Russia Policy Monitor No. 2689

RUSSIA FACES GROWING FINANCIAL HARDSHIP
Russia's federal budget faces a pressing need for more money in the face of declining energy profits and a grim economic outlook, according to Anatoly Artamonov, chair of the Federation Council Committee on Budget and Financial Markets. "We need to use all available resources to increase the revenue base," Artamonov has told The Moscow Times.

According to Artamonov, one way to improve Russia's grim economic outlook is for a reduction in the amount of tax exemptions, which he says comprise almost a third of the state's budget. He also proposed a crackdown on shadow employment, or unreported income paid in cash to circumvent taxes. This undeclared income is a massive loss to the federal budget, amounting to approximately 10 trillion rubles ($112 billion) annually, according to official estimates. Russian officials are also considering cuts to the federal budget, with the possibility of needing to cut at least 1.5 trillion rubles ($19 billion) in overall spending. (Kyiv Independent, July 16, 2025)

MOSCOW WILL RESPOND IF AMERICA MAKES A MOVE ON GREENLAND
Russia's Ambassador to Denmark, Vladimir Barbin, has promised "appropriate military and technical measures" in response to any U.S. military action toward Greenland. As the Trump administration continues to express interest in the purchase or annexation of Greenland, Barbin has argued that any action over the island would "further undermine regional security." As Greenland attracts growing interest from Moscow, Washington, and Beijing due to its strategic importance, President Putin has charged that U.S. actions in the Arctic are serving as a "springboard for possible conflicts." (The Moscow Times, July 17, 2025)

SOLDIERS BY OTHER MEANS
In an attempt to avoid another round of politically costly forced conscription, the Kremlin has created an alternative recruitment system called the "Dobrovolchesky Korpus," or volunteer corps. Run by the GRU, Russia's military intelligence agency, this initiative is designed to attract individuals who are unwilling to commit to the requirements for official enlistment. "Dobrokor" contracts last for a limited period from 6 to 12 months – in contrast to official enlistment, which requires a commitment until the conclusion of the "special military operation." However, these volunteers also incur significantly higher risks than general enlistees, since they are sent to the frontlines to be used as cannon fodder. In a leaked recording, Aleksandr Borodai, a Russian politician and director of the Union of Donbass Volunteers, said that military leaders view volunteer soldiers as a "second-rate infantry" that should be used as "expendable manpower." Volunteer units are forged around common interests – from staunchly Orthodox corps to soccer fans. (Radio Free Europe/Radio Liberty, July 17, 2025)

SETTING THE STAGE FOR A NEW CRIME WAVE
Russia's practice of offering pardons to convicts who enlist in the military, even those imprisoned for violent crimes, is likely to have negative repercussions down the line, experts warn. The estimated number of pardoned war veterans ranges from thousands to tens of thousands, and even includes convicted murderers. In a move rare for a Kremlin supporter, Willy Maslov, an employee of the Ministry of Internal Affairs' Ural Law Institute, published a report on the predicted negative impacts. Maslov writes that recidivism of pardoned criminals is only "a matter of time," highlighting the difficulties that former convicts will face while reintegrating into society and the potential desire for revenge against those who aided in their convictions. These risks are compounded by the likely experience of Post-Traumatic Stress Disorder (PTSD), which has been documented to increase aggression and hostility, as well as their experience with firearms acquired on the frontlines. Additionally, Maslov predicts that the rate of juvenile crimes will rise as military deaths increase the number of single-parent households. (BBC, July 15, 2025)

RUSSIAN PROPAGANDA HOUSES PERSIST
More than three years into the full-scale invasion of Ukraine, Russian propaganda offices still operate in Washington and other Western capitals. A network of such organizations is present across the West, with Russian Houses operating in more than 71 countries. For instance, although ROSTRUDNICHESTVO, the arm of the Russian foreign ministry that runs the houses, is sanctioned by the EU, the German government continues to pay 70,000 annually in property taxes for the Russian House in Berlin. The organization puts on film screenings portraying Ukrainians as Nazis to justify the invasion for groups of German youth. Another Russian house in Paris has facilitated camps and funded trips to Russia and the occupied territories. Its three-week "People of Artek" camp provided funded travel to occupied Crimea in 2024 for children aged 12-17. " And in the U.S. capital, the American Russian Cultural Center – a Kremlin propaganda organization housed in an annex of the Russian embassy – continues to host events promoting Russian propaganda on a tax-free basis. (Counter Offensive, July 17, 2025)