Ukraine and Russia: Entering the Final Year of the War? - Good Times Bad Times (The 20s Report) [View all]

Summary

This analysis examines the state of the Russia-Ukraine war as it approaches its fourth anniversary in 2025-2026, focusing on territorial gains, economic pressures, and diplomatic efforts.

Key Points:

Territorial and Human Costs
- Russia gained 4,322 km² in 2025 at the cost of ~400,000 casualties (nearly 100 casualties per km²)
- Total Russian casualties since the war began: 1.2-1.5 million
- Despite operational initiative, Russia remains far from capturing Kyiv, its primary objective

Trump Administration's Impact
- Based on 300+ anonymous interviews, the New York Times revealed deep divisions within Trump's administration
- Anti-Ukraine camp: J.D. Vance, Pete Hegseth, Elbridge Colby
- Pro-Ukraine supporters: Keith Kellogg (special envoy), Christopher Cavoli (US forces commander), and notably the CIA
- CIA continued supporting Ukraine's long-range strike campaigns and intelligence operations despite political headwinds

Economic Warfare
- Ukraine's sustained strike campaign against Russian refineries caused a 32-34% drop in Russia's oil-related tax revenues
- Russian crude oil prices fell to ~$33/barrel by December
- Russian banking system shows critical stress: declining liquidity, increased emergency borrowing
- Industrial output collapsing across sectors (pumps -38%, cars -34%, tractors -61%)

Ukrainian Resilience
- December 2025 saw record strikes: 24 attacks on refineries, maritime infrastructure, and pipelines
- Ukraine attacked Moscow daily in early 2026
- Major cabinet reshuffles: Kyrylo Budanov replaced Andriy Yermak as head of presidential office; Mykhailo Fedorov became Defense Minister

Diplomatic Developments
- EU provided €9 billion interest-free loan to Ukraine (Plan B after frozen Russian assets couldn't be used)
- Paris talks with 35 countries adopted the Paris Declaration on security guarantees for Ukraine
- Ukraine indicated willingness to cede ~20% of territory for peace, but Russia continues refusing negotiations

Outlook
The conflict remains in "precarious balance" with mounting pressure on both sides to negotiate, though Putin continues betting on a breakthrough while Ukraine fights for survival with European support.