Hi. This is your Russia-Ukraine war briefing, a weekly guide to the latest conflict news and analysis.
Russia’s economy is shrinking
In the first snapshot to fully capture the cost of the war to Russia, data released today showed gross domestic product fell 4 percent from April to June compared to a year earlier.
Although imports dried up and sanctions blocked financial transactions to such an extent that the country was forced to default on its external debt, the fall in GDP was not as severe as some had predicted.
This was partly because government coffers were bulging with energy revenues as prices rose because of the war. However, the economic strain is expected to increase over time as western nations turn their backs on Russian oil and gas, a major source of export earnings.
Western sanctions prompted an exodus of hundreds of Western companies, cut Russia off about half of its $600 billion in foreign exchange and gold reserves, and imposed severe restrictions on doing business with Russian banks.
Russia acted quickly to mitigate the impact of the sanctions in the days following the invasion, and was able to cushion the blow to some degree. Still, Russia’s central bank said today it expects the economy to contract more sharply next year and only start growing again in 2025.
The prospects for the coming months look bleak. Russian companies are having to reorganize their supply chains as imports falter and companies struggle to get spare parts for Western-made machines.
The prospects for the energy sector are also clouding over. Oil production will continue to fall next year, and Russia needs to find buyers for about 20 percent of its oil.
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Russia’s losses
Russia this week did not release a death toll from the mysterious explosions at its air base in Crimea, but a senior Ukrainian official said today about 60 pilots and technicians were killed and 100 injured in the blasts.
Anton Gerashchenko, an adviser to the interior minister, said the conclusion was based on video evidence and intelligence data but did not provide details.
Russia’s leaders, who expected a swift and victorious war when they invaded in February, have provided questionable reports of military casualties in the conflict, which is now in its sixth month.
When the Russian Black Sea Fleet’s flagship Moskva sank in April, US intelligence confirmed that two Ukrainian missiles hit the ship, killing an unknown number of sailors. However, Russia claimed that accidental fire caused the sinking, which was the most significant loss for a Navy in 40 years.
The Kremlin’s tendency to underestimate battlefield casualties is an ingrained behavior that dates back decades.
For example, the official military fee for Russia’s disastrous first war in Chechnya in the 1990s is almost 6,000. Most independent estimates put the actual figure at perhaps twice or more.
Russia has not released figures on the number of casualties it has suffered in Ukraine since March, when it said 1,351 soldiers were killed. The US estimate at the time was closer to 5,000.
Likewise, Ukraine has not announced an official toll. The government said that between 100 and 200 of its troops were being killed each day at the height of the Siegerodonetsk battle in June.
According to US intelligence, Russia’s losses are staggering, with around 20,000 dead soldiers, reports my colleague Helene Cooper.
Of these, 5,000 are said to be mercenaries from the Wagner group.
Some comparisons to put the character in perspective:
For Russia, which has already committed almost 85 percent of its field army to the war and is drawing in troops from the Far East and around the world, the high casualties mean slower progress.
“The Russian army is seriously exhausted,” said Seth G. Jones, director of the international security program at the Center for Strategic and International Studies. “It affects their ability to conduct an effective ground campaign in Ukraine.”
How did the war affect your finances?
We asked our readers to share their stories of how the war transformed their economic well-being. If you would like to participate, fill out this form. We may use your reply in an upcoming newsletter.
My savings, mostly in stocks, have lost about 15 percent of their value since the war began, while prices have risen an average of 10 percent and up to 25 percent for some staples, including pasta, rice and cooking oil. I won’t be able to retire at 65 next year if this continues, which is likely to be the case. – Max Weinberg, Frankfurt
Massive inflation, very high food prices and shortages of gas, petrol and electricity. Unfortunately, the sanctions against Russia are having a dramatic effect on Europe and even less on Russia, which, as we know from its history and literature, can last indefinitely. I was so happy when Biden won the election, but now I think Trump was a much better option for peace. — Sorin Stoicescu, Bucharest, Romania
What else are we tracking?
In Ukraine
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As western financial aid slowly arrives, Ukraine is printing money to pay soldiers’ salaries and buy weapons, weakening the national currency and driving up inflation, The Wall Street Journal reports.
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No operating nuclear power plant has ever been in the midst of active combat. The Times takes a look at the risks of an accident at the Zaporizhia plant.
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