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AFP: Russian inflation drops sharply in 2025

AFP, 1/16/26

Russian annual inflation fell sharply in 2025, data from the state statistics agency showed on Friday, as central bank efforts to tame price growth appeared to bear fruit.

The Central Bank of Russia kept interest rates close to 20 percent for almost two years as high military spending, which initially gave a boost to the Russian economy, and also spurred red-hot inflation.

But price growth slowed to about 5.6 percent last year, the Rosstat agency said.

This represents a sharp drop from the 9.5 percent recorded in 2024, and was also below what the central bank and analysts had expected.

In 2025, the bank started to gradually ease interest rates as price growth sagged and businesses railed against high borrowing costs which have weighed on economic growth.

Last month, Rosstat said economic growth was close to zero in the third quarter.

In November, inflation fell to about six percent from seven percent a month prior, the steepest 12-month drop in 2025, according to Rosstat.

The bank is targeting an inflation rate of four percent by 2027.

Slowing growth has put pressure on Russia’s stretched public finances, prompting the Kremlin to raise taxes to tap the pockets of citizens and businesses in the hope of plugging last year’s budget gap of around $50 billion.

Analysts forecast inflation to pick up again in early 2026 as a rise in value added tax (VAT) kicks in, contributing to upward price pressures.

In the four years of war in Ukraine, Russian defence spending has skyrocketed, while its oil and gas revenues have been weighed down by sanctions.

In 2025, Russian military spending rose by three percent over 2024, representing around seven percent of gross domestic product (GDP), the Stockholm International Peace Research Institute (SIPRI) estimated.

Last year, the US unveiled some of the harshest measures yet targeting Russia’s energy sector, sanctioning its two biggest oil producers, Rosneft and Lukoil, to curb Moscow’s revenues and force it to end the war in Ukraine.

Bloomberg: Russian Rainy-Day Reserves Grow for First Time Since Ukraine War (Except)

Bloomberg, 1/20/26

Takeaways by Bloomberg AI

-Russia’s rainy-day reserves grew in 2025 for the first time since President Vladimir Putin launched his full-scale invasion of Ukraine.

-Liquid assets held in the National Wellbeing Fund increased by 7% last year to 4.1 trillion rubles, according to Finance Ministry data.

-The fund remains a key source for offsetting lost oil revenue and financing large-scale infrastructure projects, with the government moving to conserve what remains of its fiscal buffer…

***

Russia Gains $216 Billion in Gold Rally, Replacing Lost Assets (Excerpt)

Bloomberg, 1/20/26

Takeaways by Bloomberg AI

-Russia has generated gains from a surge in gold prices since the start of its war in Ukraine, with the value of the Bank of Russia’s gold holdings increasing by more than $216 billion since February 2022.

-The increase in the value of bullion restores most of Russia’s lost financial capacity, even if it doesn’t return the blocked reserves, and gold can still be monetized if needed.

-Russia’s international reserves reached $755 billion at the end of last year, including $326.5 billion held in gold, and the Finance Ministry expects gold prices to keep climbing over the long term to $5,000 an ounce and higher…

MOA: Ukraine – Quincy Paper Praises A Peace Agreement Which Isn’t On Offer

Moon of Alabama, 1/30/26

To read the Quincy Institute Policy Note referenced below, click here.

Anatol Lieven and Mark Episkopos are historians with expertise on Russia who work for the Quincy Institute for Responsible Statecraft. They just published a Policy Note which attempts to answer:

Frequently Asked Questions About the Russia–Ukraine Negotiations.

Unfortunately the answers given miss the mark. They are not founded in reality and do not reflect the positions of the negotiating parties.

The first question the policy note tries to answer is:

“Has Russia made concessions in the negotiation process?”

Its answer:

“Yes. Russia has made significant concessions.

“Russia has agreed to lift all objections to Ukraine’s accession to the European Union, marking a major shift from its position before and after the 2014 Euromaidan revolution.”

Before the Euromaidan putsch the EU was offering an association agreement, not accession or membership, to Ukraine. This would have opened Ukrainian markets to tariff free EU products. At the same time Ukraine had a Free Trade agreement with the Commonwealth of Independent States, i.e. nine former Soviet republics including Russia. At that time some 60% of Ukraine’s foreign trade was with Russia and other CIS countries.

Russia opposed the EU Association Agreement for Ukraine because it would have exposed Russia to EU products without any tariff or custom barrier. It stated that it would have to close the open border with Ukraine if the agreement with the EU were signed. In consequence President Yanukovich of Ukraine had to reject the agreement:

[A] Ukrainian government decree suspended preparations for signing of the association agreement; instead it proposed the creation of a three-way trade commission between Ukraine, the European Union and Russia that would resolve trade issues between the sides. Prime Minister Mykola Azarov issued the decree in order to “ensure the national security of Ukraine” and in consideration of the possible ramifications of trade with Russia (and other CIS countries) if the agreement was signed on a 28–29 November summit in Vilnius. According to Ukrainian Deputy Prime Minister Yuriy Boyko Ukraine will resume preparing the agreement “when the drop in industrial production and our relations with CIS countries are compensated by the European market, otherwise our country’s economy will sustain serious damage”.

