Will the Ukraine war end soon?
Putin suggested at the weekend that the war in Ukraine could be over soon. Is he serious? The pressure on the Russian economy is high, but the key is Putin needs Trump to lift sanctions.
Everyone seized upon Putin’s remark: “I think things are drawing to a close [in Ukraine]” from the press conference after the Victory Day parade. Is the war going to end soon?
We are in a weird no-man’s land of analysis at the moment. It started with the leaked “European Intelligence Report” last week claiming that the elites around Russian President Vladimir Putin were about to turn on him. Then there is the (genuine) unhappiness with the Kremlin’s crackdown on RuNet. At the same time Institute for the Study of War (ISW) has been reporting minimal gains on the battlefield and suggesting the military campaign is going backwards. This has led to a fresh round of “Russia is about to collapse” headlines – headlines that have been appearing for 20 years already and always get it wrong.
It’s all just noise and wishful thinking. I am dismissing much of this news, as are the hardcore of the Moscow press corps as we have been here many times before. Russia is suffering. But it has always suffered. And the Russians do suffering like no one else.
The “European intelligence report” has little credibility, particularly because of the claim that chairman of the Security Council Sergei Shoigu, one of Putin’s closest friends, is behind the plot. Shoigu was there front and centre in the elite seats at the Victory Day parade and has no real powerbase of his own.
The scaled-down annual celebration of the defeat of the Nazis has also been tacked over as another sign of the imminent fall. But again I don’t think it’s particularly significant. It does acknowledge that Ukraine’s drones can reach Moscow and an attack was possible, hence the beefed up security. And Putin took that seriously enough to make it clear he would flatten central Kyiv in retaliation, to the point that the roads out of Kyiv were clogged with traffic on the night of May 8. Ukrainian President Volodymyr Zelenskiy took that threat seriously enough that he issued a decree “allowing” Putin to go ahead with the parade and ordering Red Square a no-strike zone for the day.
The economic pain is another topic that people are trumpeting, particularly the large budget deficit. However, as we have reported extensively, while the Russian economy really is feeling a lot of pain and the deficit is big, the budget remains solid. The overspend in the first few months is largely due to MinFin front-loading a lot of the annual outgoings, as it has been doing since 2023. That will fade away starting with April. The extra money the budget will earn from high oil prices has yet to make itself felt and at the same time the two-percentage point hike to VAT has also not fed through. Even with the elevated spending, the deficit is still only around 2.9% of GDP which is under the Excess Deficit limit in the EU where 14 out of the 27 members are currently in breach. The leading economies in Europe have doubled the deficit that Russia does and they have very little fiscal space to extend borrowing to meet a string of enormous costs, the least of which is funding Ukraine. As we reported on Friday Russia is paying for its war with cash and has enormous fiscal space, (although that is being constrained by the high cost of borrowing at the moment.) Finally, there have been reports that Putin’s popularity is fading, but it still remains well above pre-war levels.
All these problems are real, but as we have reported, they are all true of Ukraine too.
Ukraine’s economy is slowing and industrial output falling, thanks to the lack of demand and an even worse labour shortage. Ukraine’s budget deficit is a massive 20% of GDP and almost entirely funded by external donors. Inflation in Russia has fallen to 5.9% and continues to drop. Inflation in Ukraine is 8.6% and is going up. Ukraine can hit Moscow with drones. Russia can hit Kyiv with missiles and has already destroyed much of its key power sector assets. So far there has been a tacit agreement by both sides not to bomb the centre of each other’s capitals – or at least not the administrative buildings.
Zelenskiy’s popularity is also falling and is much lower than Putin’s. In March Putin’s popularity rating was 79% but his trust rating fell a few points. Trust in Zelenskiy “dips slightly but remains strong” at 58%, Kyiv International Institute of Sociology (KIIS) reported recently. Only 28% of respondents said they would like him to remain president, up slightly from 25% in October 2025.
On the street Zelenskiy is starting to get into trouble. Another poll found that more people distrust him than approve. And a domestic political crisis is unfolding as he appears to be losing control of his Servant of the People (SOTP) in the Rada. The reasons: the endless war and the metastasizing corruption scandals. The unravelling of Zelenskiy’s grip on the political system in Ukraine is far more serious than anything Putin faces – some unsubstantiated rumours that one of his close friends is plotting a coup d’état.
In one of the more embarrassing developments, Iuliia Mendel, Zelenskiy’s former press secretary, has turned on her ex-boss and dubbed his government a “mafia state” – something that has had little if any press. Today she reported in a blog that Zelenskiy is furious with her, regards her criticism as a personal attack and is threatening, so far for undefined, “punishments”.
