and falling civilian output—suggest the underlying trend is real. Readers should watch the 2026 budget execution and the cadence of Ukrainian drone attacks on refineries, as these will be the first indicators of whether the "two-speed economy" can sustain the grind much longer.