Russia

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Russia has established an extensive network of state-backed organizations aimed at incorporating schoolchildren into the country’s military-industrial complex, including the production, development, and operation of drones, according to a new report by the investigative outlet The Insider.

The system includes an online platform called Berloga (“Bear’s den” in Russian), which features games designed to develop students’ drone piloting skills, including a course called “Drone Academy.” To encourage participation, students are offered extra points on their university entrance exams for using the platform.

Top performers are invited to join the “Kruzhok movement,” an Education Ministry project under Russia’s National Technology Initiative (NTI). These students are also offered spots in extracurricular groups where they prepare for academic competitions and work on original engineering projects, most of which are drone-related. These include navigation, tracking and object recognition, cargo delivery, anti-drone systems, and improving drones’ resistance to electronic warfare.

The groups regularly compete in engineering contests, with assignments provided by major state corporations like Rosatom, Rostec, and Roscosmos, as well as defense contractors including the Yakovlev and Sukhoi military aircraft producers, the drone manufacturer Geoscan, and the air defense company Almaz-Antey. Representatives from these firms often serve as judges in the competitions.

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Involving minors in the development of technologies intended for warfare violates international norms such as the U.N. Convention on the Rights of the Child and the Geneva Conventions. Moreover, these students aren’t just learning general drone principles; they’re being directly integrated into the Russian military’s technology production chain. They receive commissions, carry out technical assignments, and take part in demonstrations for the military. In practice, this amounts to using child labor for war.

The entire system is coordinated by Russia’s Agency for Strategic Initiatives (ASI), a nominally non-profit organization whose supervisory board is headed by Russian President Vladimir Putin.

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Azerbaijan’s head of state Ilham Aliyev has announced that documents are being prepared with the aim of filing a case against Russia in international courts, Minval reports. The claims are connected to the crash Azerbaijani Airlines Flight 8243, which went down in Aktau, Kazakhstan on December 25, 2024 after being struck by Russian air defenses while attempting to land at its intended destination of Grozny. Aliyev stated that the circumstances of the incident are “as clear as day.”

As Aliyev pointed out, the Azerbaijani side has not received a clear response from the Russian authorities. Azerbaijan's Prosecutor General has been submitting official enquiries to the Russian Investigative Committee, but the agency continues to cite an “ongoing investigation” as the reason why further information cannot be released. Aliyev characterized the Russian side’s approach as “lacking constructiveness.”

He also drew parallels to the probe into the crash of Flight MH17, which was shot down by Russian Buk anti-aircraft system No. 332 over “separatist-controlled” eastern Ukraine on July 17, 2014. Despite the publicity around that earlier case, official accusations from European courts against Russian officials have been slow in coming. Aliyev noted:

“We are ready to wait ten years if necessary, but justice must prevail. We are currently preparing a case file to submit to international judicial bodies regarding this matter.”

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Archived

China plays a key role in Russia's war against Ukraine, supporting Russia while also being interested in preserving the semi-destroyed Russian economy. This allows Beijing to control the Russian economy and influence political processes in Moscow, according to Volodymyr Ohryzko, Director of the Centre for Russian Studies in Ukraine [and Ukraine's former Minister of Foreign Affairs].

"China, through the words of its foreign minister, has said that it will not allow Russia to lose. Therefore, this means that China has been helping and will continue to help Russia wage war against Ukraine. It's obvious and clear whose side China is on. On the other hand, will China help Russia too much? Here, I have huge doubts," Ohryzko noted [on Espreso TV].

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Today China controls practically everything that happens in the Russian economy. It dictates the prices at which it buys or will buy goods from Russia now or in the future. Therefore, China needs a half-dead Russian economy that it can manage as it pleases and accordingly influence what happens in Moscow, according to Ohryzko.

"Thus, in this triangle of Beijing–Washington–Moscow, the last one (Russia, ed.) is a zero without a stick. It's the third wheel, which will be invited to the table only when the key issues between the two serious players are resolved. That is, this is already obvious and clear to everyone," Ohryzko remarked.