Clock is ticking Much as the commentators would love to believe it, the sanctions, the economic problems and the popular malaise are not going to force Putin to stop the war. But he may agree to stop in the coming months as the political clock is ticking. He has one chance to get the sanctions on Russia lifted and he knows if he fails they will stay for at least a generation, if not longer. Trump is a once-in-a-lifetime chance to lift the sanctions.
Putin is acutely aware of the sanctions imposed on Russia by the West which will be a long-term hindrance to Russia’s economic development.
Trump has made it crystal clear that he wants to do business with Russia. America is over the barrel with its trousers down thanks to China’s monopolization of critical minerals and rare earth metals. Trump is quite right in that this is a major strategic problem when your main geopolitical rival controls everything that’s necessary to make your tech sector work. Russia is the answer. It can provide everything that America needs.
After the Moscow meeting on December 3, the peace talks are relatively advanced. The only big item left on the lists is the control of the Donbas. Reportedly there is the so-called “Dmitriev package” on the table - $12 trillion-worth of business deals. That’s equivalent to six times the value of the entire Russian economy and its existence was reported by Zelenskiy himself, based on HUR intelligence reports. And Putin himself has made it crystal clear that he is willing to go into business with Trump. Amongst the many reasons he might do this is the fact that building economic ties with America will give him some very useful leverage in his increasingly one-sided relations with China. (Russians have never really trusted the Chinese as any student of history can tell you.) The problem is the time for doing this deal is running out fast. Given the disaster that the Iran war has become it’s already very clear that Trump and the Republicans will get murdered in the midterm elections. They will lose control of both the House and the Senate. In that scenario the chances of being able to push through an unpalatable peace deal with Russia becomes impossible.
If the deal is going to be done then it needs to be done soon – well ahead of the elections in November. Given the progress already made , the only problem left is Zelenskiy’s stubbornness over the Donbas.
There’s no guarantee that this deal can be done but Putin has noticeably softened his stance and specifically during his press conference said he is now willing to meet Zelenskiy in a third country - which is new.
Putin also suggested that his old friend ex-Chancellor Gerhart Schroeder would be a good mediator, which put the cat amongst the pigeons. However, this morning Der Spiegel reported that the ruling coalition might pair Schröder with German President Frank-Walter Steinmeier, who is actually a big Russia fan (but not a Putin fan) and would be an excellent compromise —if only to ensure that negotiations actually get underway.
The European hard stance on Russia also appears to be weakening as it is suffering from all the same problems that Russia and Ukraine are facing: its economy is dysfunctional with even higher budget deficits than Russia; and Labour’s roasting in the council elections and the AfD (Alternative für Deutschland) victory in German regional elections at the weekend are a full blown political crisis. You think Putin and Zelenskiy’s popularity are falling? Look at those of any major leader in Europe… EU leaders like Belgium’s Prime Minister Bart De Wever are now openly calling for an end to the war and resumption of economic ties with Russia.
The pressure on Trump is escalating. The democracy perception index was just released, the biggest of its kind, and he found that America has fallen behind both China and Russia in terms of being perceived democratic by their own people. France has also tumbled. Trump needs some good results and he needs them now.
However, get Zelenskiy over the hill? Journalist and bne IntelliNews columnist Leonid Ragozin suggests that Zelenskiy needs a solid rejection of Ukraine’s EU membership to be able to accept Putin’s peace terms. He has already got a flat “no” on Nato membership, but if Brussels flat refuses to take Ukraine into the EU then Zelenskiy will be able to say Ukraine was “betrayed” by Europe and blame any unpleasant Russian deal on Brussels. But that also seems unlikely to happen. European Commission President Ursula von der Leyen, and EU foreign policy chief Kaja Kallas in particular, could never bring themselves to openly admit they have been stringing Ukraine along all this time.
Continuing the war for another two years could well destroy what little is left of the country. There’s currently a debate going on in Kyiv as to just how big the population under the Kyiv government’s control is - somewhere between 22mn and 29mn. That is still way less than the official 31mn and down from pre-war 45mn. If the war stops today, the UN says the population will continue to fall and crash to around 16mn over the next couple of decades thanks to the horrendous demographics in the country.
And the chances of rebuilding it are also doubtful. Two thirds of the €90bn EU loan is earmarked for military spending and the rest for paying salaries. None of it is designated for reconstruction. In a comment for IntelliNews, former NBU governor Kyrylo Shevchenko described his “Donornomics” - how funding war-torn countries like Ukraine works. The cost of rebuilding is currently estimated at $588bn and no one has any idea where this money will come from. Every day that passes the bill only gets bigger.
Taking this context into account and continuing the war is madness. Ukraine will end up as a failed state on the demographics alone.
This article originally appeared in Editor’s Picks, a free daily email digest of bne IntelliNews’ best stories from the last 24 hours. Sign up for free here.
https://to989.infusionsoft.com/app/form/editors-picks-subscribers