After the Ukraine government had paused the Association Agreement, the U.S. and EU activated their proxy forces to launch the Maidan coup to then impose the trade agreement. The violent putsch was successful. Russia closed its open border to Ukraine, the Ukrainian economy, especially its heavy industry, suffered immensely, but the association agreement was signed.

Russia thus did not make a “major shift from its position before and after the 2014 Euromaidan revolution.”

The circumstances on which the position was based have changed. Russia has adopted accordingly. A membership of Ukraine in the EU is by the way still not on offer. It will take a decade or longer after the war for Ukraine to even be marginally qualified.

Lieven and Episkopos continue:

“[Russia] has accepted the principle that Ukraine is entitled to a robust postwar domestic military deterrent. This includes very few qualitative restrictions on the types of weapons Ukraine can possess and a far larger peacetime standing army than Russia demanded during the 2022 Istanbul peace talks. Specifically, in 2022, Russia demanded that the Ukrainian military be limited to 85,000 troops, while current proposals would allow Ukraine to maintain a peacetime military of at least 600,000 and up to 800,000 troops, which would be by far the largest army in Europe.”

The ‘current proposals’ in question are those discussed between the U.S. and Ukraine. Russia is not at all involved in these nor has it agreed on any of the points made in them.

Specifically nowhere has Russia agreed to troop limit of 600,000 or 800,000 for Ukraine. A limit that is by the way higher than the current number of active soldiers in Armed Forces of Ukraine and neither financially nor demographically sustainable.

“During the August 2025 Alaska summit, Russian President Vladimir Putin agreed with President Trump that Ukraine is entitled to substantial, binding security guarantees from Western states, the scope and content of which are currently being negotiated.”

That statement as such is wrong. The link provided leads to the transcript of the press conference held on August 16 2025 after the Alaska summit between President Putin and President Trump. In that statement Putin did not mention any ‘guarantees’. He subordinated Ukraine’s security to a new security balance in Europe:

“[W]e are convinced that, for the conflict resolution in Ukraine to be long-term and lasting, all the root causes of the crisis, which have been repeatedly explained, must be eliminated; all of Russia’s legitimate concerns must be taken into account, and a fair security balance must be restored in Europe and the rest of the world.

“I agree with President Trump. He said today that Ukraine’s security must be ensured by all means. Of course, we are ready to work on this.”

Ukraine’s security must be ensured only after the implementation of a European security balance that satisfies Russia.

Moscow has pared down its September 2022 territorial demands by expressing a willingness to indefinitely freeze the front in Zaporizhzhia and Kherson, abandoning its original goal of conquering these regions.

“Combined, these Russian concessions would permit the establishment of a secure, sovereign, Western–aligned Ukrainian state on approximately 80 percent of its pre-2014 territory.”

I diligently follow the official Russian remarks about the territory in question. Nowhere has Russia or any of its officials said that it had ‘pared down’ its territorial demands. The territories in questions are in their full extend constitutional parts of the Russian Federation.

Lieven and Episkopos ask and answer further questions:

Has Ukraine made concessions in the negotiation process?

What are the key outstanding areas of disagreement?

Should it be possible to resolve these issues and reach an agreement?

… and so on.

On all points that follow the answers given by Lieven and Episkopos are based on unfounded wishful thinking.

Contrary to their fantasies:

-There will be no demilitarized part of Donbas. All of Donbas will be a part of Russia.

-The Zaporizhzhia Nuclear Power Plant is and will continue to be under full Russian control.

-The only country that can give real security guarantees to Ukraine is Russia. They require for Ukraine to be Finlandized.

I am wondering what the Quincy Institute is trying to do with this policy paper.

It gives the impression to those who are not aware of the details that a peace agreement between Russia and Ukraine requires only a little more compromise to be finished and signed.

That is as far from real world reality. There still are fundamental disagreements between Ukraine and Russia. The flim-flam theater of peace talks between the U.S., Ukraine and Europe have yet to involve core Russian demands.

Currently Ukraine is even rejecting (in Russian) to negotiate or sign a peace agreement with Russia. It wants two bilateral treaties but none between itself and the Russian Federation (machine translation):

Ukrainian Foreign Minister Andriy Sibiga said that the construction of a peaceful settlement involves two separate documents: Ukraine will sign a 20-point agreement with the United States (USA), and the United States will sign a separate document with Russia.

He said this in an interview with Evropeyskaya Pravda.

Sibiga stressed that the 20-point document, which is now at the center of the peace process, is a bilateral document of Kiev and Washington.

According to him, according to the same logic, the document with Russia should be signed by the United States.

