As Putin’s “war machine” was incorporated into the Russian economy

Even if weapons silence in Ukraine, Russia’s economy may never leave the battlefield.

Years of massive spending in defense arrested the country into a state of militarization that turned factories and absorbed hundreds of thousands of workers. This increase helped prevent the economy from shrinking – making any retreat dangerous.

Kremlin has no intention of retreating. President Vladimir Putin sees a lasting need for a well -equipped Russian combat force – something western leaders fear that he can use NATO within five years – and wants to incorporate the prosperous defense industry into his long -term vision.

While it draws its plans and Europe invests billions to restructure its armies in response, the question will be what will happen with the excess of tanks and missiles that Russian factories are producing.

Moscow can transform what today is a weight for the budget into a viable source of revenue selling weapons to allies like China. But as they accumulate in NATO’s oriental borders, destabilizing relations with Europe, they risk becoming a liability for an economy that already faces sanctions, an unstable banking system and weak growth.

Putin himself was already looking beyond the eventual end of the war during a visit last week to the oldest defense factory in Russia, saying that “the demand for modern military will not end there.”

The increase in military production of Russia has been impressive. Prior to the large -scale invasion of Ukraine in 2022, the country planned to deliver about 400 shielded vehicles the following year. Now it is sending ten times more.

It also innovated by launching their own drone production lines after they became a whole weapon in the conflict. Initially dependent on imports from Iran, Russia produced 1.5 million last year – against 140,000 in 2023.

The costs of the war, however, were huge. Defense spending between 2022 and 2024 were at least 22 trillion rubles (US $ 263 billion), according to official data available. And there are no signs that spending will be contained in the next three years, leading to annual deficits in a budget already pressured by sanctions.

Russia can look at the post-world war to understand how to take advantage of its expanded military factories: the change from the Soviet Union to a 1941 war economy launched the foundations to become one of the largest global weapon sellers after the conflict, according to Tatiana Orlova of Oxford Economics.

“The Russia-Ucrania war has become a huge field of testing for new weapons and technologies,” she said. After the end of the conflict or its stabilization, “both countries will probably export the most effective technologies and equipment.”

What Bloomberg Economics says…

“Russia will hardly end the militarization of its economy even in the end of the end of the war in Ukraine. The broader geopolitical confrontation between Moscow and the West will hardly decrease. This will be one of the factors that will maintain the Russian defense industry producing at levels far above 2022, preparing for potential future conflicts.”

Alex Kokcharov, Geoeconomics Analyst

Prior to the invasion of Ukraine, Russia was already the world’s second largest gun supplier behind the US only. Russian sales have only fallen in recent years because the country has used what it produced in the campaign against its neighbor. Now there are signs that it may be resurfaced.

The Russian Defense Industry once again participated in arms fairs in India, China, the Middle East and Africa. For the first time in six years, Russian weapons were exhibited in exhibitions in Malaysia and Brazil. The offer covers the entire range of military equipment. Technology transfers and joint production are also on the agenda.

State exporter RosoBoronexport, who accounts for about 85% of foreign sales, says repressed demand has raised its pipeline from order to a record of $ 60 billion – ensuring multi -annual contracts and demand for factories.

The World Arms Trade Analysis Center estimates that Russia could export between $ 17 billion and $ 19 billion in military equipment annually in the first four years after the Ukraine war, pointing to global southern appetite, where countries seek to avoid US dependence.

“The demand for Russian weapons has hardly disappeared,” said Anna Borshchevskaya, senior researcher at the Washington Institute for Near East Policy. “Middle and North African authorities would even see a limited or temporary agreement in Ukraine as a green light to quickly take advantage of the new Moscow supply chains.”

One of the incentives, she said, is the price, with increasing production bringing economies of scale that made some products cheaper than before the invasion.

The strategy, however, is not free from failures. Rosaboronexport’s request book, despite representing a considerable reserve if government spending is cut, is still less than half of the annual defense budget. And some potential customers may be under pressure from the West, as Donald Trump did by asking India to suspend Russian oil purchases.

Moreover, although military factories continue to operate – generating jobs and contributing to economic growth – personnel cuts and salary reduction are possible, according to Orlova. Exports will not generate sufficient demand to keep facilities running at a maximum pace, as it currently occurs.

Putin insists that the money spent on military production has not been wasted and signaled that it comprises the challenge ahead. To help in the transition, he advocates not only the increase in weapons exports, but also a narrower cooperation between the defense and civilian industries.

The so -called dual use production, in its view, should already be possible for components in sectors such as shipbuilding, aviation, electronics, medical equipment and agriculture.

For Putin, however, the decisive factor will be to maintain a military force ready for combat in which he can trust beyond the current mission – which means that Russia’s expanded military capacity is here to stay.

© 2025 Bloomberg L.P.