Is An Economic Upheaval Brewing In Russia?

11.09.2026, 10:40
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If so, then it's a closely guarded secret.

The heads of the national economy and finance are working and sharing their plans for the future as usual. A partial reshuffle of government officials seems possible, but it is unlikely to lead to a shift in strategy.

The time for a transition to the so-called “mobilization model” of the economy—the threat of which has been discussed so much—seems to have arrived. If the regime is going to undertake this transition at all, it must do so right now.

The “elections” will take place, and there will be no disruptions.

But there are no signs of preparations for a coup. If Putin is planning one, he is doing so in secret from the leaders of his “economic bloc.”

Managing Without a Coup

The Central Bank, as usual, published its annual almanac “Directions of Budget Policy” with its customary promise to defeat inflation next year. And Finance Minister Siluanov assures us—as always—that “there are no problems… and everything we’ve planned in the budget is backed by resources.” In other words, everyone is going about their business as usual.

One of three things is happening here. Either Siluanov and Nabiullina, along with the rest, are carrying out a special deception operation. Or a big “Putin-style” surprise awaits them all. Or the government believes they can handle the tasks at hand without a coup.

In my opinion, the third option is more likely.

The budget execution over the past 8 months shows that things are still not great, but they aren’t getting any worse.

The deficit has even shrunk by 0.7 trillion rubles and now stands at a very large—though increasingly familiar—5.8 trillion rubles. Yes, this is due to the inflow of dividends into the treasury (mainly from funds in the National Welfare Fund) totaling the same 0.7 trillion rubles. But even without them, the deficit would not have increased. And we can believe Siluanov when he says he’ll plug the budget hole, even if it’s much larger than planned.

Although oil revenues fell short (last year, over the same 8-month period, they were 1 trillion higher), the increase in VAT revenues by 2.4 trillion rubles came to the rescue. The increase in this tax from 20% to 22%, so to speak, saved the revenue side of the budget.

And overall, budget revenues turned out to be only slightly below expectations. Once again, the problem was not revenue but spending. Expenditures are 10 percent ahead of the plan. That is what created this deficit. But even here, things aren’t all that bad for Putin’s financial officials.

Still need to scrape together trillions

Of course, Putin shamelessly deceived the government a year ago—when the financial plan for 2026 was being drafted, he promised not to increase military spending. Government finance officials pleaded with him, insisting that the Russian economy needed a breather. That’s what they agreed on. A couple of months later, the national leader, of course, couldn’t resist and ordered them to rewrite the entire plan and allocate an additional five trillion for the war.

But he could have gone even further. However, it seems the last few months have passed without any new improvisations from Putin. And his technocrats have managed to cope with his previous ones, more or less, even though they initially whined and complained.

And since Putin isn’t demanding even more money from them just yet, the regime’s economic managers (except for Nabiullina) have perked up a bit and are now cobbling together the 2027 budget, which should be in draft form by the end of this month.

The Central Bank chair, as one can understand, does not share their enthusiasm, since—due to all of the above—she is forced to maintain an extremely high key rate and, as a result, is viewed by Putin’s “elite” as the culprit behind all the economy’s woes.

The outlines of the plan for 2027 are already visible. The technocrats will achieve a formal balance between expenditures and revenues by reducing the share of social spending.

They will likely not risk a third round of across-the-board increases in major taxes. Instead, they will ramp up minor levies and cut tax breaks. They will reduce “unprotected” spending. They will curtail subsidized mortgages. They will exert more systematic pressure on the regions. Medium-term budget consolidation programs will now be imposed on them, and as early as 2027, they plan to save 0.8 trillion rubles through these measures.

All these measures, taken together, could probably scrape together another 5 trillion rubles for the war while simultaneously ensuring that the budget deficit is smaller than it is now.

And to ensure the regime doesn’t run out of reserves for a “rainy day,” it has been decided to protect the National Wealth Fund from being spent too quickly by lowering the so-called cut-off price. This means that funds will be withdrawn from the fund only if oil prices drop significantly. In other words, in the event of budgetary difficulties, there will be no money available for secondary (i.e., non-military) needs.

And they won’t be looking for it.