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• Top executives at some of Russia's biggest banks have privately discussed seeking a state-funded bailout if the level of bad loans on their books continues to worsen over the next year.
• The banks' assessment of the quality of their loan books is far worse than what official data show, according to current and former officials and documents.
• Central bank Governor Elvira Nabiullina has downplayed the risk of a systemic crisis, saying Russia's banking system was "well capitalized" and had capital reserves of 8 trillion rubles.

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At least three lenders identified as systemically important by the Bank of Russia have considered the possibility that they may need to be recapitalized in the next 12 months, according to current and former officials and documents reviewed by Bloomberg News.

The banks have discussed internally how they would raise the prospect of a bailout with the central bank should that become necessary. The scenario arises because their assessment of the quality of their loan books is far worse than what official data show, according to the people and documents.

The people, granted anonymity to disclose information that isn’t public, said any bailout request was dependent on a continued rise in the volume of bad loans over the next year. Still, they said the discussions were becoming more urgent throughout the banking industry.

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On paper the banking system is in relatively good health, with profits robust even amid a rise in so-called non-performing loans to companies and households with the central bank’s key interest rate at a near-record high 20%. Officially, levels of bad debt remain well below those recorded in past financial crunches and that were defused by the Russian authorities.

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Officially, the share of bad-quality loans to corporate borrowers stood at 4% as of April 1, while the proportion of unsecured consumer debt in arrears of 90 days or more was at 10.5%.

Still, top bankers have begun to raise the alarm about the prospects for the next year.

"It is already clear that it will not be easy,” Herman Gref, chief executive officer of state-owned Sberbank, Russia’s largest lender, said of the prospects for the next year at the annual shareholders meeting last month, because loan portfolio quality is deteriorating with companies increasingly needing to restructure their debts. “I hope, as always, we will be able to find joint plans to get through these difficult times,” he added.

At VTB, Russia’s second-largest lender, the share of non-performing loans from individuals in its retail portfolio reached 5% in May, amounting to 377 billion rubles, the bank’s First Deputy Chairman Dmitriy Pianov said, Vedomosti newspaper reported July 1.

That indicator has risen by 1.2 percentage points since the beginning of the year. The share of bad loans could hit 6%-7% by 2026, Pianov said, though he also noted this was below the peak of 8%-10% seen in 2014-16.

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Russia has used bailouts and other mechanisms to recapitalize failing banks in the past. In 2017, the central bank spent at least 1 trillion rubles to rescue three large private banks, Otkritie, Promsvyazbank and B&N Bank, a move it said was necessary to save the financial system.

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Russia’s spending on military personnel reached a record 2 trillion rubles ($25.68 billion) in the first half of 2025, according to new estimates from Re: Russia, an analytical platform run by exiled Russian academics.

The surge in spending — driven by enlistment bonuses, salaries and compensation for wounded soldiers and bereaved families — reflects the Kremlin’s determination to keep waging its war in Ukraine at any cost.

Between January and June, federal and regional budgets allocated an estimated 400 billion rubles ($5.14 billion) for enlistment bonuses, 865 billion rubles ($11.11 billion) for military salaries and 765 billion rubles ($9.82 billion) in payments to families of the dead and wounded.

If the current pace of spending continues, total personnel costs are projected to exceed 4 trillion rubles ($51.36 billion) by year’s end.

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Approximately 38% of employed Russians have no financial cushion in case of emergency, according to business daily RBC, citing research conducted by headhunting firm SuperJob on Thursday.

Among those with savings, the study found that 13% could live on their savings for less than a month, 24% for one to two months, 12% for three to six months and 7% from six months to one year.

Only 6% of respondents said that their savings could last them for more than a year without a salary.

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Separate findings from a survey by accounting firm Aktion Buchgaltera suggest that Russian employers are preparing for wage reductions.

16.5% of enterprises reportedly plan to decrease salaries within the next year, while 3.6% of companies intend to implement such cuts within the coming three months.

In 41.4% of cases, companies cited declining revenues and a need for better financial management as reasons for reducing salaries.

