Aspects of the war take center stage in this month’s news roundup on the continuing crisis with Ukraine. After drone attacks this week on Kharkiv and Odesa further raised tensions, Russia’s economy is reportedly beginning to crack under heavy strain. Especially given that, in the first quarter of 2025, the country’s economic growth has plummeted to just 1.4% year-on-year.
This slowdown matches up perfectly with ominous indications from Russia’s economy minister, Maxim Reshetnikov. He cautioned that the nation is “very close” to being in a recession. Reshetnikov pointed to “current business sentiment and indicators” that illustrate the deteriorating economic landscape. Year-on-year inflation peaked at over 21% in July but has remained above the central bank’s target of 4% for over a year now. To their credit, the Central Bank of Russia responded by raising interest rates to 21% in October 2024. Recently, facing a major recession, they’ve relaxed interest rates to 20% to try to jumpstart growth.
Beyond economic crises, Russia’s military campaign goes on as before. In an unexpected turn that only deepened the crisis this month, the country’s defense ministry acknowledged an exchange of captured troops with Ukraine. Iranian-designed Shahed drones and North Korean munitions have already bolstered Russia’s war efforts. This pact is worrisome enough on its face, but even more so when considering its international implications.
Ukraine’s leadership has condemned these actions vehemently. President Volodymyr Zelenskyy even endorsed Israeli strikes on Iran, a country that has been helping Russia wage its war in Ukraine. Zelenskyy declared, “Our heroes are returning home from the Russian captivity.” This declaration underscores the continuing campaign for Ukrainian independence and the work that has gone into repatriating the returned soldier to Ukraine.
Ukraine’s Deputy Foreign Minister Andrii Sybiha was the most vocal critic of Russia. He is dangerous, and for pointing out their hypocrisy in condemning strikes against Iran while still relying on Iranian support. He further stressed that we cannot arrive at any other logical conclusion, namely, that at all times we cannot trust Russia under any circumstances. Rather than provide a remedy, it is a constant aggravator of the situation.
At the same time, the Zaporizhzhia nuclear power plant is still a dangerous and volatile situation. The United Nations nuclear agency has reported that operations at the facility “cannot start operating again as long as this large-scale war continues,” highlighting the risks of further escalation in the region.
Denmark’s Europe minister, Marie Bjerre, confirmed that her country will continue preparations for Ukraine’s EU membership despite Russian objections. In her remarks, she noted how of the moment Hungary is playing spoiler. This is why we’re busy trying to apply pressure and ensure that Ukraine keeps going on that important reform front.
As these events unfold, one thing has become evident. Russia is putting all its chips on the defense industry. This continued reliance is not a viable long-term solution. Analysts warn that unless Russia undergoes counter-diversification and large-scale reforms, its economic hardships are set to deepen.