logo
Russia is gaining ground in Ukraine, but can its economy keep pace?

Russia is gaining ground in Ukraine, but can its economy keep pace?

Straits Times6 days ago
Analysts say Russia wants to methodically destroy the Ukrainian military, as Moscow slowly advances its own troops.
KYIV - Russia's summer offensive in Ukraine is gaining ground as its forces attack on multiple fronts. In June, the country's numerical advantages in troops and air power produced its biggest monthly gains in territory since the beginning of the year.
Russia's aims are not simply territorial. Analysts say it wants to methodically destroy the Ukrainian military, as Moscow slowly advances its own troops. The biggest challenge for Moscow may be far from the front lines, as the Russian economy can no longer keep pace with escalating military spending.
For Ukraine, its ability to sustain the war may also be decided far away, as the Trump administration sends mixed signals about its desire and ability to continue arming Kyiv's forces. Earlier in July, President Donald Trump said that Nato countries would buy weapons from the United States to give to Ukraine.
The ground war
Over the past two months, Russian units have been able to step up their attacks on multiple fronts, from Ukraine's Sumy region in the north to the steppes of Zaporizhzhia in the south.
Russia now controls more than two-thirds of Ukraine's Donetsk region – the main theatre of the ground war. Russian forces have carved out a 10-mile-deep pocket around the Ukrainian troops defending the crucial city of Kostiantynivka, partly surrounding them from the east, south and west.
Russia has also entered the Dnipropetrovsk region of eastern Ukraine for the first time in more than three years of war.
Ukrainian soldiers say the Russian army uses two main tactics to advance on the battlefield: pinning down Ukrainian troops with drones, shells and glide bombs before attacking enemy lines with relentless squad assaults.
Top stories
Swipe. Select. Stay informed.
Singapore Tampines regional centre set to get more homes, offices and public amenities
Multimedia How to make the most out of small homes in Singapore
Life US tech CEO Andy Byron resigns after viral Coldplay 'kiss cam' video
Asia From toy to threat: 'Killer kites' bring chaos to Indonesian airspace
Opinion I thought I was a 'chill' parent. Then came P1 registration
Singapore 'God and government are the only things beyond our control,' says Trip.com Group CEO
Business Me and My Money: He overcomes a $100k setback to build a thriving online tuition business
Asia At least 34 killed as tourist boat capsizes in Vietnam's Halong Bay
Ukraine responds by sending experienced, drone-equipped units to help plug the gaps, a tactic that has been compared to sending firefighters to contain flare-ups.
But Russia's relentless attacks are placing a strain on Ukraine's outmanned army.
Those attacks helped Russia make its largest territorial gains of the year in June. According to Deep State, a Ukrainian group that maps the conflict using drone footage and its links with the Ukrainian military, Russia gained more than 214 square miles of Ukrainian territory in June, up from 173 square miles in May.
Putting those gains in context, Russia is capturing less than 0.1 per cent of Ukraine's vast territory each month. At that pace, it would take Moscow several years to occupy all of the four Ukrainian regions it declared annexed in 2022.
The air war
Away from the front lines, Russia has been increasing the toll it inflicts on the Ukrainian population at large by pummeling the country with mass-produced exploding drones. Over the past weeks, Russia has been setting records on the number of drones it sends into Ukraine.
Russia recently launched 728 exploding drones and decoys in one nightly barrage, according to Ukraine's air force. As Russia builds up its drone-making infrastructure, military analysts expect Moscow to routinely launch more than 1,000 drones per volley by autumn.
Kyiv was the main target earlier this month of an intense overnight bombardment, which killed at least two people and wounded 25 others, according to local officials.
The Russian barrages also include cruise missiles and ballistic missiles. Ukraine has a variety of air-defence systems – including improvised systems like fishing nets to snare drones – but the ballistic missiles can be shot down by only one air-defence system in Ukraine's arsenal: American Patriot missiles.
But after a series of reversals by the Trump administration – which paused military aid and then agreed to sell weapons to European allies, which will then give them to Ukraine – Ukrainians are hopeful but cautious about whether they can count on US military support.
Officials in Nato countries have proposed a plan where the Trump administration could sell weapons to its allies, which would then give them to Ukraine. That would be a financial windfall for the United States, and could also shield Mr Trump from accusations of direct involvement in the war.
Last week, Mr Trump said he intended to adopt that strategy.
Russia's goals
Russia is not only seeking to win new territory in Ukraine.
'Its goal is to destroy Ukraine's military potential, its army,' Mr Valery Shiryaev, an independent Russian military analyst, said in an interview with Redaktsiya, an independent Russian news channel. 'If there is no army – the state would be defenceless.'
The Kremlin has repeatedly said that it would continue pressing on in Ukraine until it can coerce Kyiv into accepting Moscow's peace terms. Russia has demanded that Ukraine recognize Russian territorial gains, shrink its military, designate Russian as an official language in Ukraine and formally commit to Ukrainian neutrality, which would rule out joining Nato.
These demands are considered completely unacceptable by Ukraine's political leadership and its citizens.
The Russian economy
Analysts say that Russia may be spending unsustainable sums to fund the war, fuelling inflation, even as its oil and gas industry suffers from low energy prices, caused in part by Trump's tariffs. Oil exports finance about a third of Russia's total federal budget.
At the end of June, President Vladimir Putin said that Russia was spending 6.3 per cent of its gross domestic product, or US$172.5 billion (S$221 billion), on its military, which was 'a lot' and that the country had 'paid for it with inflation.' The country's central bank set interest rates at 20 per cent to keep prices in check.
'We are planning to cut the defence expenses next year and the year after, as well during the next three years,' Mr Putin said.
If he follows this plan and Russia reduces military spending, its ability to wage war will inevitably suffer.
M.M.I., a leading Russian news outlet on Telegram dedicated to the economy, called the situation with the country's budget a 'catastrophe.'
Spurred by record-high military expenditures, Russia's budget deficit has reached US$47 billion over the first half of the year. Because of lower prices, oil and gas revenues have dropped by more than 16 per cent, the country's Finance Ministry said.
Casualties
After releasing a few official death tolls early in the war, Russia stopped publishing any information about its losses. But teams of researchers and experts have sifted through publicly available data, like obituaries and inheritance records, to identify and verify casualties. To date, they have confirmed more than 115,000 deaths in the Russian military.
A study in June found that nearly 1 million Russian troops had been killed or wounded in the war.
According to Mr Dmitri Kuznets, a military analyst with the Russian news outlet Meduza, which was outlawed by the Kremlin and operates from Latvia, both Ukraine and Russia are now losing between 250 and 300 service members each day, based on available data.
In 2025, Russia has still been able to attract an average of about 30,000 new service members per month, according to government statements and an analysis of budgetary data conducted by Dr Janis Kluge, a researcher at the German Institute for International and Security Affairs. But it was able to do so only by spending lavishly on its military, offering outsize sign-up bonuses and salaries.
'Both sides have devoted last year to increase sustainability – so that they could continue fighting no matter what happens,' Mr Kuznets said. NYTIMES
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