The majority of surveyed businesses, 93.3%, stated that they had not reduced salaries in the last two to three years.

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Russia has sharply reduced state support for small and medium-sized businesses as it grapples with a widening budget deficit and economic slowdown, raising concerns among economists and business leaders about the sector’s long-term health.

Government subsidies for small and medium-sized enterprises (SMEs) dropped by 43% in the first quarter of 2025 compared with the same period last year, according to a new report by the Higher School of Economics Development Center.

Total assistance fell from 127.8 billion rubles ($1.6 billion) to 72.3 billion rubles ($918 million).

That figure is also lower than the level of support provided in early 2022, shortly after Russia launched its full-scale invasion of Ukraine, when it stood at 75.8 billion rubles ($962 million).

At the same time, the number of SMEs and self-employed individuals receiving government aid declined by 17%, reaching 99,200 recipients.

The cuts reflect a broader shift in the Kremlin’s approach to business support, with planned allocations for the SME sector over the 2025-2030 period totaling 330 billion rubles ($4.2 billion), a 20% reduction from the previous six-year plan.

Lending programs, particularly the popular 1764 initiative that offered subsidized interest rates through commercial banks, have been hit hardest.

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Russia’s state statistics agency Rosstat has stopped publishing monthly data on births and deaths, a move that comes amid a deepening demographic crisis and ongoing troop losses in the war against Ukraine.

For the first time, Rosstat last week released its monthly socio-economic report without including figures on births, deaths, migration or the country’s total population.

The agency had already stopped releasing regional breakdowns of births and deaths earlier this year.

“Since March 2025, there’s been virtually no publicly available demographic data in Russia,” demographer Alexei Raksha wrote at the time. “We consider the full suppression of regional demographic statistics a clear sign of failed demographic policy at the regional level.”

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Raksha [cited] internal data from an unnamed region allegedly showing life expectancy for men dropping from 66 years in 2024 to 61 in mid-2025, while life expectancy for women held steady at 75.

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Since launching its full-scale invasion of Ukraine in 2022, Russia has gradually restricted access to demographic data that experts have used to infer wartime casualties, including deaths by age, region and cause.

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Russia has decided to classify data on the state of the economy and foreign trade as a state secret. From now on, only individual indicators that are favorable to the authorities will be disclosed in order to calm the public, UNIAN reported.

According to data from the Foreign Intelligence Service of Ukraine, serious crisis processes are observed in the coal mining, oil refining, construction, automotive and logistics industries of the Russian Federation, which in general provide about 17% of revenues to the federal budget.

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The EU extended sanctions against Russia for another six months.

Due to Moscow's continued actions destabilizing the situation in Ukraine.

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The report comes as defense drives Russia’s industrial growth while civilian production contracts.

Russia’s industrial sector, fueled by the defense sector, grew by 1.6% in May and 1.8% over the last year after accounting for seasonal factors, state statistics service Rosstat has reported.

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Civilian industries have reported widespread contractions, leading analysts to warn that Russia’s economy has become disproportionately driven by the military-industrial complex in the fourth year of its invasion of Ukraine.

Tverdye Tsifr (“Hard Numbers”), a Telegram channel that reports on financial data, noted a 42% surge in the output of “miscellaneous transport equipment” and a 14% increase in finished metal products over the last month, compensating for weaker performance in March and April.

Clothing production increased by 12%, and production of electronic and optical products, computers and pharmaceuticals rose by 9%.

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Analysts from Russia’s largest private bank Alfa-Bank described the May results as evidence of a highly segmented economy.

Previously, “when civilian growth was weak and defense growth was robust, all sectors expanded to some degree,” wrote MMI, a Telegram channel that analyzes Russian and global microstatistics, of the new divergence between military and civilian industry.

“Now, all civilian industries have recorded declines, while defense output has accelerated. There are not enough resources to go around for everyone, so someone has to cut back,” it said.

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Rosstat reported that the producer price index for industrial goods shrank by 1.3% in May and by 2.8% since the start of the year.

