Russian Economy Is Being Dismantled to Feed the War Machine
The Russian state is no longer managing an economy — it’s feeding it into the jaws of genocidal war. As oil revenues plunge and Western sanctions tighten, the Kremlin has begun gutting its own civilian industries to sustain the invasion of Ukraine. Aviation, automotive, and tech projects are being scrapped or indefinitely postponed, not because they failed, but because they no longer matter. The only metric that counts in Putin’s Russia is military utility.
Due to the war, many of Russia’s key enterprises have shut down. The most significant closures over the last half-year include:
- Belokamenka LNG Construction Site (Murmansk Region): Once the largest construction project in Russia, aimed at Arctic LNG expansion. Closed due to an economic downturn, sanctions, and material shortages.
- Kremniy EL Microchip Plant (Bryansk Region): One of the country’s largest microelectronics producers, whose shutdown reveals major vulnerabilities in Russia’s high-tech sector. Closed following damage caused by Ukrainian drone strikes.
Russia’s Ministry of Industry and Trade has withdrawn support for numerous large-scale industrial programs. Projects in aviation and automobile manufacturing have been labelled “non-priority,” while defense contracts expand without limit. This is not a reallocation—it is a full-scale reorientation of the economy toward war production.
The MC-21 aircraft, once touted as a symbol of Russian engineering prowess, has become a cautionary tale. Its development was built on imported components—composites, engines, avionics—that sanctions have cut off.
Replacing them with domestic versions has crippled progress, increased its weight by 5.75 tons and sent costs soaring. The aircraft is grounded not by design flaws, but by the Kremlin’s political choices. Similar stories are unfolding across the aviation sector. Russia has acknowledged facing challenges in substituting Western components.
Russia’s auto industry is faring no better. Without access to global supply chains, production has plummeted. Plans for electric vehicles and new platforms have stalled. Factories operate far below capacity, and innovation has stopped. Engineers once working on modern transport systems now help retrofit military vehicles or build logistics platforms for the front.
All of this is being driven by a collapse in state revenue.
Oil and gas, the backbone of the federal budget, are under pressure. Sanctions, price caps, and a shrinking customer base have drained the Kremlin’s financial reserves.
What’s left is being funneled into the war: subsidizing arms production, paying mercenaries, repairing destroyed hardware. Civilian projects are cut not because they are inefficient, but because they are irrelevant to the war’s immediate demands.
The effects ripple far beyond factories. Research institutions are losing grants. Regional budgets are strained. Workers are being laid off or conscripted. Industrial strategy has been replaced by emergency improvisation. The idea of economic planning has given way to wartime improvisation, dictated by urgency and paranoia.
Factories that once built commercial technology are now retooled for drones. Supply chains that supported consumer industries now serve the arms sector. Engineers are tasked with increasing output for artillery batteries rather than consumer batteries. No sector is exempt. Everything is assessed by its ability to support destruction.
Russia is not preparing for long-term self-reliance. It is cannibalizing its own future to maintain a failing campaign. The Kremlin is not building a new economic model. It is burning down the old one and calling it patriotism. Industries are not being modernized. They are being weaponized.
There is no revival on this path. There is only a deeper descent into isolation, inefficiency, and exhaustion. Russia’s economy is not just suffering under sanctions—it is being actively dismantled by the very regime that claims to defend it. And the end point is not strength, but irrelevance.