‘US needs China's fireworks': No alternative for some Chinese goods amid trade uncertainty
‘US needs China's fireworks': No alternative for some Chinese goods amid trade uncertainty

Straits Times

time38 minutes ago

  • Straits Times

‘US needs China's fireworks': No alternative for some Chinese goods amid trade uncertainty

LIUYANG/YIWU - Fourth of July celebrations in the United States might have just passed, but Chinese businessman Marx Wu is already prepared for a dampening effect of tariffs on sales of his fireworks to American customers for the festivities in 2026. This is due to the additional 30 per cent tariffs that US President Donald Trump has been imposing on China – since the outbreak of a trade war between the two countries in April – in a bid to bring back manufacturing to the US. 'Customers will be more cautious because their costs have increased significantly,' Mr Wu told The Straits Times. His company, Magnus Fireworks, is based in Liuyang, Hunan province, which is dubbed China's 'fireworks' hometown' for its expertise in manufacturing pyrotechnics. The US government now collects a 35.7 per cent tax from American importers for fireworks from China. The bulk of these sales are meant for the annual US Independence Day celebrations synonymous with fireworks displays. Such orders are typically made a year in advance. But Mr Wu, who sells mainly to the US, remains optimistic about his business' viability in the longer-term, because the strengths of the Chinese industry in Liuyang cannot be easily replicated elsewhere, he said. When unpacking the impacts of Trump's aggressive tariff strategy on Chinese manufacturers, it is a mixed picture on the ground. Top stories Swipe. Select. Stay informed. Singapore Almost half of planned 30,000 flats in Tengah to be completed by end-2025: Chee Hong Tat Asia Death toll climbs as Thai-Cambodia clashes continue despite calls for ceasefire Multimedia Lights dimmed at South-east Asia's scam hub but 'pig butchering' continues Singapore Black belt in taekwondo, Grade 8 in piano: S'pore teen excels despite condition that limits movements Asia Where's Jho Low? Looking for 1MDB fugitive in Shanghai's luxury estate Asia Thousands rally in downtown Kuala Lumpur calling for the resignation of PM Anwar Life SG60 F&B icons: Honouring 14 heritage brands that have never lost their charm Business Can STI continue its defiant climb in second half of 2025? Mr Marx Wu with some of his company's firework products for US Independence Day celebrations at his office in Liuyang, Hunan province. ST PHOTO: LIM MIN ZHANG On the one hand, Mr Trump's move to impose tariffs across the board on Chinese goods in April has led to factory closures and worker lay-offs in certain sectors such as the garment industry, and accelerated moves to diversify away from the US market for other exporters. On the other hand, there are other products which simply have few to no alternatives to 'made in China', because the country's manufacturers are overwhelmingly competitive, say experts. When Mr Trump proclaimed 'Liberation Day' on April 2 with 'reciprocal tariffs' on the US' trading partners, Beijing and Washington engaged in a tit-for-tat tariff war. At one point, American importers had to pay a 145 per cent tax on Chinese goods. But bilateral trade talks since May 12 have de-escalated the situation. US and Chinese officials are set to meet in Stockholm next week (from July 27) to discuss a possible extension of a 90-day truce. The fireworks industry presents a case study showing how, despite trade tensions and strategic competition, the US and China remain economically intertwined. While US businesses now adopt a cautious approach in placing orders, the deals have continued to flow as Chinese manufacturers remain competitive. Liuyang has over decades accumulated the technical know-how, the quality of its raw materials, proper regulatory oversight and strict transportation requirements, Mr Wu said. Factories dot the surrounding mountainous terrain of the city, about an hour's drive from the inland Hunan capital of Changsha. Production has to stop for about a month for safety reasons every summer because of the heat. 'America needs fireworks – this will not change,' said Mr Wu. 