“If we talk exclusively about this 20-point framework, it is still a bilateral document that will be signed by the United States and Ukraine. Well, with Russia-the United States should sign it. At the moment, such a design is being discussed, but negotiations are still ongoing, this is a process,” he said.

The government of Ukraine also wants a specific sequencing of those bilateral treaties. It demands a treaty with the U.S. about security guarantees before agreeing to any territorial ‘concessions’. This while the U.S. is pressing Ukraine to first make concessions and to only then receive whatever weak assurance the U.S. is willing to offer:

The Trump administration has indicated to Ukraine that US security guarantees are contingent on Kyiv first agreeing a peace deal that would likely involve ceding the Donbas region to Russia, according to eight people familiar with talks.

Volodymyr Zelenskyy, Ukraine’s president, had hoped to sign documents on security guarantees and a postwar “prosperity plan” with the US as early as this month, giving Kyiv leverage in future talks with Moscow.

But Washington is now signalling the US security commitments depend on reaching an accommodation with Russia. Ukrainian and European officials described the US stance as an attempt to strong-arm Kyiv into making painful territorial concessions Moscow has demanded in any deal.

If even the U.S. and Ukraine have such fundamental disagreement about basic items how can one expect that there will be any negotiated peace agreement between Russia and Ukraine anytime soon?

We can’t.

This war, as realist John Mearsheimer has asserted for some time, will be decided on the battlefield to eventually end with Ukraine’s capitulation:

“[W]ith regard to working out some sort of peace deal, Trump can’t do it. And the reason Trump can’t do it is because the Ukrainians and the Europeans, on one side, and the Russians, on the other side, are miles apart. There’s no basis for compromise here. And Trump can’t create a basis for compromise. And furthermore, he can’t coerce the Russians into agreeing to Ukraine’s terms, and he can’t coerce the Ukrainians and the Europeans, on the other side, to agree to Russia’s terms.

“So, this one is going to be settled on the battlefield. And what Trump wants to do is he wants to back away, and he wants to turn responsibility for this war mainly over to the Europeans and the Ukrainians. Let them see what happens on the battlefield, and then they could work out an arrangement with Putin. This is the direction that we’re headed in.”

The Policy Paper by the Quincy Institute tries to answer question around a purported peace agreement which is simply not on offer as neither side of the conflict agrees to it. The paper mangles the facts to give the impression that peace is nearly at hand.

It obscures the real disagreements which still need to be laid out and tackled to finally end the conflict.

Poll: Vast Majority of Americans Want Trump To Accept Putin’s Offer on New START Treaty

By Dave DeCamp, Antiwar.com, 2/1/26

The vast majority of American voters believe President Trump should accept Russian President Vladimir Putin’s offer to maintain the limits on the US and Russia’s nuclear arsenals set by the New START treaty, the last piece of nuclear arms control between the two powers that’s set to expire on February 5, according to a YouGov poll.

New START caps the number of nuclear warheads either side can deploy at 1,550 and also limits the deployment of delivery systems. The treaty doesn’t allow further extensions, but Putin has offered that the US and Russia maintain the limits for another year to allow time for diplomacy to negotiate a replacement. So far, Trump hasn’t agreed to the proposal.

The poll, commissioned by ReThink Media and the Nuclear Threat Initiative, found that 87% of registered voters, including 86% of Republicans, believe the US should accept Russia’s offer. Even more respondents, 91%, agreed that the US should negotiate a new deal with Russia to maintain current nuclear limits or further reduce both countries’ nuclear weapons. 

Trump and Putin walk on the tarmac at Joint Base Elmendorf Richardson in Anchorage, Alaska, Friday, August 15, 2025. (Official White House Photo by Daniel Torok)

If New START expires without a replacement or temporary deal, there will no longer be any limits on the nuclear stockpiles of the world’s two largest nuclear powers. The poll found that 72% of registered voters believe that removing all nuclear limits on the U.S. and Russian nuclear arsenals would make the US less secure.

Russia said on January 29 that it was still waiting for a response from the US on extending the limits of New START. “We keep waiting, but the deadline is approaching. There was no response from the United States,” said Kremlin spokesman Dmitry Peskov. “The Kremlin’s position is well known, and it is consistent.”

In an interview with The New York Times in early January, Trump signaled he was ready to let the treaty expire and wasn’t concerned about potential consequences. “If it expires, it expires. We’ll do a better agreement,” he said.

Arms control experts have warned that negotiating a new agreement will take time and that ending the New START limits could spark a major new arms race and result in increased nuclear deployments.

“If Trump fails to respond positively to Russia’s proposal for an interim deal to maintain the New START limits, each side likely will begin increasing the size of its deployed nuclear arsenal for the first time in more than 35 years by uploading additional warheads on existing long-range missiles,” Daryl Kimball, Director of the Arms Control Association, wrote last month. “Many members of the nuclear-weapons establishment are lobbying for such a buildup.”