Russia's Financial System Under Strain as Ukraine War Persists

Economic Pressures Mount

Russia's economy is facing increasing pressure as the conflict with Ukraine nears four years, with senior officials warning of potential financial crisis and banking sector instability ¹

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Source 2

https://internasional.kontan.co.id/news/ekonomi-rusia-tertekan-pejabat-peringatkan-risiko-krisis-perbankan

. The prolonged war has taken a toll on the Russian economy despite initial resilience to Western sanctions.

Declining Energy Revenues

The country's oil and gas revenues have dropped by 22% in the first 11 months of 2025 compared to the previous year. The situation is expected to worsen, with estimates suggesting a nearly 50% decline in December revenues due to lower energy prices and stricter sanctions imposed by Europe and the United States ¹

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Banking Sector Concerns

A senior Russian official, speaking anonymously to The Washington Post, expressed grave concerns about the financial system's stability. The official warned that both banking crisis and sovereign default are possible scenarios, highlighting the severity of the economic challenges facing Russia ¹

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Impact of Western Sanctions

While Russia's economy initially showed resilience due to discounted oil sales to China and India, the recent tightening of sanctions has significantly impacted revenue streams. The combination of lower global energy prices and restricted market access has weakened Russia's financial position.

Diplomatic Developments

The economic pressures come as diplomatic efforts to end the conflict show signs of revival. Ukrainian President Volodymyr Zelensky met with US President Donald Trump in Florida on December 28, 2025, as part of efforts to revive peace talks ¹

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