Slava Sobetski

“Permanent Deterioration of External Conditions”: Central Bank Head Admits War Is the Reason for High Key Interest Rates

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Central Bank Chair Elvira Nabiullina responded to critics who argue that excessively high interest rates are stifling the economy. “Past episodes of high rates were linked to temporary deteriorations in external conditions. When the situation normalized, we lowered the rate fairly quickly. Now, the deterioration is effectively permanent—both for exports and imports,” she explained. Key Highlights of the Statement: Analytical Summary: Nabiullina’s admission of a “permanent” deterioration is a blunt recognition that the Russian economy has entered a state of “perpetual crisis.” The euphemism “external conditions” masks an irreversible isolation that strips the Central Bank of the ability to return to low interest rates in the foreseeable future. This sends a clear signal to the business community: cheap credit is a thing of the past. While companies previously could “wait out” high-rate periods, they must now survive under the weight of expensive capital for years. This will inevitably lead to market consolidation around state contracts and the bankruptcy of those unable to adapt to this new reality. In essence, Nabiullina has confirmed that the cost of “geopolitical decisions” is long-term stagnation and technological degradation, which the Central Bank is forced to mitigate with harsh monetary measures.

Russian Oil and Gas Budget Revenues to Surge by 38% in April

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Russia’s federal budget revenues from oil and gas—accounting for a fifth of the state treasury’s total income—are set to rise by 0.23 trillion rubles (+38%) in April 2026 compared to March, reaching 0.85 trillion rubles, according to Reuters calculations. Despite this monthly jump, revenues are expected to be 22% lower (0.24 trillion rubles less) than in April 2025. Key Drivers of the April Growth: Analytical Summary: The April surge in oil and gas revenues is a temporary “breather” for the Russian budget, driven entirely by external geopolitical factors. The treasury is receiving extra funds not due to increased production or efficiency, but because of a “war premium” on energy prices triggered by instability in the Middle East. However, the 22% year-on-year decline is a sobering statistic. It confirms that even with high global benchmarks, the Russian energy sector is struggling with rising logistics costs and the impact of sanctions. For the government, this means the budget deficit remains a systemic threat, and the temporary windfall will likely do little to offset the overall trend of shrinking export margins. The treasury’s growing dependence on volatile foreign conflicts makes long-term fiscal planning increasingly fragile.

Number of Russians Working Part-Time Hits Record High Since 2020 Pandemic

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By the end of 2025, Russia saw a sharp spike in the number of employees transferred to part-time work, reduced schedules, or placed on standby. In the fourth quarter, this figure reached 1.6 million people. This is the highest level since the second quarter of 2020, when the country was under COVID-19 lockdowns, according to the Central Bank’s “Regional Economy” report. Over the course of 2025, the number of part-time and idle workers increased by 14.3%. Industries Most Affected: The Central Bank attributes this trend to falling demand and companies’ efforts to avoid mass layoffs amidst a slowing economy and high interest rates. Analytical Summary: The record level of underemployment is a symptom of a “hidden crisis.” Unlike 2020, when idleness was caused by administrative lockdowns, the current situation is driven by a systemic drop in demand and the high cost of capital. The inclusion of industrial giants like Alrosa and KAMAZ in this list indicates deep-seated problems in export-oriented and high-tech sectors. Businesses are trapped: they cannot lay off staff due to a severe long-term labor shortage, but they cannot afford full salaries due to stagnating production. This “waiting mode” is unsustainable. If business activity does not pick up in the coming quarters, this hidden unemployment will inevitably become overt, further suppressing consumer demand.

75-Year-Old British Accountant Charged with Money Laundering for Attempting to Create a Shadow Fleet for Lukoil

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The UK’s National Crime Agency (NCA) has charged 75-year-old British financier John Michael Ormerod with money laundering and violating sanctions against Russia. According to investigators, he facilitated the acquisition of at least 25 second-hand oil tankers later used by Lukoil—Russia’s second-largest oil producer—to transport billions of dollars worth of crude oil. Investigation Details: This case highlights that the creation of the “shadow fleet” involves not just anonymous intermediaries, but high-profile Western professionals. Analytical Summary: The Ormerod case serves as a major precedent in the West’s crackdown on “grey” schemes for exporting Russian energy resources. The fact that the defendant is a prominent British accountant with an elite Eton education damages the reputation of the City of London as a financial hub that assisted Russian capital for decades. For Lukoil, this investigation signifies increased pressure on its international infrastructure, particularly Litasco and its Dubai-based branches. The scheme of using separate offshore entities in the Marshall Islands was long considered “opaque” to regulators, but the NCA has now demonstrated its capability to dismantle such chains. This creates significant risks of “secondary sanctions” for all intermediaries involved in managing the shadow fleet. In the long term, such prosecutions make the logistics of Russian oil even more expensive and complex, as Western specialists like Ormerod will now fear criminal prosecution for working with Russian assets.