'At the very most, they will buy fewer, but they will not stop buying completely. In addition, we have good relations with our customers who trust in our products, and they also believe that this (tariffs issue) is temporary.' Screenshot from a video Mr Wu took of a Fourth of July fireworks celebration in Ohio earlier in July. His company's products were used. PHOTO: MARX WU According to the American Pyrotechnic Association, 90 per cent of professional display fireworks used in the US are imported from China. Reports say that US companies import close to US$400 million worth of consumer fireworks from China each year. More than 200 other imported products depend on China for more than 90 per cent of their supply, including baby carriages, vacuum flasks, umbrellas and artificial plants. Mr Stephen Olson, a visiting senior fellow at the ISEAS-Yusof Ishak Institute in Singapore who specialises in international trade, said that despite all the conflicts and tension, trade between the US and China has remained remarkably resilient. Although China's exports to the US declined in the first half of the year, China remains among the US' largest trade partners and will continue to be so for the foreseeable future, he said. China's exports to the US declined by 10.7 per cent in the first half of 2025, compared to the same period in 2024, a drop of US$25.7 billion. 'Trump's tariffs have undoubtedly dented China's cost competitiveness but the resilience of China's exports reflect the simple fact that China is the world's preeminent manufacturer and is overwhelmingly competitive in a host of consumer products and industrial inputs. It's simply not possible to cut China entirely out of US consumer markets or supply chains,' Mr Olson said. Mr Steve Houser, president of Missouri-based Red Rhino Fireworks who was on a work trip to China, said he has already placed his orders for 2026, but added that he – like other major importers – is doing so much more cautiously. 'I'm being very particular on what I order. I'm ordering only what I really, really need. I'm not really taking chances on other things because of the tariff rates; the goods are costing me a lot more,' he told ST. He said that the National Fireworks Association in the US was recently in Washington DC to make the case that fireworks should be exempt from the across-the-board tariffs of 30 per cent, as there are no viable alternative suppliers from other countries. Apart from the fireworks business, the US-China trade war has resulted in uncertainty for many exporters, such as those in Yiwu, of Zhejiang province, which is home to the world's largest wholesale market for small commodities. The sprawling Yiwu International Trade City hosts more than 70,000 shops selling products from cosmetics to stationery, backpacks and Christmas decorations. Most shops that stocked Halloween and Christmas decorations at the trade city declined to speak with ST in early July, when it is usually the peak sales season for these products. A few shop owners would only say that business is slower in 2025, while others said they were not authorised to speak with the media. Rows of dozens of shops at Yiwu International Trade City in Zhejiang province selling Christmas decorations were largely empty when ST visited in early July. ST PHOTO: LIM MIN ZHANG Ms Guo Xiabing, an entrepreneur in Zhejiang who runs a factory making Christmas trees in Yiwu, said that typically, US customers are more able to afford higher-priced products, such as those with more fanciful ornaments. She shared about her factory's race to ship orders in the 90-day trade truce between the US and China in a documentary aired in June. 'Customers also do not want to give up on the orders. But that also means that we are left hanging, not knowing when we can resume production and shipping. This type of uncertainty causes a lot of anxiety. Should we let go of the workers? How would we find jobs for them?' she said. Yet others have taken a longer-term view, and have long made efforts to diversify away from the US market. Chief executive of Aokai Sporting Goods in Yiwu, Mr Wu Xiaoming, who has been in the industry for 30 years, counts the South American and African markets as his major customers - at about 50 per cent and 20 per cent respectively - with the US market accounting for only about 5 per cent. Chief executive of Aokai Sporting Goods in Yiwu, Mr Wu Xiaoming, inspecting a football bound for Nicaragua at his factory in Yiwu city, Zhejiang province. ST PHOTO: LIM MIN ZHANG He recalled that there was one American customer who called him to resume an order on May 13, shortly after news of successful US-China trade talks in Geneva was announced, as well as to place a new order for 90,000 footballs. His orders from the US are mainly for supermarkets. 'For the US market, the volume is still there. But it is US consumers who have to bear the cost (of the tariffs). If you force us to lower our costs, it means the quality of the product suffers, so ultimately it's still the consumers who pay the bill,' Mr Wu said. He believes that diversification is necessary for his company's viability, not only because of trade frictions, but also due to other sources of instability. He cited examples such as a Croatian client that halted a shipment because of the Kosovo War in 1998, and how demand from Russia has plummeted because of the Ukraine war. 'There has not been a period where the entire world was completely at peace... In Yiwu, we engage in global trade. If the West doesn't shine, the East will.'

