Two More Years of War: How Russia’s Economy May Collapse Before Her Army Does

The war in Ukraine, already in her eleventh year if one dates the conflict from the seizure of Crimea in 2014, shows few signs of an early settlement. Yet it is increasingly plausible to predict that the struggle may continue for another couple of years, and then resolve itself not through diplomatic compromise but through the disintegration of Russia’s economic base. Such a collapse would in turn compel the Russian Armed Forces to retreat in disorder, leaving a patchwork of uncertain futures across the presently occupied territories. Some of those lands may return to Ukrainian sovereignty, though perhaps not without turbulence.

The economic clock

Russia’s fiscal lifeblood has always been hydrocarbons. Western sanctions since 2022 have redirected much of that trade eastwards, to China and India. But the discounts imposed by these new buyers, the growing cost of shadow fleets and covert trans-shipments, and the cumulative effects of financial isolation are eroding Moscow’s revenues year by year. Domestic substitution industries, so loudly trumpeted, have never provided genuine replacement for imports of advanced technology.

As the war grinds on, defence expenditure consumes a mounting proportion of state resources. Russia has already mortgaged much of her sovereign wealth fund; inflation eats at the ruble; capital flight continues through opaque channels. A few more years of this trajectory suggest not stability but exhaustion. The economy, forced into an autarkic mould, may eventually implode, unable to sustain both civilian needs and military commitments. Such a reckoning is unlikely to be gradual: sudden shocks in the Russian financial system may produce cascading crises across banking, industry and state administration.

The limits of mobilisation

The Russian Armed Forces have borne extraordinary losses in personnel and materiel. Mobilisation has plugged some gaps, but at terrible human cost, with undertrained conscripts hurled into attritional battles. Equipment losses are replaced with antiquated stock, drawn from decades-old warehouses. The Ukrainian side, by contrast, continues to receive flows of Western support, whether in long-range munitions, drones or training.

If Russia’s economic underpinning fails, the army will face dwindling pay, unreliable supply chains, and collapsing morale. History offers examples of armies disintegrating once the home economy can no longer sustain them: Tsarist Russia in 1917 or Germany in 1918. A repeat pattern, this time under Putin’s Kremlin, is conceivable.

A chaotic retreat

The manner of a Russian military collapse is unlikely to be neat. There may be sudden withdrawals from exposed salients; units deserting their positions; and local commanders negotiating informal arrangements with Ukrainian forces. The retreat could be as chaotic as the advance was brutal. This would leave behind devastated towns and disoriented civilian populations, many of whom have lived for years under Russian occupation and propaganda.

For Ukraine, liberation would be cause for celebration, but it would also bring challenges of reintegration, rebuilding, and confronting collaborators. Some territories may revert swiftly to Ukrainian authority; others could endure periods of uncertainty, with fragile governance and smouldering resentment. The possibility of paramilitary groups or irregular militias emerging in the vacuum cannot be discounted.

The political vacuum

What happens inside Russia is the most unpredictable element. An economic implosion and military defeat may shake the very foundations of the regime. Power struggles in Moscow, regional restiveness, or even a fragmentation of the Russian Federation cannot be ruled out. Alternatively the state might harden into a more repressive shell, attempting to preserve unity through force alone.

In either case, the collapse of Russia’s war effort will usher in a period of uncertainty not just for Ukraine, but for Europe as a whole. The West will face difficult questions: how to manage a wounded nuclear power, how to stabilise liberated territories, and how to avoid repeating the mistakes of the 1990s, when Russia’s transition from crisis was mismanaged and resented.

Historical parallels of exhaustion and collapse

Austria-Hungary, 1918

By the final year of the First World War, the Habsburg monarchy was hollowed out by food shortages, galloping inflation, and a patchwork of disaffected nationalities. Although her armies had fought valiantly in Italy and the Balkans, the imperial economy could not sustain them. When Italy launched her October 1918 offensive, Austro-Hungarian units collapsed almost overnight, with entire regiments surrendering or disbanding. The collapse of the economy had quietly primed the collapse of the army.

Germany, 1918

Similarly, Germany’s High Command still hoped for favourable peace terms in early 1918, even after the spring offensives stalled. But the economy, wracked by blockade and shortages, eroded both civilian morale and military resolve. By November, strikes paralysed industry, sailors mutinied in Kiel, and the Western Front imploded. The political order fell with startling speed, ushering in the uncertain years of Weimar.

Tsarist Russia, 1917

The clearest parallel for today’s Russia may be her own past. The First World War exposed deep structural weaknesses in the Tsarist state. Food shortages in Petrograd, runaway inflation, and mounting casualties triggered revolution. The army, deprived of supplies and leadership, disintegrated. What began as an economic breakdown cascaded into political upheaval and a catastrophic military retreat.

The Soviet Union in Afghanistan, 1989

While not an economic collapse, the Soviet withdrawal illustrates how overstretched resources and waning political will can bring about sudden disengagement. By 1989, the Kremlin concluded that sustaining a war in a distant theatre was no longer affordable, either financially or socially. The withdrawal was staged rather than chaotic, but it foreshadowed the larger collapse of Soviet power just two years later, when economic contradictions became insurmountable.

Conclusion

If this forecast proves true, the war in Ukraine will end not because peace was negotiated, but because Russia’s economy buckles under the strain of sustaining aggression. History shows that once a great power’s economy falters, her armies can unravel far more quickly than expected, leaving leaders with little choice but to retreat in disorder. The result will be an army in chaotic flight, Ukraine reclaiming at least part of her occupied territories, and a political void in Moscow with consequences far beyond Ukraine’s borders. For Ukrainians, the long wait will have been bitter; but endurance may yet bring them the liberation for which they have sacrificed so much.