In Putin’s Russia, dogs pull cars

Mark O'Neill October 13, 2025 09:16

On a road next to a wood in rural Russia, two dozen dogs are pulling a car. The driver could not find any petrol – the stations were closed or the waiting lines were too long.

After three and a half years, Vladimir Putins’s war with Ukraine is now affecting the daily life of its people. He no longer has enough money from oil and gas revenue to pay for the war and is having to find other sources.

In late September, the government announced that it would raise the rate of Valued Added Tax (VAT) from 20 to 22 per cent, breaking a promise Putin made last year not to raise taxes before 2020.

“At the start of the war, the spending on the army came from reserves and surplus oil and gas reserves,” said Alexandra Prokopenko, a former central bank official now at the Carnegie Russia Eurasia Center in Berlin.

“Then they raised corporate taxes. Now all businesses and Russian citizens are going to finance the war directly because there are not any other sources left,” she said.

From 2022 to 2024, the war cost 228 billion euros, according to official figures. It has yielded almost no economic return, because of the chaotic situation in regions of Ukraine occupied by Russia.

Russia’s Finance Ministry said that, for all of 2025, the national budget deficit will reach 5.7 trillion rubles, 2.6 per cent of GDP, up from a shortfall it predicted earlier this year of 0.5 per cent.

The main reasons for this are the fall in global prices of oil and gas, Russia’s most important exports, and the Western sanctions against them.

Another important factor has been a devastating drone offensive this year by Ukraine against Russian oil refining capacity. At the end of August, Reuters reported that about 17% of Russia's oil-refining capacity had been at least temporarily taken out by these drones.

While Russia enjoys superiority in weapons and manpower at the frontline, Ukrainian drones are more sophisticated, with heavier payload, and can fly further than Russian ones. Many of the refineries have little or no air defences.

On paper, Russia can refine 327 million tons of oil every year, or 6.5 million barrels per day. The capacity of the 16 refineries attacked by Ukrainian drones in August and September was 123 million tons a year -- or 38 percent of the total. This figure is the upper limit of potential damage. The attacks condinue every week.

These attacks have brought the war to the daily lives of Russians over many areas of the country. They have closed petrol stations or forced them to sell only limited quantities to each motorist.

Of the national budget this year, half of the money is going to the war in Ukraine. This is putting great pressure on the non-military sectors of the economy.

In 2023 and 2024, Russia’s GDP grew by an annual more than four percent but began to slow in late 2024. Growth in the first quarter of this year was 1.4 per cent and 1.1 per cent in the second quarter. For the full year, it will be one per cent, according to official forecasts.

In mid-September, the central bank cut its benchmark interest rate by one percentage point to 17 per cent. But state corporations and businesses say this is too high. German Gref, president of state-owned Sberbank, the largest bank, said a rate of 12 per cent or less would be needed to make the economy recover.

“The slowdown is continuing, as we see from the growth in GDP. The second quarter (of 2025) can be considered technical stagnation. The months of July and August show clearly that we are approaching zero,” he told the Eastern Economic Forum in Vladivostok in early September.
The other daily reminder of the catastrophic war for ordinary Russians are the regular funerals of soldiers from their towns and the expanding military cemeteries.

According to Ukrainian figures, as of October 7, Russia had lost 1.17 million soldiers killed, wounded or missing in the war. Add the 700,000 who have fled the country to avoid being called up and the 700,000 at the front. This means serious labour shortages and higher wages for those in work.

On September 29, Putin ordered the conscription of 135,000 men by the end of 2025, the largest conscription drive in nine years. Conscripts captured by the Ukrainians include convicts who signed up to escape a prison sentence and those in pre-trial detention. The Russian army includes many foreigners, including North Koreans, Africans, Nepalis and Cubans.

When captured, many of these foreigners say that they were promised jobs in Russia in construction, factories and other fields and, after arrival, were forced to go to the front.

One captured soldier was a Nenets, from an indigenous group in western Siberia. He said that he had signed up because of the generous payment offered by the state. “The Nenets are dying out in Russia,” he said.

His Ukrainian captor asked: “if we hand you back in a prisoner exchange, you will be sent back to the front. Do you want that?” He replied: “I do not know what to say.”

Mark O'Neill

A Hong Kong-based writer, teacher and speaker.