Moscow, RUSSIAN FEDERATION: Russian President Vladimir Putin is seen on the TV screen as another TV sets are reflected in it in a shop in Moscow (DENIS SINYAKOV/AFP via Getty Images)

AFP via Getty Images

Call it a tale of two Russias. On the one hand, it’s becoming increasingly apparent that Russia’s war of choice against Ukraine is turning into a financially unsustainable venture – one that risks bankrupting the country and may even end up imperiling President Vladimir Putin’s hold on power. On the other, Moscow is now mounting a massive propaganda offensive designed to show off Russia’s softer side, woo gullible Westerners and reset the terms of the international conversation. And those two trends are intimately linked.

To understand the connection, it’s necessary to start with the Russian economy. At home, after years of Western sanctions and economic pressure, the Kremlin is at long last facing serious fiscal headwinds. Top officials in the country’s Finance Ministry and Central Bank are now reportedly warning that the cost of the Ukraine war in Ukraine has become unsustainable and proposing cuts to defense spending.

They have good reason to be concerned. Over the past several years, the Kremlin has adapted to widening European and American sanctions by transforming its economy into one heavily dependent on military-related output – and subsequently by hiking war spending to channel capital to those industries. Last year, Russia’s military spending reached a record high of some 15.5 trillion rubles ($190 billion), according to the Stockholm International Peace Research Institute. (The projection for this year is pretty much the same; 14.9 trillion rubles, or $204 billion at current exchange rates.)

Such a rate of spending is simply unsustainable. As a result of it, the country’s budget deficit is growing, and could balloon to as much as three trillion rubles ($36 billion) this year.

Not long ago, Kremlin officials were still hopeful that rising global oil prices stemming from the Iran war would be a boon to the country’s coffers. But the dividends haven’t been as significant as initially expected, while Ukrainian long-range drone strikes on Russian energy infrastructure are taking a massive toll. Russian crude processing has now fallen to a 16-year low, prompting Moscow to ban the export of jet fuel as a conservation measure.

Even so, the Kremlin is balking. Putin and his coterie have invested heavily in their war of choice against Ukraine and are loath to pare it back in any meaningful way. As a result, senior officials are said to be insisting on the projected level of spending, and Putin himself has reportedly asked the Finance Ministry to find other areas of the federal budget to shrink before targeting defense spending.

But if Putin isn’t prepared to give up on his efforts to dominate Ukraine, he’s certainly trying to reframe how they are perceived – particularly in the West. Recent days have seen a veritable deluge of pro-Russian commentary on social media platforms like X extolling the welcoming environment in Moscow and ridiculing the idea that Russia is seeking conflict with the United States or Europe. Some of this is organic, a byproduct of high-profile events like the recent St. Petersburg International Economic Forum and the Kremlin’s courtship of influential “influencers.” But some of it is clearly inauthentic, aimed at convincing the West to lessen Russia’s its international isolation – and, by extension, to alleviate its economic problems.

Moscow, moreover, is throwing massive resources at this effort. In this year’s budget, the Kremlin reportedly allocated $1.85 billion to foreign propaganda operations, an increase of more than 50% over 2025 figures. That level of investment, especially at a time of fiscal troubles, clearly reflects that changing the international conversation and resetting its global image is a key priority for Russia’s government.

Whether it can do so depends on which version of the Russia story global publics end up believing: the one in which it is a misunderstood friend, or the one where Putin is prepared to bankrupt the state to satisfy his will to imperial power.