Students Recruited to Bomb Ukraine with Drones “Like in Hearts of Iron”

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The Alabuga Polytech College, located at one of Russia’s largest drone manufacturing sites in Tatarstan, is urging students to “help their country” by completing their compulsory military service directly at the educational institution. This recruitment drive was highlighted by the specialized outlet T-Invariant. The advertising campaign, which has reached hundreds of major social media channels, notably references the popular computer strategy game Hearts of Iron IV (a global strategy game set during World War II). Key Features of the Campaign: Alabuga Polytech is effectively transforming into a hybrid of an educational institution and a military facility, where training in drone production is combined with their direct combat application. Analytical Summary: Attempting to sell participation in a war through the interface of Hearts of Iron IV is a cynical yet technologically savvy marketing move. Authorities are trying to solve the shortage of UAV operators by appealing to a generation raised on video games. The concept of “safe warfare” from a command center is designed to reduce the fear of conscription: the student is led to believe that their actions in reality are no different from mouse clicks in a simulator. However, behind this “gaming” veneer lie serious risks. Firstly, it marks the final militarization of education, where a college becomes a direct participant in hostilities. Secondly, using Western gaming imagery to recruit for “unmanned brigades” highlights a lack of domestic cultural codes that resonate with the youth. The primary danger is the dehumanization of the conflict: when real strikes are presented as completing a “difficult level,” the responsibility for human lives dissolves into “gameplay.” For Alabuga itself, such open military activity solidifies its status as a legitimate military target under international law.

Russia’s Largest Electronics Manufacturer Slumps into Losses as Orders Collapse

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Element Group, the flagship of Russia’s microelectronics industry, concluded the last fiscal year with a sharp decline in financial performance, posting a net loss of 2 billion rubles compared to a profit of 8.3 billion rubles the previous year. Revenue fell by 12% to 38.6 billion rubles. The most significant drop occurred in the core business segment—electronics production—where revenue plummeted by 29% due to dwindling demand from industrial enterprises. Consequently, top management bonuses were slashed fourfold. Key Factors for the Decline: Analytical Summary: The shift of Element Group from multi-billion-ruble profits to a net loss is a diagnosis of the current state of Russia’s “technological sovereignty.” A 29% drop in revenue within the core segment means the industrial sector has stopped purchasing modern components for development, focusing instead merely on maintaining existing capacities. This is a direct consequence of the “investment freeze” observed in Central Bank surveys: businesses are unwilling to invest in long-term high-tech projects given the current cost of capital. The situation is critical because Element is a primary beneficiary of import substitution policies. If even such a major player sees its orders collapse, it indicates that the civil and industrial electronics market in Russia is shrinking. The cutting of management bonuses is a symbolic gesture aimed at appeasing shareholders and the state, but it fails to address the root problem: without systemic demand from a stable industrial sector, microelectronics manufacturers risk a prolonged depression, leading to a new cycle of technological lag.

Russians Visit Shopping Malls Less Frequently Due to Shift to Austerity Mode

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The footfall of medium and large shopping centers (SCs) in Russia fell by 2% year-on-year in January–March 2026 and plummeted by 25% compared to the same period in 2019. This is according to Focus Technologies data cited by Kommersant. The primary reason for the current decline is the drop in purchasing power and the transition of Russians into a “saving mode.” Key Indicators of Spending Decline (March 2026 vs March 2025): Experts note that Russians have almost entirely abandoned “emotional shopping.” Visiting a mall has ceased to be a form of leisure, as the population no longer has surplus funds for spontaneous purchases. Analytical Summary: The 25% drop in mall traffic compared to 2019 signals the sunset of the “retail development” era in Russia. We are witnessing more than just a temporary slump; it is a fundamental shift: the consumer market is shrinking to satisfy only basic needs. The severe hit to furniture and renovation categories (-12%) directly indicates stagnation in the real estate market and a reluctance among citizens to invest in long-term living arrangements amid uncertainty. Saving on clothing and sporting goods suggests that Russians have begun cutting expenses that were previously considered standard for the middle class. Shopping centers are turning into “monuments to past consumption,” unable to compete with marketplaces on price or with citizens’ wallets on demand levels. In the long term, this will lead to the mass closure of large facilities and the repurposing of spaces into warehouses or social centers, as the SC business model—built on mass and spontaneous consumption—has definitively stopped working in today’s Russia.

