Russian President Vladimir Putin has reportedly asked the nation's oligarchs to make donations to the country's dwindling defence budget to sustain its invasion of Ukraine, according to recent reports. The Financial Times indicates that Putin intends to continue the conflict, which began in February 2022, until Moscow secures control over the remaining areas of Ukraine's eastern Donbas region not currently under Russian authority.
Businessmen Pledge Contributions
At least two businessmen have informed Putin of their willingness to contribute to the defence budget following discussions held on Thursday, as detailed by the newspaper. This move comes as Putin pushes forward with the invasion after Ukraine refused to unilaterally withdraw from Donbas during recent negotiations mediated by the United States.
Peace Talks and Economic Measures
Kremlin spokesperson Dmitry Peskov stated that Russia remains in contact with the US regarding potential new peace talks, pending favorable conditions. Peskov emphasized that Russia has not lost interest in negotiations but noted that key issues, including territorial disputes, remain unresolved.
In response to financial pressures, Russia's defence budget surged by 42% last year, reaching Rbs13.1tn. The government has implemented various taxation strategies to stabilise the economy. Economy minister Maxim Reshetnikov announced on Thursday that Russia is considering another windfall tax this year if the rouble continues to weaken, following a previous one-off 10% levy on large companies in 2023 that raised Rbs320bn.
Additionally, the Kremlin increased VAT to 22% in January, aiming to generate an extra Rbs600bn ($7.4bn) over three years from small and medium-sized businesses. Russia's budget deficit for January and February expanded to over 90% of the annual projection, largely due to US sanctions forcing discounted oil sales.
Putin's Cautious Economic Stance
Earlier, Putin advised Russian companies and the government to exercise prudence in managing windfall gains from higher oil prices, which have been influenced by the war in the Middle East. He warned against the temptation to squander extra revenue through excessive dividends or expanded budget spending, advocating for a conservative approach in both corporate and public finances.
Meanwhile, Ukrainian President Volodymyr Zelenskyy told Reuters that the US is conditioning security guarantees for a peace deal on Ukraine ceding the entire Donbas region to Russia. Zelenskyy expressed concern over this stance, urging the American side to recognize the eastern part of Ukraine as integral to its security assurances.
