Russia doesn’t need a military economy, it’s a ‘complete breakdown of the system,’ says former Finance Minister Mikhail Zadornov
Russia’s economy “doesn’t need” to become a military one, and doing so is “impossible,” Mikhail Zadornov — Russia’s finance minister from 1997 to 1999 and later head of Otkritie Bank — told the Russian business news outlet RBC.
A military economy in Russia, he said, “is pure fantasy.”
A military economy would mean a complete breakdown of the system currently in place: it requires its own institutions and different rules of the game, which would have to be enshrined in dozens and hundreds of pieces of legislation. It requires trained personnel who follow these rules at every level, and it requires enforcement mechanisms, since no military economy can exist without them. That is why it is impossible to declare the introduction of a military economy overnight on January 1 or March 1: it takes years to build.
Dismantling the current system, Zadornov said, would trigger an economic downturn — something he called “extremely unwise” in wartime.
The former minister said Russia’s market economy, “despite all its particularities,” has weathered previous crises and “adapted to fairly serious external and internal shocks.” As evidence, he pointed to federal budget spending and inflation data from the years of Russia’s full-scale war against Ukraine.
Let me give one figure as an example: federal budget spending this year rose 75% in nominal terms compared to 2022, while cumulative inflation from 2022 to 2026 came to 30%. This shows that our economy is not only capable of growing, but also of financing military spending that has increased roughly 3.5 times over that period. In other words, it is meeting all its objectives.
Debate over shifting Russia’s economy “onto a war footing” has resurfaced over the past month. Andrei Kolesnik, a member of the State Duma’s defense committee — the lower house of Russia’s parliament — said that amid intensifying Ukrainian strikes on Russia, the country needs to move to a military economy and begin “normal military operations.” Moscow Mayor Sergei Sobyanin said shifting the economy onto a war footing would kill the country, calling the very discussions of such a shift “worthless” and “unnecessary.”
At the same time, VEB.RF, the Russian state development corporation, fired its chief economist, Andrey Klepach, over his “personal harsh assessments” of Russia’s economic and political development. In one speech, Klepach said Russia is headed toward economic decline and a social crisis.
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