By Murad Rakhimov | 2025-05-12

TASHKENT -- Russia's cash-fueled contest to fill the ranks for its war in Ukraine may be grinding to a halt.

For months, provincial governments had quietly raced to outbid each other with enlistment bonuses, sweetening a Kremlin-mandated payout of 400,000 RUB (about $4,900) to entice new contract soldiers to join the euphemistically termed "special military operation" (SMO).

But as the economy sags and oil revenues fall, the financial burden is becoming unsustainable. Provincial governments are covering almost three-quarters of the cost, and with recruitment now costing the state an estimated 2 billion RUB ($24.5 million) a day, the strain is showing.

Something has gone wrong

The wave of pay cuts for Russian contract soldiers has accelerated since early 2025. In Belgorod, effective January 1, authorities slashed the one-time enlistment bonus from 3 million to 800,000 RUB ($36,800 to $9,800), a move provincial governor Vyacheslav Gladkov had warned about as early as last October on Telegram.

The trend intensified in spring.

In late March, Rostov province reduced its bonus from 1.2 million to 1 million RUB ($14,725 to $12,270), while on April 16, the Yamalo-Nenets Autonomous District (Yamal) cut its payment from 3.1 million to 1.9 million RUB ($38,000 to $23,300).

The Yamal shift may be the most revealing, since propaganda outlets had only recently -- in January -- touted a "record" 10-fold increase in payments for contract soldiers, showing just how quickly the financial incentives have begun to unravel.

What actually happened?

On April 21, the Moscow Times reported that the Russian government was preparing for the lowest oil price since the pandemic. Brent crude had already fallen below $60 per barrel, with Urals crude dipping under $50, dragging down one of the Kremlin's key revenue sources.

In the first quarter of 2025, oil and gas revenues were down 10% year over year, including a 17% drop in March alone.

As market analyst Yevgeny Kogan noted on Telegram, "for every dollar the oil price drops, the Russian budget loses approximately 160 billion rubles [$1.9 billion] in revenue per year."

Russia's capacity to finance a full-scale war against a technologically advanced adversary like Ukraine is showing visible strain, according to Alisher Ilkhamov, director of Central Asia Due Diligence in London.

"Indicators of Russia's dwindling economic capacity include the near-total depletion of the National Wealth Fund -- once Russia's bottomless wallet, an almost complete halt in gas exports, falling oil prices, a mounting crisis in several economic sectors such as coal and transportation and the high refinancing rate of the Central Bank, which makes bank credit extremely expensive," Ilkhamov told Kontur.

Russia's civilian and military economies are tightly intertwined, and the burden placed on the civilian sector to support war spending has become nearly unbearable, he said.

"If this threshold is crossed, the collapse of the civilian economy will undermine the military one. Understanding this, the Russian authorities have been forced to stop further salary increases for contract soldiers," Ilkhamov said.

"That is, they can still afford to finance the war at the current spending level for some time, but they can no longer increase this level."

Military service is becoming unpopular

Even the high payouts offered in most provinces are no longer enough to attract new recruits.

The military's reliance on suicidal frontal assaults already has led to serious morale problems, prompting some commanders to take extreme disciplinary measures, including torture, basement detentions and even extrajudicial executions.

These tactics show just how deeply unpopular military service has become, even among Russia's most marginalized men.

Massive casualties also do not motivate men to join the army.

The outlook for returning soldiers offers little incentive either. Veterans of the Ukraine war are being offered monthly salaries under 38,000 RUB ($466), less than half the national average and just a fifth of what contract soldiers earn while deployed, according to the Moscow Times, which cited Russia's Work, the site of the Federal Employment Service.

Tashkent-based economic journalist Navruz Melibayev sees the recent drop in oil prices as a critical blow.

"The Russian economy relies heavily on hydrocarbon exports, and the decline in oil and gas revenues undermines the sustainability of both federal and provincial budgets," he told Kontur.

Many of Russia's provinces, especially the subsidized ones, are already struggling to meet basic obligations to their populations, he said. As revenues shrink, local governments are increasingly unable to sustain payments to troops.

Those men already are seeing widespread reneging by provincial governments.

Melibayev pointed to growing reports of recruited troops experiencing delayed payments, reduced payments and canceled benefits, especially in poorer, more remote areas. The result, he warned, could be falling morale, rising discontent among contract soldiers and a slowdown in new enlistments.

"In the long term, this is another factor undermining the sustainability of the entire military campaign launched by the Kremlin on aggressive and unjustified grounds," said Melibayev.

The steady rise of the Russian Central Bank's benchmark rate is an indirect sign of deepening economic trouble, said Kyrgyz journalist and analyst Adil Turdukulov.

"Inflation is high, the economy is war oriented, and it does not produce any beneficial added value. That is: although industrial output is growing, people are not seeing any improvement in their quality of life," he told Kontur.

The state's promises of generous compensation and benefits to participants in the SMO are becoming harder to fulfill, according to Turdukulov.

"As a result, we see a repudiation of the original commitments to volunteers [for army service] and their families. This is a direct consequence of the Kremlin's economic shortsightedness and aggressive foreign policy," he said.