In the Iran War, is Vladimir Putin of Russia the true victor?

As oil prices increase Russian exports, some have claimed that Vladimir Putin is the true victor of the war against Iran

Is that actually the case, though?

What's up with Russia's economy?

Things appeared to be at their worst point since Russia's invasion of Ukraine in February 2022 prior to the Iran War oil shock, which resulted in an increase in oil prices and a rise in the Kremlin's earnings.

Many Western politicians and economists at the time predicted that Russia's economy would implode due to fiscal implosion and sanctions. "The Russian economy is on track to be cut in half," US President Joe Biden declared a month into the conflict. Prior to this invasion, it was the eleventh largest economy in the world, and it will soon fall outside of the top twenty. A "

What was Joe Biden's mistake regarding Russia?

Quite incorrect. By 2025, Russia had risen to the ninth largest economy in the world, surpassing Brazil and Canada and trailing only the UK, France, and Italy. Russia responded to the sanctions by increasing state spending on its military apparatus, which led to an improbable economic mini-boom and disproved predictions of collapse.

The article is continued below.

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Start your trial A 1.4 percent shallow recession in 2022 was followed by strong positive growth in 2023 - 2024, driven in part by rising oil prices and in part by an increase in corporate credit and spending related to the war. A steady current-account surplus "helped soften the impact of approximately half of Russia's international reserves being immobilised," according to Marek Dabrowski of the Bruegel think tank, while the fiscal situation worsened but stayed in relatively safe territory. Overall, the Russian economy showed remarkable resiliency after 2022.

Why is the Russian economy so strong?

In essence, Russia possesses goods and resources that other nations wish to purchase. Trade will occur if the price is right, but Russian gas and oil will be traded at a lower cost than they were before the war. Given the lax enforcement of secondary sanctions, Western sanctionswhich have in any case been backed by countries that make up less than half of the world's economywere too telegraphed, slow, and simple to get around through third countries. China, which has surpassed Europe as Russia's largest trading partner, was instrumental in boosting Russian imports and exports.

Second, the Russian government was prepared for conflict. Many foreign companies were forced to sell their Russian entities at low prices when the crisis struck because it had been preparing for sanctions for years and had accumulated dollars. Third, in addition to spurring growth, the de facto establishment of a war economy has solidified a network of regime supporters within the business community.

Is the economy of Russia a war economy?

According to Emma Sage and Savannah Taylor on War on the Rocks, Russia's economy has expanded over the last four years, but only as a result of civilian industry being "progressively cannibalized" to support sharply increased military production. According to German foreign intelligence, the war is responsible for over 50% of government spending and 10% of GDP. According to Russia's Center for Macroeconomic Analysis and Short-Term Forecasting, the industries most involved in the conflict with Ukraine accounted for between 60 and 65 percent of the country's increased industrial output between 2022 and 2024, while unrelated industries saw a decline. In the meantime, Smertonomika, or "Deathonomics," which supports domestic consumption, has led to an increase in wages for soldiers who are willing to fight and compensation payments to their families in the event of their death. Soldiers are now paid six times as much as they were in 2022, and death benefits have increased to between £130,000 and £180,000 more than many of the young men who die would have made in their lifetime. In other words, in order to finance the war, Russia has mortgaged its future. That will eventually need to be reimbursed.

What is Russia's current state of affairs?

The government is £320 billion in debt, and stagnation has taken hold. From 4% in 2024 to less than 1% in the fourth quarter of 2025, growth plummeted last year. Vladimir Putin, the president of Russia, revealed this week that the country's GDP fell by 2.1 percent in the year ending in January. Industrial production also decreased by 0.8 percent, despite the fact that unemployment remained low at 2.2 percent and inflation was below 6 percent. Many analysts from the West believe the situation is worse. According to Alexandra Prokopenko in The Economist, the economy won't collapse. However, it won't get better. It has reached what mountaineers refer to as the "death zone," which is the altitude above 8,000 meters where the body uses itself up more quickly than it can be rebuilt. Russia is maintaining a "negative equilibrium" in which it can maintain unity at the expense of gradually undermining its own future potential. Because export earnings are declining and the economy is weak, more tax revenue cannot be used to close budget gaps.

Will the war with Iran save Russia's economy?

Of course, nobody can predict how long the price of oil will stay higher than it was before the war. However, Putin, who has been hailed as the "real winner" of the war in recent weeks, isn't exactly heralding the arrival of a new paradigm of unrestricted spending. This week, he urged oil and gas firms to use the extra money they are making from the current spike in the price of hydrocarbons to pay back domestic banks and lessen their debt. It is obvious that Russia benefits from the conflict in the Middle East and Persian Gulf because it can reduce its budget deficit through higher prices and possibly more exports to Asia. Liam Peach of Capital Economics states, "But unless disruption to global energy supplies is prolonged, this is unlikely to materially alter Russia's macroeconomic outlook." The nation's economy will continue to be war-driven, low-growth, low-productivity, and reliant on hydrocarbonsa resource that will eventually run outas well as under ongoing financial strain. For the foreseeable future, "Russia can probably continue waging war," according to Prokopenko. However, not all climbers who attempt the descent survive it, and no climber can stay in the death zone indefinitely. The "