Medvedev Identifies European Drone Factories Supplying Ukraine as Potential Strike Targets

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Dmitry Medvedev, Deputy Chairman of the Security Council of the Russian Federation, has labeled European enterprises involved in manufacturing drones for Ukraine as “potential targets.” Ukraine has significantly increased its drone strikes on Russia throughout 2026 using these weapons. The former Russian president’s statement follows the publication by the Russian Ministry of Defense of a list containing 21 industrial facilities across various European countries that are allegedly participating in “scaling up production and supplying UAVs to Ukraine for strikes on Russian territory.” Key aspects of the statement: The list includes objects in various European countries, which underlines Moscow’s readiness to consider the entire territory of the EU as a zone for the potential expansion of the conflict. Analytical Summary: Medvedev’s statement is an attempt to project the concept of “deterrence through fear” directly onto the territory of NATO member states. The publication of a specific list of 21 factories serves as a tool for psychological pressure on European businesses and political elites. Moscow is attempting to impose direct responsibility on Europe for the damage caused by Ukrainian UAV attacks, effectively equating the supply of equipment with direct participation in combat operations. This rhetoric pursues two goals. First, it aims to create an atmosphere of instability within the EU by provoking discussions about the risks to internal security arising from the support of Kyiv. Second, it prepares the ideological ground for potential sabotage or “hybrid” strikes against logistics chains. The use of the X platform in English confirms that the message is specifically addressed to a Western audience. However, the primary danger remains the potential escalation toward a direct clash with NATO should these “potential targets” actually be attacked, which would make a full-scale war in Europe inevitable.

Russian Business Investment Activity Plummets to Post-Pandemic Low

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Russian businesses are freezing investments, according to a survey of 11,500 companies conducted by the Central Bank of Russia. The balance of responses regarding quarterly changes in investment activity fell to -4.8 points. This represents the lowest level since the second quarter of 2020, when COVID-19 lockdowns were in full effect. According to Central Bank data, the last time this indicator entered negative territory was during the first quarter of 2022. Key Indicators from the Central Bank Monitoring: Companies are not merely revising their budgets; they are effectively preparing for stagnation, seeing no prerequisites for the profitability of new capital expenditures under current macroeconomic conditions. Analytical Summary: The drop in investment activity to pandemic-era levels is a dire signal, indicating that the resources for “adaptive growth” observed in recent years have been exhausted. The primary barriers for business remain the extremely high key interest rate, which makes development lending virtually inaccessible, and general uncertainty that prevents project planning beyond a few months. The fact that businesses have lost their traditional optimism regarding future periods signifies a transition to a survival strategy. In the long term, an investment hiatus will inevitably lead to technological degradation and capacity shortages. While the economy previously relied on state orders and “first-wave” import substitution, the private sector is now demonstrating an unwillingness to risk its own funds. This creates a risk of an “investment pit” from which it will be extremely difficult to escape, even if the Central Bank eventually eases its policy, as entrepreneurial confidence in stable market conditions has been severely undermined.

St. Petersburg Schools Begin Training Students as “Stormtroopers”

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In St. Petersburg, military-patriotic education has reached a new level as schoolchildren are being trained for specialized combat roles, including “stormtroopers,” as part of the revamped “Zarnitsa 2.0” games. The project is organized by “Dvizheniye Pervykh” (The Movement of the First), Vladimir Putin’s new youth organization, and involves students from grades 5 to 11, as well as vocational college students. Combat Unit Structure: Participants compete in teams of ten, designed to simulate a real-world combat squad. Each student must take on a specific role: Tactical Training for “Stormtroopers”: During the competitions, “stormtroopers” work in pairs to hit targets and throw grenades under time pressure. The training includes specific tactical maneuvers, such as how to move through buildings (crouching with the weapon muzzle pointed down), constructing temporary shelters, and using signals to request supplies, such as food or ammunition. The Digital and Media Front: The games are heavily integrated with modern technology. While the squad performs combat tasks, the “war correspondents” manage Telegram or Max channels. Teams earn extra points for likes, shares, and even the strategic use of memes in their posts. Additionally, participants must complete online courses on the “Zarnitsa 2.0” website to earn higher scores. Analytical Summary: The modernization of “Zarnitsa” under the “Movement of the First” signals a profound militarization of the Russian school system. While the Soviet-era version of the game was largely focused on general physical fitness, “Zarnitsa 2.0” is explicitly adapted to the realities of modern warfare, incorporating drone operation, stormgroup tactics, and information warfare. By using gamified mechanics—such as points for social media engagement and digital platforms—the state is attempting to normalize the concept of combat for the “digital generation,” shifting the focus from abstract patriotism to the practical skills required in active conflict zones.