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Swedish intelligence assessments are consistent with ISW’s longstanding assessments about the significant challenges the Russian economy is facing and the Kremlin’s efforts to conceal these issues in order to falsely present Russia as able to sustain its war effort indefinitely. The Financial Times (FT) reported on April 20 that Sweden’s Military Intelligence and Security Service Head Lieutenant General Thomas Nilsson stated that Russia’s economy has failed to recover despite rising oil prices due to the war in the Middle East. Nilsson stated that Russia needs prices for Urals crude to remain over $100 per barrel for at least one year in order to close its budget deficit but that prices would need to remain that high for significantly longer to mitigate Russia’s other economic issues. Nilsson stated that Russia will likely struggle further to finance its war in Ukraine if oil prices stabilize and the ceasefire in the Middle East holds. Nilsson emphasized that an unsustainable growth model that cannot replace Russia’s materiel losses on the battlefield is contributing to Russia’s economic issues. Nilsson noted that defense industrial sectors outside of the drone industry are lossmaking, suffering from corruption, and dependent on loans from state-run banks. Sweden’s military intelligence analysis of Russia’s economic problems is consistent with ISW’s ongoing assessment that Russia’s prioritization of its defense industry is hurting the civilian sectors of the economy and that high battlefield losses are impacting the Russian economy.
Nilsson reported that intelligence indicates that the Kremlin systematically manipulates data to convince the West that Russia’s economy is effectively withstanding the pressure of sanctions and excessive military spending. Nilsson stated that Russian inflation is likely closer to 15 percent even as the Kremlin claims it to be 5.86 percent. Nilsson said that Russia has understated its budget deficit by $30 billion. ISW has long assessed that the true Russian inflation rate is higher than the Kremlin publicly claims and that the Kremlin has been spreading narratives that exaggerate Russia’s strength to support its demands at the negotiating table.
Russian forces continue to struggle to defend Russian infrastructure against repeated Ukrainian strikes. The Ukrainian General Staff reported that Ukrainian forces struck the oil tank farm at the Tuapse oil refinery in Krasnodar Krai on the night of April 19 to 20, causing a fire. Geolocated footage published on April 20 confirms large fires at the refinery. Krasnodar Krai authorities acknowledged the Ukrainian strike and resulting fires. Ukrainian forces have recently launched a wave of strikes against Russian military, energy, and port infrastructure in Krasnodar Krai, including against the Sheskharis oil terminal and an Admiral Grigorovich-class frigate near the port of Novorossiysk on April 5 to 6, the oil pumping station in Krymsk on April 8 to 9 and April 10 to 11, the Naftoexport port and oil depot in Tuapse on April 15 to 16, the oil pumping station in Tikhoretsk on April 17 to 18, and the seaport in Yeysk on April 18 to 19. Russian ultranationalist television network Tsargrad criticized Krasnodar Krai authorities for sending ”beautiful reports” that present false information about the situation to Moscow. Tsargrad complained that Russian authorities are focused on keeping the beaches open for summer tourists despite ongoing Ukrainian drone strikes and recent oil spills. Tsargrad’s criticism of Krasnodar Krai authorities comes as other regional authorities are increasing their response to recent Ukrainian strikes, with Leningrad Oblast Governor Alexander Drozdenko acknowledging the impacts of recent Ukrainian strikes against the oblast and moving to bolster regional air defenses. ISW continues to assess that Russian forces are struggling to defend against Ukrainian strikes as the infrastructure that Ukrainian forces are targeting is widely dispersed across Russia’s vast territory.
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