Former U.S. President Donald Trump’s efforts to improve relations with Moscow should not include lifting sanctions that hinder Vladimir Putin’s ability to wage war, a Ukrainian think tank has warned Newsweek.
Following a phone call with Trump on Tuesday, Russian President Vladimir Putin agreed to a limited ceasefire in Ukraine but resisted an immediate 30-day truce. Further discussions between Moscow and Washington officials are set for Sunday. However, the Kyiv School of Economics (KSE) Institute insists that U.S.-led sanctions, which have constrained Putin’s ability to finance and equip his military, must remain in place.
According to KSE analysts, despite record spending, Russia’s military-industrial complex (MIC) faces significant setbacks, including labor and component shortages, a decline in arms exports, and difficulties in modernization. “This is exactly the wrong time to ease pressure,” said Benjamin Hilgenstock, a senior economist at KSE and co-author of the report.
Newsweek has reached out to the State Department for comment.
Why It Matters
Russia has proposed enhanced economic cooperation with the U.S., including joint rare earth mineral projects—a priority for Trump given China's dominance in the sector. Reuters recently reported that the White House had asked the Treasury Department to explore easing energy sanctions, signaling a potential policy shift from the Biden administration, which sought to curb Russian war funding.
However, KSE warns that relaxing sanctions could revitalize Russia’s war machine, increasing global security risks.
What to Know
Russia’s exact defense budget figures remain elusive, but military spending has surged to Cold War-era highs. In 2022, the first year of its full-scale invasion of Ukraine, Russia’s military budget reached $86.4 billion—a 31% increase from the previous year. Spending then jumped to $109.5 billion in 2023 and reached $112 billion in 2024, according to Ukrainian estimates. Projections for 2025 suggest a further increase to $142 billion, representing 32.5% of government expenditures.
Despite this massive spending, Russia’s war economy is not without challenges. The KSE report highlights issues such as rising costs, labor shortages, declining arms exports, and the effects of sanctions. Although Russia has made progress in some areas, it struggles to keep pace with modern military innovation.
Hilgenstock emphasized that ongoing sanctions and pressure have been effective, and now is not the time to ease them. This presents a long-term challenge for the West: maintaining pressure without compromising diplomatic engagements.
Russia has suffered significant equipment losses and has attempted to compensate by restoring old stockpiles, including tanks. To offset shortages in artillery shells, Moscow has turned to North Korea and Iran for supplies.
With Western-sourced supplies dwindling, China has become a crucial lifeline for Russia, particularly through its exports of intermediate components like high-tech electronics and industrial tools—many of which are subject to export controls.
While Putin seeks sanctions relief from the U.S., the KSE report argues that such measures have weakened Russia’s economy, exacerbated labor shortages, and disrupted supply chains for critical military components. Co-author Pavlo Shkurenko noted that North Korea has supplied Russia with artillery shells, underscoring Moscow’s struggles to meet battlefield demands independently. While China has not provided finished military products, it has supplied crucial electronic and optical components.
Russia’s capacity to produce advanced main battle tanks remains limited, and its overall production of new military equipment has not kept pace with battlefield needs.
Rather than introducing new sanctions, KSE advocates for strict enforcement of existing measures and leveraging secondary sanctions on China’s financial sector, which have proven effective in curbing military support. Shkurenko argued that lifting sanctions would not serve U.S. interests, as it would benefit Russian arms manufacturers producing weapons that could eventually threaten the U.S. and Europe.
What People Are Saying
- Hilgenstock: “U.S. sanctions and pressure on the Russian MIC have worked. This is exactly the wrong time to ease them.”
- Shkurenko: “There is absolutely no self-interest for the U.S. in lifting sanctions on Russia’s military.”
What Happens Next
The debate over U.S. sanctions on Russia is expected to continue. In the short term, talks between American and Russian officials are scheduled in Saudi Arabia on Sunday following the Trump-Putin call. While easing sanctions is not officially on the agenda, discussions will likely focus on an energy attack pause and a potential maritime ceasefire in the Black Sea.
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