Putin will meet Trump as a ‘fiscal crunch’ is about to hit Russia’s war machine 

Economy·Ukraine invasionEuropePutin will meet Trump as a ‘fiscal crunch’ is to hit Russia’s war machine By Jason MaBy Jason MaWeekend EditorJason MaWeekend EditorJason Ma is the weekend editor at Fortune, where he covers , the economy, finance, and housing.SEE FULL BIO Russian President Vladimir Putin and U.S

President Donald Trump in Alaska on Aug. 15 to discuss ending Moscow’s war on Ukraine

Meanwhile, Russia’s economy continues to feel the strain of Western sanctions and high interest rates

The Kremlin also faces a “fiscal crunch” that will hamper its war effort, an expert said

But as Putin gets set to meet President Donald Trump in Alaska on Friday to discuss ending the war, there are more signs of strain in the Russian economy and fiscal situation

In June, Economy Minister Maxim Reshetnikov warned that Russia was “on the brink” of a recession

Meanwhile, government finances have been under growing pressure, too

That’s as crude oil prices have fallen, while Europe has continued to add sanctions on Moscow and crack down on the “shadow fleet” of tankers dering Russian crude supplies

Even as revenue weakens, spending keeps soaring amid Russia’s relentless attacks on Ukraine

In addition to outlays for weapons, incentives to mobilize more volunteers for the army as well as compensation for families of dead soldiers remain sky-high

Economist and author Anders Åslund, who wrote Russia’s Crony Capitalism: The Path From Market Economy to Kleptocracy, said the situation is dire enough that Russia may run out of financial reserves, forcing cuts to public expenditures

In a ject Syndicate op-ed on Thursday, he pointed out that Moscow has few sources of funding as sanctions have largely shut out Russia from the global financial system—and even banks from ally China are reluctant to lend money

So Russia has had to tap reserves in its National Wealth Fund, which has dwindled from $135 billion in January 2022 to just $35 billion this past May, according to Åslund, who predicted that the fund is set to run out in the second half of this year. “Russia’s economy is fast apaching a fiscal crunch that will encumber its war effort,” he added. “Though that may not be enough to compel Putin to seek peace, it does suggest that the walls are closing in on him.” For now, Moscow has avoided steeper penalties from the U.S. as Trump backed off from this threat to impose secondary sanctions that would hit buyers of Russian oil, choosing instead to try reviving ceasefire talks in Alaska

An earlier round of negotiations in April to stop the fighting included a posal from Trump’s envoy to lift U.S. economic sanctions on Russia, require neutrality for Ukraine, and recognize territory Russia seized

Ukrainian and European officials rejected those terms, and talks failed to duce a deal

On Friday, Trump predicted some land would have to change hands to reach an agreement this time. “You’re looking at territory that’s been fought over for three and a half years with—you know, a lot of Russians have died, a lot of Ukrainians have died,” he said. “There’ll be some swapping of territories to the betterment of both.” Introducing the 2025 Fortune Global 500, the definitive ranking of the biggest companies in the world

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