Putin to turn on his own people as Kremlin revenues plunge | Scott Lucas

(KYIV, UKRAINE) – Ukraine has secured a major financial and strategic boost as European support expands and pressure grows on the Russian war economy, analysts say.

Professor Scott Lucas said Russia faces a “very significant government budget deficit”, noting that “their entire budget deficit projected for 2026… was eaten up in January and February”.

He added that while official figures may understate inflation, “it’s always been estimated that… inflation rate may have been as high as… 20 to 25%”, with current levels “15% conservatively”.

The comments came as the European Union agreed a €90 billion ($97 billion) loan package to Ukraine, expected to cover Kyiv’s financial and military needs through 2027. The agreement followed political changes in Hungary, where the defeat of a Kremlin friendly government removed a key obstacle to EU support.

Lucas said the funding marked a “huge breakthrough”, reducing reliance on uncertain US backing amid shifting priorities in Washington.

Ukraine has also strengthened its position on the battlefield. Despite sustained Russian aerial attacks that at one stage damaged up to 50 to 60% of the energy grid during winter, Kyiv has stabilised infrastructure and expanded domestic air defence production.

At the same time, Ukraine has intensified strikes inside Russia, targeting oil terminals, ports and refineries. Key export hubs, including Baltic and Black Sea ports handling around 75% of Russia’s maritime oil exports, have faced disruptions.

These attacks have offset gains Moscow sought from higher oil prices, with revenues fluctuating in recent months. Lucas noted that oil income “was cut in half in January and February” and remains vulnerable to further Ukrainian strikes.

On the battlefield, Russian advances have slowed. After gradual gains in 2025, progress stalled early this year and, in March, Russian forces lost territory for the first time since 2023, albeit limited to around nine square kilometres.

Ukraine has also demonstrated advantages in drone technology, increasing production and exports while maintaining defensive resilience.

Lucas cautioned that Russia is not facing imminent economic collapse but said constraints are increasing. Budget pressures have forced cuts to infrastructure and social spending, with the possibility of tax rises.

“You cannot completely lie to the Russian public about what the economic situation is because they know it on a day to day basis,” he said.

He added that the Kremlin may seek to manage public perception by allowing limited criticism, while avoiding broader dissent. Opinion polls suggest a gradual decline in support for the Russian leadership, though not a sudden drop.

In Europe, the loss of a key ally in Hungary has weakened Moscow’s ability to block EU decisions. While some governments remain sceptical of support for Ukraine, analysts say no single country now has the weight to obstruct major initiatives.

Lucas said the shift marked one of the most significant geopolitical developments since 2022, as Ukraine and its partners adapt to reduced US engagement by strengthening European and global alliances.

He also warned that Russia would continue efforts to exploit political divisions abroad through disinformation campaigns aimed at undermining support for Ukraine.