As Russia’s economy begins to cool after years of war-driven expansion, President Vladimir Putin remains firmly committed to the Ukraine conflict, with defense spending now central to both military strategy and domestic stability, new reports from the Wall Street Journal and Financial Times show.

According to the Wall Street Journal, Putin has transformed Russia’s economy into a war machine, ramping up tank and howitzer production while offering lucrative bonuses to sustain troop recruitment. Factories now run around the clock, fueled by government subsidies that have raised wages and lifted living standards in Russia’s poorer regions.

“Peace would threaten these gains,” said Alexander Kolyandr of the Center for European Policy Analysis. Analysts suggest Putin’s battlefield momentum—Russia gained over 100 square miles recently—gives him room to delay negotiations and ignore U.S.-led peace efforts.

Slowing Momentum, But Stability Persists

The Financial Times finds that salary growth for new hires dropped from 4.2% to 2.2% in early 2025, a sign of economic cooling.

Yet despite falling GDP growth forecasts, Russians still feel financially stable due to three years of defense-fueled stimulus, especially in manufacturing towns like Ivanovo, where seamstress wages have doubled.

“The state has been using money to pour cold water on the simmering pot of public sentiment,” said Alexandra Prokopenko of Carnegie Russia Eurasia Center.

Unwinding the War Economy Could Be Risky

Analysts warn that a post-war demobilization could trigger unrest. Many soldiers on short-term contracts would return to a slower civilian economy, and military industries could face job losses without wartime demand. Comparisons have been drawn to Stalin’s post-WWII fear of returning veterans.

“There are so many people interested in keeping this merry-go-round going,” said Kolyandr, referring to Russia’s now-entrenched defense economy.

Strategic Outlook and Western Concerns

With the U.S. and Europe pressing for a ceasefire, Putin has shown little willingness to de-escalate. Trump has expressed increasing frustration, writing: “He’s playing with fire!” while Baltic and Central Asian neighbors fear the war machine could pivot toward them if Ukraine stabilizes.

Meanwhile, Russian officials eye a return to arms exports, but sanctions and declining quality make this a difficult prospect.