Italy's Meloni: Recognising Palestinian state before it is established may be 'counterproductive'
Italy's Meloni: Recognising Palestinian state before it is established may be 'counterproductive'

Straits Times

time38 minutes ago

  • Straits Times

Italy's Meloni: Recognising Palestinian state before it is established may be 'counterproductive'

Find out what's new on ST website and app. FILE PHOTO: Italian Prime Minister Giorgia Meloni reacts as she speaks to the media at a NATO summit in The Hague, Netherlands June 25, 2025. REUTERS/Claudia Greco/File Photo MILAN - Italy's Prime Minister Giorgia Meloni said on Saturday that recognising the State of Palestine before it is established could be counterproductive. "I am very much in favour of the State of Palestine but I am not in favour of recognising it prior to establishing it," Meloni told Italian daily La Repubblica. "If something that doesn't exist is recognised on paper, the problem could appear to be solved when it isn't," Meloni added. France's decision to recognise a Palestinian state at the United Nations General Assembly in September drew condemnation from Israel and the United States, amid the war in Gaza between Israel and Palestinian militant group Hamas. On Friday, Italy's foreign minister said recognition of a Palestinian state must occur simultaneously with recognition of Israel by the new Palestinian entity. A German government spokesperson said on Friday that Berlin was not planning to recognise a Palestinian state in the short term and said its priority now is to make "long-overdue progress" towards a two-state solution. REUTERS

Australia, Britain sign 50-year AUKUS submarine partnership treaty
Australia, Britain sign 50-year AUKUS submarine partnership treaty

CNA

time38 minutes ago

  • CNA

Australia, Britain sign 50-year AUKUS submarine partnership treaty

SYDNEY: Australia's government said on Saturday (Jul 26) it signed a treaty with Britain to bolster cooperation over the next 50 years on the AUKUS nuclear submarine partnership. The AUKUS pact, agreed upon by Australia, Britain and the United States in 2021, aims to provide Australia with nuclear-powered attack submarines from the next decade to counter China's ambitions in the Indo-Pacific. US President Donald Trump's administration announced a formal review of the pact this year. Defence Minister Richard Marles said in a statement that the bilateral treaty was signed with Britain's Defence Secretary John Healey on Saturday after a meeting in the city of Geelong, in Victoria state. "The Geelong Treaty will enable comprehensive cooperation on the design, build, operation, sustainment and disposal of our SSN-AUKUS submarines," the statement said. The treaty was a "commitment for the next 50 years of UK-Australian bilateral defence cooperation under AUKUS Pillar I", it said, adding that it built on the "strong foundation" of trilateral AUKUS cooperation. Britain's ministry of defence said this week that the bilateral treaty would underpin the two allies' submarine programmes and was expected to be worth up to 20 billion pounds (US$27.1 billion) for Britain in exports over the next 25 years. AUKUS is Australia's biggest-ever defence project, with Canberra committing to spend A$368 billion over three decades on the programme, which includes billions of dollars of investment in the US production base. Australia, which this month paid A$800 million to the US in the second instalment under AUKUS, has maintained it is confident the pact will proceed. The defence and foreign ministers of Australia and Britain held talks on Friday in Sydney on boosting cooperation, coinciding with Australia's largest war games. As many as 40,000 troops from 19 countries are taking part in the Talisman Sabre exercises held from Jul 13 to Aug 4, which Australia's military has said are a rehearsal for joint warfare to maintain Indo-Pacific stability. Britain has significantly increased its participation in the exercise co-hosted by Australia and the US, with aircraft carrier HMS Prince of Wales taking part this year.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store