A sustained decline in industrial prices, Promsvyazbank warned, “signals the real economy’s diminished resilience to high interest rates.”

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According to the government-affiliated CMACP analytical center, industrial growth has been mostly concentrated in the defense sector, with civilian industries remaining stagnant since mid-2023.

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Archived

Russian companies are increasingly cutting or eliminating employee bonuses and incentive payments as they seek to reduce costs, a new report has revealed.

The report, compiled by the HeadHunter recruiting service and the pension fund NPF Evolyutsiya, was obtained by the pro-Kremlin newspaper Izvestia, which reported the findings on Friday.

Almost one-third of workers who previously received bonuses reported either a reduction or total loss of bonuses over the last year, a symptom of the slowing Russian economy.

The survey found that 20% of respondents noted a decrease in bonus amounts, while 9% said payments had stopped entirely.

For one-quarter of those surveyed, bonuses accounted for 10 to 30% of their total take-home pay.

Fifteen percent of workers reported bonuses equal to 10% of their pay, with a similar number of workers reporting that bonuses accounted for 30 to 50% of their income.

Managers, IT specialists, realtors and employees in sales, finance and construction were most likely to experience reduced or canceled bonuses, the data showed.

The regions where employees most frequently reported a loss of bonuses were Sverdlovsk (42%), Novosibirsk (36%), Samara (32%), Rostov (31%) and the republic of Tatarstan (32%).

“Bonuses and incentive payments are typically the first expenses companies cut when seeking to save money without implementing official salary reductions or formal layoffs,” Vladimir Chernov, an analyst at the online broker Freedom Finance Global, told Izvestia.

“Companies are becoming less flexible, especially with high interest rates and reduced access to loans. Businesses have reached a stage where financial incentives can’t be the sole motivators,” said Dmitry Dudarev, HR director at communications company CROS, referring to the Central Bank’s key rate of 20%.

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Archived

“They Told Me: Deripaska Is the Client. Don’t You Want To Sell Your Virginity?” - How a network for selling sex with teenagers was built in Russia - and which of its influential clients managed to escape responsibility

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The meeting between the schoolgirl and the man she would later call Oleg Deripaska was organized by five people: Svetlana Titova, Alexandra Shantyreva, Olga Goncharova, Maksim Nekozyrev, and Anastasia Yakusheva. They became the defendants in the criminal case opened in 2019 in Priozersk, Leningrad Oblast.

The network for recruiting girls operated for at least two years (2018–2019) under the cover of regional, often children’s, beauty contests, modeling agencies, dating sites, and themed groups on messengers.

According to detectives from the Investigative Committee, one of the key roles in this network was played by 51-year-old Svetlana Titova. She grew up in Mordovia, where in the 2000s she founded her first modeling agency, Lel. Later, Titova organized several local beauty contests: Miss Carnival, Miss Bust, and Beauty of Mordovia. In 2017, their participants said that Svetlana recruited them into her agency and promised good income.

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“The men knew I was 17, they asked, as well as where I studied, what city I was from,” Irina recalled during her interrogation about that trip to Moscow. “I answered that I was 17, studying to be an economist, that I was a model, and so on.”

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“They were specifically looking for us. I was found at age 15. They wrote to me on VK under some fake photo,” recalls Alena Yaroshenko, another underage girl from the case files. She is now 23. In 2021, she was summoned for questioning in the case against Titova and Nekozyrev, but she refused to testify. Four years later, Alena agreed to speak to journalists.

“They told me the client was Deripaska and asked if I wanted to sell my virginity. Apparently, I had the kind of face Oleg was willing to pay for. He was supposed to come to an economic forum in Petersburg. At first, I agreed, because I had remembered him since childhood from the story with the pen, and I liked him. But then I imagined what my mother would do to me,” she said.

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Archived

Thousands of North Koreans are entering Russia, posing as students on “practical training” but instead coming to labor under slave-like conditions [...] The practice directly violates UN sanctions — sanctions that Russia itself has agreed to. The workers toil six days a week, sometimes for up to 20 hours a day, while their wages are divided between the North Korean regime and Russian companies. