Russian Economy Consists of ‘Islands of Growth in an Ocean of Stagnation,’ Prokofyev Says

Paul Goble

            Staunton, Feb. 9 – Russia’s economy has transitioned “from a model based on the export of raw materials and integrated into the global chains of the consumer market” into “a model of centralized and mobilized administration of resources where the priorities are defined not by market forces but by the logic of government priorities.,” Dmitry Prokofyev says.

            The economics editor of Novaya Gazeta says that the result is not simply slowed growth across the board but the division of the economy “into two parallel but weakly connected economic subsistems which show diametrically opposite trends” (novayagazeta.ru/articles/2026/02/09/arkhipelag-rosta-v-okeane-stagnatsii).

            One, which enjoys the support of the government, continues to grow relatively well because of subsidies, while the other, which doesn’t, shows declines, thus forming “islands of growth in an ocean of stagnation,” something that is obscured by figures for the economy as a whole, like measuring the average temperature in a hospital. 

            Once this pattern is recognized, the economist says, it is quite easy to understand what is going on; but if one doesn’t recognize the pattern or refuses to do so because of pressure from the powers that be or the impact of regime propaganda, then nothing makes sense – and one falls victim to Kremlin claims that the economy is doing better than most people feel.

            In a 4500-word article, Prokofyev documents this divide, something that allows him to conclude with the following damning observation: “Rosstat data for 2025 do not record a temporary aberration or cyclical slowdown, but the final consolidation and institutionalization of this architecture.”

In fact, he continues, “the division of the national economic mechanism into two economies—one for the state and the elites serving it, and one for the rest of the population—has ceased to be a trend and has become a systemic, fundamental, and integral quality of the Russian economic model.”

And that means this: “future dynamics will be determined not by market forces, consumer optimism, or private investment, but solely by the volume and efficiency of resource use, which the state is willing and able to continually redistribute from the "continent of stagnation" to the "archipelago of growth" and to the "islands of stability" to maintain a fragile, but, as the figures show, still sustainable, balance between these two worlds.”

“This balance,” Prokofyev says, “is both the main achievement and the main challenge of Russia's new economic reality in 2026.”

Following Protests, Budget Cuts and a Reality Check, Moscow Plans to Allow River and Sea Vessels to Remain Service until Age of 50

Paul Goble

            Staunton, Feb. 10 – Last year, Moscow officials proposed in a draft law the decommissioning of all Russian riverine and ocean ships after they reached the age of 40, but after the budget for replacements was cut by half, regional protests, and evidence Russian yards couldn’t deliver in time, these same officials have said ships may remain in service until 50. 

            (On the original announcement, protests from regional officials, and backtracking, see windowoneurasia2.blogspot.com/2025/11/to-boost-shipbuilding-russias.html, windowoneurasia2.blogspot.com/2026/01/khabarovsk-governor-denounces-moscows.html,  vedomosti.ru/business/articles/2026/02/10/1175139-mintrans-predlozhil-smyagchit-zakon-o-vethih-sudah  and themoscowtimes.com/2026/02/10/srok-sluzhbi-vethih-sudov-v-rossii-uvelichat-do-50-let-iz-za-otsutstviya-deneg-na-stroitelstvo-novih-a186793.)

            This pattern of making bold announcements and then backing away from them has become increasingly common as Putin struggles to find the money for his war in Ukraine and guts all programs not directly related to that. But in this case, this decision poses some real threats to Russia and any countries to which its ships travel.

            On the one hand, the retention rather than replacement of so many older ships means that many of them will be tied up in drydock for repairs, thus limiting the size of the Russian domestic and foreign fleet far more than the statistics about total number of ships in Russia’s possession suggests.

            And on the other, such aging vessels, many of which were scheduled to be decommissioned not at 40 but at 25 or even less, are likely to suffer more accidents both in Russian  waters and in the waters and ports to which these Russian vessels go and thus posing an ever-increasing danger to both.

Northern Sea Route Carried Less Cargo Last Year than the Year Before and Far Less than Moscow had Projected

Paul Goble

            Staunton, Feb. 9 – The volume of cargo carried via the Northern Sea Route in 2025 was 870,000 tons less than a year earlier and stood at 37 million tons, less than half the figure that Moscow had projected for either year only four years ago and experts saying there is little likelihood that things will improve in 2026.

            That is the conclusion of research by the Gekon Consulting Center which like all observers of the NSR faces increasing difficulty in coming up with numbers because Moscow has shuttered the digital platform of the NSR and restricted the release of other data (ru.thebarentsobserver.com/perevozki-po-sevmorputi-sokratilis-do-37-mln-tonn/444907).

            The 2.3 percent year on year decline from 2024 to 2025 is a summary figure. There have been increases in some types of cargo such as processed rare earth minerals that almost cover larger declines in raw oil, gas and coal shipments.  Container shipments also grew but from an extremely small base, Gekon says.

            The number of voyages remained constant between 2024 and 2025, but the volume increased slightly and the flows in and out of Russian ports became more export-oriented last year than they had been the year before. According to the study, in 2025, “exports exceeded imports by more than two to one.

            Because of sanctions, few ships from foreign countries made the crossing. Instead, Russia has used ever more foreign-flagged vessels of Russia’s “shadow fleet,” ships that “often do not meet ice class and safety standards” and thus threaten the region’s fragile eco-system in the event of accidents.

Putin has Made Governors Targets of Popular Anger and Their Spending on Body Guards has Almost Doubled since 2022, ‘Vedomosti’ Reports

Paul Goble

            Staunton, Feb. 9 – Vladimir Putin has sought to deflect popular anger away from himself and onto the governors of the Russian Federation’s federal subjects by making the latter responsible for carrying out many of his most unpopular policies. That has prompted the governors to almost double their spending on body guards, Vedomosti reports.

            In 2021, the Russian newspaper reports, the Russian authorities in the countries regions and republics were prepared to spend 59.7 million rubles for the governors’ body guards, a figure that rose to 119.7 million rubles in 2023 before falling back slightly to 112.4 million rubles last year (vedomosti.ru/politics/articles/2026/02/09/1174866-s-nachala-spetsoperatsii-gubernatori-stali-bolshe-tratitsya-na-ohranu

            Those figures cover only bids for contracts on body guard services and thus do not include the spending for regular police or special forces that also are involved in protecting the heads of the federal subjects. But they do show that governors are worried about their own security, a fear likely to have risen given that Putin has made them executors of many policies.

            Putin’s effort to ensure that any anger Russians feel about policies is directed not at him and his regime but at the governors has been much discussed especially since he launched his expanded invasion of Ukraine in 2022. What these figures show is that this has made the governors nervous, and they are doing what they can to ensure that no attack on them succeeds.

‘At a Minimum,’ Russia has Lost 20 Times as Many Killed in Action in Ukraine over the Last Four Years as the USSR Lost in Afghanistan over Ten, Zhelenin Says

Paul Goble

            Staunton, Feb. 8 – Recent evaluations of losses in Putin’s war in Ukraine show that, “at a minimum,” Russia has lost 20 times as many killed in action there over the last four years than did the USSR in Afghanistan, over the ten years its invasion forces were in that country, 300,000 KIAs now as opposed to 15,000 then, Aleksandr Zhelenin says.

            A major reason for this, the opposition journalist and commentator says, is that Russian commanders are even less concerned about human losses than were their Soviet predecessors and do not have the mix of weapons that would help them keep such losses low (mostmedia.org/ru/posts/za-chetyre-goda-rossia-poterjala-v-ukraine-v-20-raz-bolshe-ljudey-chem-sssr-za-10-let-v-afganistane).

            Both because they recognize fewer reserves to raise more troops in the event of losses and for humanitarian considerations as well, constraints that Russian officers do not appear to feel as deeply, Ukrainian commanders have worked far harder and with significant success to keep losses lower.

            Zhelenin’s analysis is striking because while the Soviet army was notorious for its lack of concern about human losses as long as it achieved its goals, the Russian army is even worse as far as this measure is concerned, yet another way that Putin’s Russia is moving in a very different direction than most countries.

            But it also means something else: not only will Russia have to cope with the problems of veterans returning from service where their lives were not considered that important by their officers and their political bosses but it will have to deal with the impact of such enormous losses and the reasons for them on the population of the country as a whole.

Hard-Pressed Orenburg Oblast Turns to Better-Off Nizhny Novgorod for Money to Pay Bonuses to Those Signing Up for the Russian Army

Paul Goble

            Staunton, Feb. 6 – The governments of Russia’s poorer regions find themselves in a bind: Moscow rates them on their ability to get men to sign up for service in the military but neither leaves enough tax money in the regional government’s pockets to pay or returns enough in subsidies to allow them to compete with better off regions.

            Now, one poor region, Orenburg, has come up with a solution of sorts. It has borrowed money from wealthier Nizhny Novgorod Oblast so that it can get enough men to sign up so as to avoid problems with Moscow (storage.googleapis.com/istories/stories/2026/02/06/rossiiskii-region-vpervie-poprosil-dengi-na-viplati-kontraktnikam-u-drugogo-subekta-rf/index.html).

            According to the Important Stories portal, this is a first; but it does recall the arrangements of the first decades of Soviet power when better-off oblasts were required to help their poorer counterparts -- although the new arrangement has potentially more serious consequences because the regions themselves and not Moscow are behind it.

             The portal’s Sonya Savina says that Nizhny Novgorod in December 2025 transferred to Orenburg 400 million rubles (six million US dollars) to pay for 1,000 bonuses that the poorer oblast had agreed to pay to men who had signed up in the last quarter of that year but did not have the cash on hand to do so.

            Aleksandra Prokopenko, an expert on Russian politics and economics, says that this arrangement resembles “a ‘horizontal’ subsidy in which the expenditure obligations of one budget are covered by another,” an arrangement that was legalized by Moscow in August 2019 but that hasn’t been reported being used except for cooperative projects like bridges.

            “If the goals correspond to the powers of the recipient region, and the Nizhny Novgorod region has sufficient budget funds for this, the parties conclude an agreement with clearly defined conditions: what exactly the funds can be spent on, within what time frame, what results need to be achieved, and how to report,” the expert says.

In this case, Orenburg won’t have to return the funds to Nizhny Novgorod unless the former violates the terms of its agreement with the latter.  That is very unusual, Prokopenko says. “Usually regions do not finance each other’s expenses;” and she adds that she doesn’t think this was “an initiative” by Nizhny Novgorod.

Rather, she suggests, it may well be “one of the ways [for Moscow] to solve the problem at a regional level without allocating additional funds from the federal budget.” Prokopenko is probably correct in that, but the Orenburg-Nizhny Novgorod lash up may open the way to kinds of cooperation among regions that could lessen rather than increase central control.

Both History and Current Problems Behind High Rates of Recidivism and Violent Crime in Urals Region, Russian Police Say

Paul Goble     

            Staunton, Feb. 5 – Federal subjects in the Urals region of the Russian Federation lead that country in terms of both recidivism and violent crime, a pattern police say reflects the presence of so many people who were sent to the GULAG as well as their descendants and rapidly intensifying social problems, including the widespread availability of guns.

            The Russian interior ministry has released figures on recidivism rates and violent crime in the federal subjects of the Russian Federation. The oblasts and krays of the enormous Urals Federal District lead the country in both rankings, the data show, often by wide margins (svpressa.ru/society/article/501426/).

            The explanation for this pattern is simple, current and former MVD officials there say. On the one hand, they say, the presence in the region’s population of many who were dispatched to the GULAG or otherwise deported and later to prison camps means a large portion of the population suffers from grievances and is used to viewing law enforcement as the enemy.

            On the other, they say, the region has a high rate of gun ownership because so many trophy guns have ended up there, something that has intensified in recent years, and is suffering from increasing poverty and even more from a widening gap between the wealthiest and the poorest elements of society, characteristics that feed grievance and violence as well.

            What is a particular problem, one former MVD officer says, is that those who have been released from prisons in recent years typically remain unemployed. According to data from 2025, “more than 60 percent of former inmates remain unemployed in the course of the first year after they are released.” Such people often turn to crime to make ends meet.