The conflict in Ukraine has entered a phase that transcends territorial gain. Moscow has recalibrated its strategic objectives, moving away from the pursuit of a traditional 'victory'—defined by the collapse of the Ukrainian state or a grand settlement—towards a policy of institutionalised attrition. This is the Myla Calculus: the recognition that for the current Russian leadership, the process of war is now more politically and economically stable than the uncertainty of peace.
The End of the Terminal Objective
For the first two years of the invasion, Russian strategy was tethered to specific, if shifting, end states. Whether it was the decapitation of the Kyiv government or the complete annexation of the Donbas, there was an assumption that the war was a means to an end. That has changed. Data from the Russian Ministry of Finance and recent industrial directives suggest that the war has become the end itself. The Kremlin has transitioned into a total war economy not to win quickly, but to endure indefinitely.
By committing over 7% of GDP to defence and security, Moscow has created a self-sustaining loop. The Russian state is now the primary employer, consumer, and creditor. To stop the war would be to invite a structural economic collapse that no amount of civilian stimulus could offset. Consequently, the incentive for the Kremlin is no longer to find an 'off-ramp,' but to extend the runway of the conflict as long as the state's social contract holds.
The Economics of Exhaustion
Incentives drive outcomes. Currently, the Russian elite and the industrial base are incentivised by the continuation of hostilities. The redistribution of assets from departing Western firms to loyalists, combined with massive state subsidies for the military-industrial complex, has created a new class of 'war winners.' These actors have no interest in a return to a pre-2022 globalised economy where they were outcompeted by more efficient international firms.
Furthermore, the labour market has been fundamentally altered. High military salaries and death benefits have created a distorted form of social mobility in Russia’s impoverished regions. For the first time in decades, capital is flowing from the urban centres of Moscow and St Petersburg to the periphery. This has bought the Kremlin a degree of domestic stability that Western analysts, focused on the costs of the war, consistently underestimate.
A Historical Parallel: The Long Northern War
We have seen this pattern before. During the Great Northern War (1700–1721), Peter the Great did not merely seek to defeat Sweden; he used the prolonged nature of the conflict to fundamentally rebuild the Russian state, its bureaucracy, and its social hierarchy. The war lasted twenty-one years because the reforms it necessitated were more important to the Tsar than the immediate cessation of hostilities. Today, Vladimir Putin is using the war to 'purify' Russian society of Western influence and to forge a state that can survive in permanent isolation. The war is the crucible for a new Russian identity.
What Most People Miss: The 'Buffer State' Fallacy
Most analysis focuses on whether Ukraine can reclaim its land or whether Russia can seize more. This misses the broader geographic shift. Moscow has effectively abandoned the idea of Ukraine as a neutral buffer state. Instead, it is transforming the occupied territories and the border regions into a 'perpetual grey zone.' This zone is intended to be a permanent drain on Western resources and a barrier against NATO integration.
The goal is not to govern these territories effectively, but to ensure they remain ungovernable and costly for the West to support. By maintaining a state of low-to-medium intensity conflict, Russia prevents Ukraine’s economic reconstruction and ensures that foreign investment remains deterred. The exhaustion is intended to be bilateral: draining the Russian treasury while simultaneously breaking the political will of the Atlantic alliance.
Strategic Consequences
The shift to a permanent war economy has three primary second-order effects:
- Sino-Russian Asymmetry: Russia’s dependence on China for dual-use technology and consumer goods is now irreversible. Moscow has traded European market access for a junior partnership in a Beijing-led bloc, limiting its future strategic autonomy.
- The Erosion of Human Capital: While the war economy boosts short-term GDP, the loss of hundreds of thousands of high-skilled workers who fled the country, combined with battlefield casualties, creates a demographic vacuum that will cripple Russian innovation for decades.
- Institutionalised Repression: A permanent war requires a permanent enemy. The domestic security apparatus (FSB and Rosgvardia) will continue to expand, ensuring that any dissent is framed not as political disagreement, but as treason against a state in an existential struggle.
What to Watch
- Refinancing of State Debt: Watch how the Russian Central Bank manages interest rates. If they cannot control inflation while funding the war, the social contract in the provinces may begin to fray.
- The Uralvagonzavod Output: Monitor the production rates of new T-90M tanks versus refurbished Soviet-era stock. This is the clearest indicator of whether the industrial base is genuinely expanding or merely cannibalising the past.
- Western Fatigue Cycles: Specifically, the 2024 and 2026 electoral cycles in Europe and the US. Moscow’s strategy hinges on the belief that democratic patience is shorter than autocratic endurance.
KJ Verdict
The West is waiting for a Russian collapse or a decisive Ukrainian breakthrough that may not come in the way anticipated. By shifting to a strategy of total exhaustion, Moscow has accepted a lower quality of life and a diminished global standing in exchange for internal regime survival and the long-term degradation of its neighbour. This is a structural pivot, not a tactical one. The world must prepare for a Russia that is not just at war, but is defined by war. Peace is no longer the Kremlin's objective because the current Russian state cannot afford the consequences of its arrival.
