Russia has approved its federal budget for 2026, triggering a wave of discussion about the scale of its militarisation. The figures look unprecedented not only for modern Russia but also in comparison with specific estimates from the late Soviet period.
In this analysis, we explain what these numbers actually mean, what can be verified and how the Kremlin uses the budget as a political and economic tool to sustain a long war.
The budget reflects a clear shift: Russia has moved its entire economy onto wartime rails and the 2026 spending plan signals not peace or stability, but long-term consolidation of war, one that the Kremlin intends to continue regardless of the economic cost or the social degradation of the whole country.
Reuters' analysis, published on September 29, 2025, examined the draft of Russia's 2026 budget.
Even the draft showed that the country remains strongly committed to a wartime financial stance: total defence and security spending will still amount to 16.8 trillion roubles - approximately 38% of all federal spending. Reuters highlights that 84% of defence spending is classified, meaning the real cost of the war is likely far higher.
Sources familiar with the budget told Reuters that the Kremlin can increase military funding at any moment and that actual wartime expenditures routinely exceed official targets and are concealed within other categories. To sustain this level of spending, Russia's Finance Ministry has proposed raising VAT to 22% in 2026 specifically to fund military needs and limit the budget deficit. Taken together, these elements show that Russia's 2026 budget keeps the country on a war footing, with the flexibility and secrecy to escalate spending as needed.
As of December 2025, Russia's newly signed 2026 federal budget makes clear that the Kremlin is preparing for a long war, not for peace.Nearly 40% of all federal spending is allocated to defence and security - an unprecedented level in modern Russian history. At the same time, pro-Kremlin media highlight projected revenues of 40.3 trillion rubles (about $492 billion), a claimed 10% increase over 2025, this headline figure masks serious structural weaknesses.
In practice, it is Russia's population that will pay for sustaining the war.
To understand the significance of these numbers, they must be viewed in comparison.
As of April 28, 2025, according to the Stockholm International Peace Research Institute (SIPRI), Russia was the principal driver behind Europe's sharp rise in military spending in 2024. With the war in Ukraine entering its third year, defence spending increased across almost the entire continent, pushing Europe's total military expenditure above levels last seen at the end of the Cold War. All European countries increased their military budgets in 2024 except Malta, but Russia still stood out.
Moscow spent an estimated $149 billion on its military, a 38% increase from the previous (2023) year and twice its 2015 level. This amounted to 7.1% of Russia's GDP and 19% of all federal spending.
However, even these high figures only reflect what Moscow allows to be known.
Russia's war is funded not only by its official state budget but also through an increasing mix of covert and unsustainable mechanisms. As the Stockholm Institute of Transition Economics (SITE) explains, military spending is now crowding out other public services, while the government increasingly depends on its shrinking reserves and domestic borrowing to fund the costs of war.
SITE notes that Russia has turned the National Wealth Fund into a key source of wartime financing, draining its liquid assets to historic lows. At the same time, the Kremlin relies on opaque off-budget channels: state banks are directed to issue large loans to defence companies. Meaning: part of Russia's war costs is concealed in the banking system rather than shown in the federal budget. These practices, SITE warns, rely on "opaque financing" and "shrinking fiscal buffers," making Russia's war economy far less stable than it appears. (SITE, "Financing the Russian War Economy", Executive Summary, April 2025)
Some media draw parallels between Russia's current military spending and Soviet-era defence budgets. However, these comparisons are limited.
Tracking Russia's defence spending in a long historical perspective is extremely difficult. Even today, we do not have fully reliable numbers on Soviet military expenditures: during the Cold War, entire research fields were devoted to estimating them, relying on fragmented or deliberately distorted data. Some of works are by Dudkin & Vasilevsky (1987), Noren (1995) and Steinberg (1990), who showed how deeply opaque and inconsistent Soviet budgeting was. As Noren stated, they often had to work with partial figures and broad approximations rather than transparent, verifiable accounts.
Here you can find summaries of works on the opacity of Soviet military spending.
Therefore, modern comparisons with Soviet spending levels can only be approximate. What we can say with confidence is that Russia now demonstrates a historically unprecedented degree of militarisation within its post-Soviet history, even if exact Soviet parallels remain uncertain.
Data from SIPRI, Reuters and SITE show that Russia's 2026 budget is not a signal of readiness for peace:
it is the formal consolidation of a wartime economy designed to endure and prolong war.
At the same time, the budget functions as a tool of strategic manipulation:
by showcasing record-high military allocations, Moscow seeks to project the image of an unstoppable war machine, aiming to intimidate Ukraine, pressure Europe and signal to NATO that Russia is capable of a long and victorious war.
And Putin's words just before the meeting with Steve Witkoff and Jared Kushner in Moscow, on December 2, prove this even more, as he warned that Europe would face a "swift defeat" if it went to war with Russia.
In reality, these numbers reveal not strength, but a state organised around war because it sees no viable alternative. For Ukraine and Europe, this is a reminder that the coming years will require endurance, clarity and unity: Russia is not preparing for peace, and the free world must not fool itself into believing otherwise.
