A warning from Estonia: Russia’s economy is spiraling downward, but Moscow is still stockpiling for the ‘next war’
Russia is unlikely to attack any NATO member in the near future, but plans to continue its war against Ukraine, according to Estonia’s annual international security report. Published by the Estonian Foreign Intelligence Service (EFIS) on Tuesday, the report focuses almost exclusively on Russia, warning that the Kremlin is actively preparing for its “next war.” Meduza summarizes the report’s main points here.
In the report’s foreword, EFIS Director General Kaupo Rosin writes that Moscow has “no intention” of launching a military attack on Estonia or any other NATO member in the coming year. “We are likely to reach a similar assessment next year because Estonia and Europe have taken steps that compel the Kremlin to calculate very carefully what, if anything, it can risk attempting,” he adds.
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Rosin stresses that the NATO alliance must continue its deterrence efforts, “to ensure that this remains the case tomorrow and in the future.” Despite the economic and human toll of waging war against Ukraine, even a weakened Russia remains a threat, he warns. With this in mind, Rosin calls on Western countries to close loopholes that enable sanctions evasion and urges NATO allies to keep investing in defense.
“Russia’s military reform will enhance the capabilities of its armed forces in the years ahead. To counter this, Estonia and NATO must continue investing in defense. Russia’s calculations of the balance of power must always work to our advantage,” Rosin writes.
On Russia’s foreign policy
According to the Estonian assessment, the Kremlin “merely feigns interest” in peace talks aimed at ending the war with Ukraine. Russia hopes to restore bilateral relations with the United States and “formalize Ukraine’s defeat,” the report says. At the same time, EFIS maintains that Moscow continues to view Washington “as its principal adversary.”
The report adds that Russia seeks to undermine the current international order in pursuit of its “great power” aspirations. As such, Moscow is pursuing a two-pronged approach, courting the “global majority” (also referred to in the report as “formerly colonized states”) while exerting pressure on its regional allies.
Referring to China and Russia as “allies without a treaty,” the report says that both countries are trying to tip the global balance of power in their favor. The EFIS characterizes frequent consultations between Moscow and Beijing as an attempt to “mitigate the risk” of one side striking a deal with the U.S. “behind the other’s back.”
“Despite a certain level of mutual distrust, both China and Russia recognize that, for the foreseeable future, they will benefit more from maintaining good relations with one another than from pursuing potential agreements with the U.S. administration,” the report says.
On Russia’s military-industrial complex
Although under strain from international sanctions, Russia’s military-industrial complex continues to function thanks to sanctions evasion schemes that keep dual-use goods flowing into the country, the report notes.
The report also notes that since 2021, Russia’s military-industrial complex has increased artillery ammunition production more than seventeenfold. According to the EFIS, this indicates that Russia is “highly likely” to rebuild its stockpiles in preparation for future conflict, even as the war against Ukraine continues.
On Russia’s drone warfare
As part of its military reform, Russia is establishing numerous specialized drone units across all services and branches of its military, assigning them both combat and support roles, according to EFIS.
“In any future conflict with Russia, [NATO] allies must be prepared to face an adversary that employs unmanned systems at scale — at strategic, operational, and tactical levels on land, in the air, and at sea,” the report says.
On Russia’s economy
Russia is facing increasingly severe economic problems and continues to neglect nearly all non-military sectors, the report says. EFIS predicts that Russia’s GDP will contract in 2026, raising the risk of economic and social instability.
The report says that the Russian economy has “entered a downturn” and would likely still face serious problems even if the war were to end and sanctions were lifted. As the defense sector expands at the expense of the civilian economy, nearly all other sectors are in recession or stagnating.
However, the report concludes that Russia is more likely to experience an economic crisis than a total collapse. “A complete collapse of the Russian economy remains highly unlikely,” it says.