Armed with these rules, Putin’s economic managers believe they know how to hold out for another year. They aren’t seriously looking any further ahead. But there is a weak link among them—the Central Bank.

Shake Things Up Without Radicalism

The Central Bank’s constant task, the “fight against inflation,” is dictated by none other than Putin himself. Throughout his time in power, it has been his personal priority. But the longer the war drags on, the higher the price to pay for this “fight” and the accompanying high interest rates—including general stagnation and, in many sectors, a downturn.

This year, Putin has begun signaling that he remains opposed to inflation but that interest rates need to be lowered as soon as possible. By his own order, more and more money must be allocated to the war effort, but this combination contradicts the views of professional financiers regarding what is possible and what is not. After all, where there is war, there is inflation.

With or without this caveat, most of the civilian architects of “Putinomics” are ready to continue serving and working according to market rules, without switching to the so-called “mobilization model.” Only a minority of them want it, and it’s not certain they know how to organize it.

It’s easier to imagine some less radical steps that could, however, shake up the leadership. For example, a change in the prime minister and some of the ministers.

To some extent, Mikhail Mishustin behaved inappropriately this year. At the beginning of the year, he seemed to have been too insistent in dissuading the leader from issuing orders that would cause the budget to spiral out of control. Although this wasn’t a rebellion, if a replacement is suddenly needed, First Deputy Prime Minister Denis Manturov is ready to step in.

As the friend of a close friend of Putin’s, he is closer to the leader than Mishustin, and as head of the military-industrial complex, he makes more sense in a time of war. In the video footage that is available, the leader has been seen conversing with Manturov far more often than with the prime minister in recent months.

Appointing Manturov as prime minister is a pure mind game. But even if one were to imagine such a personnel reshuffle, it would hardly symbolize a rejection of the “market economy.” It would, however, signal a shift in priorities. In Putin’s governments, managers with a background in collecting and distributing money have always been more important than those who beg for and spend it.

Manturov has never collected money, as Mishustin did during his time as head of the tax service. He has always merely received and spent it. If he or someone like him heads the government, it will almost automatically resolve the debate over whether to continue the “fight against inflation.” The attitude toward inflation will naturally become more lenient, as will the attitude toward spending money.

Literate Beggars

I’m not trying to predict a favorite here. If Putin is indeed preparing to replace the prime minister, then it’s definitely a covert operation and a secret. But what he doesn’t hide are his ideas about what the Russian economy should ideally look like.

A report by experts from Putin’s administration at the “Third Rome” center—compiled under the supervision of Maxim Oreshkin, the administration’s chief economic advisor—appears to reflect these visions. And, of course, Oreshkin would not have advanced his career had he not also been an expert on his boss’s moods.

This report is a collection of everything Putin likes: annual 3 percent growth, a wise state apparatus that issues only sensible orders, and a steady push toward “robotization, artificial intelligence, autonomous systems, and platformization against the backdrop of the ongoing ‘whitening’ of the economy.” And facilities like the “Moscow–St. Petersburg” high-speed rail line—which occupies a place of honor in the presentation as Putin’s favorite toy—will be built everywhere.

Using this report as a source of information on Putin’s preferences, we see, first of all, that there is no Soviet-style mobilization of the economy here. On the contrary, the market system has been preserved, and private capital—directed, of course, by the authorities—is developing the economy using the bank deposits of the common people, which are granted to it as “long-term funds.”

Second, it appears that it is time to draw a line under the Russian Federation’s current economic model, and “starting in 2027, the Russian economy must take not so much a step forward as a step upward: to shift onto a new development trajectory, where economic growth is directly transformed into an increase in the well-being and quality of life of the population”

In other words, the author of this rhetoric—Oreshkin, in a nutshell—is simply asking Putin to appoint him as chief economic advisor and promises to do a better job than the current leaders. Apparently, those in the ruler’s inner circle are now permitted to make such requests of him.

***

At the command center of the Russian economy, we see infighting among individuals and clans rather than preparations for a shift in the economic model. The inner circle and its leader are most likely not preparing to turn the economic order upside down. At least not in the short term.

The existing system continues to provide them with as much funding for the war as they order.

Sergey Shelin, The Moscow Times

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Is An Economic Upheaval Brewing In Russia?

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