AN ENERGY CRISIS IN RUSSIA'S MOLDOVAN ENCLAVE
On January 1st, Ukraine halted the transfer of Russian gas through its territory by declining to renew a transfer agreement with Moscow. This decision severed the supply of gas to the Russian-backed Moldovan enclave of Transdniester, which has received free gas from Russian state natural gas giant GAZPROM since 2005. Ukraine had warned Moldova and Russia months in advance that it would not renew the agreement, but neither GAZPROM nor Chisinau prepared for the cutoff.
Now that it has occurred, however, the cutoff has triggered an energy crisis across Moldova - but especially in Transdniester, where many citizens have been left without adequate heating. Local authorities have declined Chisinau's offers for assistance, and blame the Moldovan government for the ongoing crisis. Russia, too, blames Chisinau, citing Moldova's refusal to pay GAZPROM some $709 million in gas debts as a result of disputes over the actual amount owed. Ukraine, for its part, accuses Russia of instigating the crisis, and authorities in Kyiv have spoken with Moldovan President Maia Sandu about potentially shipping coal to Moldova as a stopgap measure. (Carnegie Politika, January 11, 2025)
[EDITORS' NOTE: That proposal represents a novel geopolitical play. If Kyiv is able to help Moldova solve the present crisis, which has left hundreds of thousands of Russian citizens without heat, it has the potential to weaken Russia's influence in the enclave.]
HOW THE KREMLIN IS COMBATTING DEMOGRAPHIC DECLINE
Last year, amid its ongoing offensive against Ukraine, the government of Russian President Vladimir Putin launched a new drive to ameliorate the country's adverse demographic conditions. Russia's "Year of the Family" has entailed new economic stimuli, educational initiatives, and other assorted incentives designed to lessen a long-running demographic decline - one which has been made considerably worse as a result of Russian battlefield losses on the Ukrainian front. Over the course of the past year, Russian authorities have discouraged divorce, authored laws to penalize "childfree propaganda," and launched a broad effort to promote "traditional family values" in classrooms. (Radio Free Europe/Radio Liberty, January 13, 2025)
IS MOSCOW BATTLING BACK IN KURSK?
Russia's military claims to have recovered over 60% of territory in the Kursk region occupied by the Ukrainian military following its August 2024 offensive into Russia. Ukraine is estimated to still retain control over approximately 420 square kilometers in the region, down from the 1,268 square kilometers gained as a result of the initial incursion last Fall. (The Moscow Times, January 17, 2025)
RUSSIA'S AILING ECONOMY
Although Kremlin authorities have repeatedly boasted about the strength of the national economy, economic indicators suggest that Russia's fiscal straits are approaching a crisis point. Reports from September indicate that the average cost of consumer goods in the conutry has risen by 22.1%, and the Russian government recently announced major tax increases. Additionally, in 2022 and 2023 the Kremlin registered a budget deficit of about 2% of GDP, and is expected to do so again for 2024.
Russia is now dependent on its National Wealth Fund for financing, and the country's hard currency reserves have fallen from $117 billion in 2021 to $31 billion as of November 2024. In 2025, inflation and the cost of living are expected to continue to rise, and a number of major companies are near bankruptcy. Experts now believe Russia will likely run out of liquid reserves by this Fall, forcing budget cuts and possibly even price controls and rationing. (Kyiv Independent, January 15, 2025)