Despite the Putin regime’s efforts to hide Russia’s internal contradictions during the war, doing so grows harder each year. Increasing censorship shows how desperately it tries to control public opinion. One of the regime’s main goals is to block access to information that reveals the political and class conflicts in other countries, especially in Europe and the US.
Thus, the Russian media writes very little about Trump’s efforts to establish a fascist dictatorship in the US, the violent crackdown on immigrants, the military strikes on civilian boats in the Caribbean and Pacific or the domestic policies of the European powers. As a result, Russian workers are prevented from understanding the overall context of the global situation.
In particular, this also applies to the so-called “peace plan.” Its prospects are, to put it mildly, murky. The propaganda gives the impression of superficial prosperity, that peace is about to be achieved in 24 hours, in a week, etc. These are attempts to blind the working class. In fact, behind this ostentatious negotiation process lies an attempt to strike a deal with the devil for the benefit of Russia’s oligarchs.
The continuation of the war in Ukraine has been increasingly centered on Europe. The main goal of the European imperialist powers is—if not the direct continuation of the war (Ukraine is less and less capable of this due to the crisis of the Zelensky regime and the disintegration of the Ukrainian army)—then an attempt to preserve Ukraine as a military springboard for a future war, when Europe’s armament program is more advanced.
The regime, eager to preserve the illusion of social stability, may accept a more disadvantageous deal, provoking new tensions within the Russian oligarchy. The situation as a whole is becoming increasingly volatile and explosive.
To understand the considerations of the Putin regime, it is necessary to review the domestic socioeconomic situation.
In October, the US and EU imposed joint sanctions on Lukoil, Rosneft and 34 of their subsidiaries, which together handle about half of Russia’s oil exports. This will force Russia to invest more effort and resources into bypassing restrictions, reducing export profits and pushing the economy to rely more on domestic demand. A shift toward domestic demand is likely to trigger sharp increases in gas and gasoline prices, which will in turn drive up the cost of goods and services across the country.
At the same time, according to JP Morgan, global oil prices could fall to $30 per barrel in 2027, which will inevitably affect the Russian budget. Currently, the average cost of a barrel of oil in Russia is approximately $40. Falling oil prices will trigger major changes in Russia’s oil industry. Companies will likely shift to more profitable fields. For instance, Russia now sells oil at $50–$55 per barrel; a drop to $40–$45 would pressure the sector, forcing restructuring that hits the working class and domestic gasoline buyers hardest.
The Russian economy continues to face a slowdown in growth. While it grew by 1.4 percent in the first quarter, it grew by 1.1 percent in the second quarter and only 0.6 percent in the third quarter of 2025. At the same time, the latest review by the Center for Macroeconomic Analysis and Short-Term Forecasting is disappointing, indicating that Russia will no longer be able to avoid recession. The economy is expected to contract in the first quarter of 2026. Overall industrial production growth for the first three quarters was 0.7 percent. However, growth was only recorded in the engineering and pharmaceutical industries. The food industry, metallurgy, chemical industry and extractive sector recorded a decline in the third quarter.
Inflation remains relatively high (6.6 percent as of December 1) despite falling from 8.4 percent in August. However, a further decline in inflation to the target level of 4 percent remains unlikely given the Russian Central Bank’s continued tight policy (the interest rate is currently 16.5 percent). On December 19, there will be a new Central Bank meeting, which in the best case scenario will lower the rate to 15.5 percent. Amid further economic downturn, high inflation persists. Output cuts raise unemployment, despite labor shortages in some sectors. This worsens Russia’s stagflation, ongoing since late 2024.
What have been the consequences for the working class? In 2025, fees rose by an average of almost 12 percent across the country, but in some regions by 40-50 percent. At the same time, the quality of services often remained at the same level or even declined: hot water outages, power cuts and problems with garbage collection became commonplace. Add to this constant interruptions in mobile internet service, as well as restrictions on WhatsApp and Telegram, slowdowns on YouTube, and everything else that was part of the everyday life of Russian workers (especially the younger generation), their communication and their hobbies.
