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Russia to Prioritize Military Spending in 2025 Amid Escalating Ukraine War
Russia’s military budget is set to soar to unprecedented levels in 2025, with spending on national defense surpassing allocations for health care, education, and social policy combined. This strategic shift underscores Moscow’s commitment to its war efforts in Ukraine as the conflict continues into its third year.
President Vladimir Putin has approved budget plans allocating 32.5% of next year’s budget—equivalent to over €137 billion—to defense. This represents a significant increase from the reported 28.3% spent on defense in 2024. The budget was formally ratified by both chambers of Russia’s parliament in recent weeks, reflecting a unified stance on bolstering the country’s military capabilities.
The war in Ukraine, which began in February 2022, remains Europe’s largest conflict since World War II, draining resources on both sides. While Kyiv receives substantial aid from Western allies, including financial and military support, Russia continues to leverage its larger and better-equipped armed forces. Recent months have seen Russian troops steadily pushing back Ukrainian forces in the contested eastern regions.
Escalating Violence on Both Sides
The conflict remains marked by deadly exchanges, with both nations employing drone strikes in increasingly aggressive tactics. On Sunday, three civilians were killed, and seven were injured in Kherson, southern Ukraine, when a Russian drone struck a minibus, according to regional Governor Oleksandr Prokudin.
The aftermath of a missile strike on Dnipro on Saturday revealed a rising toll, with 24 injured, including seven in serious condition, and four fatalities, Dnipropetrovsk Governor Serhiy Lysak reported.
Meanwhile, Ukraine faced an onslaught of 78 Russian drones overnight into Sunday. Ukrainian officials stated that their air force destroyed 32 drones, while 45 others were electronically jammed and neutralized.
In a retaliatory strike, Ukrainian drones targeted Russian territory, resulting in the death of a child in the Bryansk region near the border, according to Governor Alexander Bogomaz. The Russian Defense Ministry claimed to have intercepted 29 Ukrainian drones in four western regions, including Bryansk, Kaluga, Smolensk, and Kursk.
Economic and Strategic Implications
The record-breaking military budget highlights the strain the conflict places on Russia’s economy, as spending on domestic welfare programs diminishes. Analysts suggest the increased defense spending reflects Moscow’s aim to maintain its strategic advantage over Ukraine while preparing for a protracted conflict.
With no immediate end to the war in sight, the intensified focus on military spending signals Russia’s prioritization of its geopolitical objectives, even at significant domestic cost. As the conflict drags on, the global community remains watchful of its far-reaching consequences.
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Russia Demands SWIFT Reconnection as Condition to Revive Black Sea Initiative
Russia has set forth a key demand for the restoration of the Black Sea Initiative—reconnecting its Agricultural Bank, Rosselkhozbank, to the SWIFT financial system. This request, which falls under the jurisdiction of the European Union (EU), comes amid ongoing negotiations between global powers on the war in Ukraine.
Partial Ceasefire and Black Sea Security Agreement
Following recent talks in Saudi Arabia, the United States announced that Russia and Ukraine had agreed to a partial ceasefire specifically covering energy facilities. While this fell short of the broader ceasefire pushed by former President Donald Trump, the parties also agreed on measures to ensure the safe navigation of commercial vessels in the Black Sea and to prevent their use for military purposes.
However, the Kremlin quickly detailed additional conditions, demanding the lifting of sanctions on food exports, fertilizers, agricultural machinery, and cargo insurance. Most notably, Russia is insisting that Rosselkhozbank and other financial institutions involved in agricultural trade be reinstated on SWIFT, a global messaging system that facilitates secure financial transactions.
EU’s Role and Sanctions History
SWIFT, headquartered in Belgium, falls under EU regulations. In response to Russia’s invasion of Ukraine, the EU removed several Russian banks from SWIFT in 2022, including Sberbank, Credit Bank of Moscow, and Rosselkhozbank. The exclusion was a significant blow to Russia’s financial system, as it restricted the country’s ability to conduct international transactions.
Rosselkhozbank, a state-owned institution, plays a critical role in facilitating payments for Russia’s agricultural exports, a major revenue source through the global sale of wheat, barley, and corn. While the EU has not directly sanctioned Russian agricultural exports, the banking restrictions have complicated payments for these transactions, leading to the collapse of the initial Black Sea Initiative brokered by Turkey and the United Nations.
Diplomatic Tensions and Uncertain Outcomes
The demand to reinstate Rosselkhozbank puts the EU in a difficult position. Granting this request could signal a willingness to make concessions, potentially encouraging Russia to seek further sanctions relief. However, refusing it could provoke tensions with the Trump administration, which is eager to secure a ceasefire.
President Volodymyr Zelenskyy has consistently opposed easing sanctions, arguing that they must remain in place until Russia ends its military aggression. European Commission President Ursula von der Leyen echoed this stance, stating that sanctions would only be lifted after Russia takes concrete steps toward peace.
As EU sanctions require unanimous renewal every six months, any member state could disrupt the process. Hungary, which has previously expressed opposition to sanctions, could leverage this situation to push for changes when restrictions are up for review on July 31.
Future of SWIFT and Global Financial Pressures
While the EU holds the power to reinstate Rosselkhozbank’s SWIFT access, the U.S. could signal leniency by ensuring that those engaging with the bank avoid legal repercussions. Analysts suggest that Russia’s demand may be a strategic move to test both Washington and Brussels, pressuring the EU to reconsider its stance on financial restrictions.
For now, the EU remains firm in its approach. France has indicated that sanctions should remain unless Russia agrees to a full ceasefire, reparations, and security guarantees for Ukraine. However, with negotiations ongoing and international pressure mounting, the debate over SWIFT and broader sanctions relief is unlikely to fade anytime soon.
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