Russia’s energy sector has been hit by a huge financial loss, with estimates from Lieutenant Colonel Joby Rimmer, Senior Military Adviser to the UK’s Permanent Mission to the OSCE, showing that international sanctions have caused the country to lose about $450 billion in revenue. This massive drop is shaking Russia’s economy and affecting its government’s spending choices, especially in how much it spends on defense compared to social programs.
A Heavy Toll on Russia’s Energy Earnings
Energy – especially oil and gas – is a very important part of Russia’s economy. For many years, selling oil and gas to other countries has been one of the biggest ways the country makes money. This money helps pay for everything from building roads to funding schools and hospitals. But since early 2022, when Russia launched its large-scale invasion of Ukraine, many countries have placed strong sanctions on its energy exports.
Sanctions are like financial punishments used by countries to try and change the behavior of another country. In this case, Western nations, including the United States and European countries, stopped buying a lot of Russian oil and gas. They also made it harder for the country’s energy companies like Gazprom Neft and Surgutneftegaz to sell their products and get paid in the international market. This has led to a steep drop in the country’s energy exports.
According to Lieutenant Colonel Joby Rimmer, these sanctions have caused Russia to lose about $450 billion in revenue from its energy sector. That is an enormous amount of money — enough to cause major problems for the country’s economy.
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Struggles Inside Russia: Economic Pain and Government Spending
The loss of energy revenue is causing many problems inside Russia. The government is facing serious financial troubles. For example, interest rates in the country have shot up to 21%. This means borrowing money has become very expensive for people and businesses, making it harder to invest and grow the economy.
Also, the Russian government has had to make tough choices about how it spends its money. In 2025, about 40% of the country’s federal budget will go to defense spending. For the first time since the Soviet Union broke apart, the amount of money spent on defense is higher than what is spent on social programs like health care, education, and helping families. Lieutenant Colonel Rimmer points out that this shift shows the government prioritizing military needs over the well-being of its citizens.
Russia’s savings are also shrinking fast. The country has a National Wealth Fund, which is like a big savings account used to help during hard times. But now, they have spent about two-thirds of the money in this fund, making it harder to handle future economic shocks.
Energy Prices and Challenges for Industry
To deal with the huge drop in energy earnings, Russian authorities are planning to raise gas prices for industries within the country. This means factories and businesses within the country will have to pay more for the gas they use. This move is meant to help make up for losses that Gazprom, Russia’s biggest gas company, has suffered due to fewer exports.
Since the invasion of Ukraine, Gazprom’s exports have fallen sharply. This is a major problem because gas sales were one of the company’s main ways to bring in money. The higher gas prices for industry could lead to more challenges for Russian businesses, potentially making production more expensive and affecting jobs.
Lieutenant Colonel Rimmer explains that Western sanctions, including measures targeting Gazprom Neft and Surgutneftegaz, are designed to reduce Russia’s ability to fund its military efforts. By cutting off much of its income from energy sales, the international community aims to pressure the country to change its policies.