The global boom in artificial intelligence has led to a serious increase in the price of electronics in Russia (especially RAM and SSD drives). This will inevitably affect the further growth of prices for all electronics in Russia, which will be exacerbated by the introduction of a “technology tax” on September 1, 2026. Added to this is the “scrap tax” on cars (depending on engine size and power), which will make cars even less affordable for Russian workers next year, as the tax affects not only premium cars but also budget options.
Housing remains unaffordable for most people. According to a statement by Sberbank Deputy Chairman Taras Skvortsov, only 8 percent of Russians can save up for a down payment on a mortgage in two years (20 percent of the cost of housing). Moreover, in the most densely populated regions of the country, this share drops to 7 percent, including Moscow and St. Petersburg. This primarily affects young workers without their own housing, who have to rent or continue living with their parents. At the same time, housing prices will grow until 2030 by an average of 7-8 percent per year, according to analysts from DOM.RF.
Utility prices by service type will rise significantly from 2024 to 2028: gas by 41 percent; electricity by 48 percent; heat by 46 percent; water supply by 38 percent; water disposal by 37 percent. Added to this will be price increases for internet, communications, etc. It is even likely that prices will rise above these forecasts. Overall, the share of housing costs will increase more rapidly than ever before in the history of modern Russia. This will be a real blow to the majority of the working class.
The transition from stagflation to recession is a telling example of how the Putin regime’s policy of maneuvering has failed to address the problems facing Russian capitalism. The state injections into the economy in 2022-2023 could not save it from the long-term consequences of sanctions and the war in Ukraine. The Central Bank’s policy failed to reduce inflation to target levels due to the decline of the rest of the economy.
The vicious circle is now closed. It is no longer a matter of the Putin regime’s individual maneuvers but of its political fate. Hence the shift of the Putin regime towards tightening tax policy, censorship and the repressive apparatus. The state seeks to suppress the class struggle, and to avoid that it associates itself with the class struggle in Europe and the US.
The fear of a social explosion and divisions within the oligarchy under the pressure of the worsening economic crisis are the principal reasons why Putin is so eager to negotiate a deal. But whatever may be agreed upon, it will not be a solution to the structural crisis of Russian capitalism and the imperialist efforts to carve up the entire former Soviet Union to bring its resources under the direct control of the imperialist powers.
It should be noted that, even on the most elementary level, the Kremlin is completely unprepared for a further escalation of the war and its impact on the general population. In particular, regions close to the front line have virtually no bomb shelters. It should be noted that dozens and sometimes even hundreds of Ukrainian drones are intercepted on Russian territory each day, and several people have been killed in Russian regions by Ukrainian drone strikes in recent weeks.
The Putin regime initially invaded Ukraine, believing that it could secure a quick victory in order to strike a deal with NATO. Clearly, it underestimated the enormous amount of support provided to Ukraine by the US and the European imperialist powers. As a result, 150,000 Russian troops, who were supposed to complete a “special military operation” back in 2022, found themselves facing a real war. The war dragged on and took on the character of a war of position, reminiscent of World War I, with new methods of destroying each other: drones, missiles and other military equipment.
Today, we are indeed at a turning point. The initial resources that the parties had at their disposal have practically dried up. This is pushing them towards negotiations. But it would be wrong to view these negotiations outside their broader international context.
The Putin regime invaded Ukraine in response to the systematic encirclement of Russia by the imperialist powers since the dissolution of the Soviet Union in 1991 and, specifically, the 2014 coup in Ukraine. But this encirclement itself has deep objective roots. The imperialist powers, driven by a profound crisis of world capitalism, are vying for full control over a territory from which they have been cut off since the 1917 Revolution and which they failed to bring under their direct control even after the destruction of the Soviet Union by the Stalinist bureaucracy.
US imperialism, in particular, is simultaneously preparing for war against China and seeking to establish its direct control over Latin America. The war in Ukraine is only one manifestation of this broader imperialist explosion. In this context, any deal to settle the war in Ukraine would mark only a shift of the theater of war on a global level without resolving any of the deeper tendencies that have led to the war in the first place.
While it cannot be exactly predicted what forms this shift will take, one thing is clear: If it is left to the imperialist powers and the regimes of Putin and Zelensky, what awaits workers is a future of further wars and social destitution. Everything depends on the development of the global class struggle, on the actions of the working class. The fate of the Russian and Ukrainian working class is once again linked to the fate of European, American and workers around the world.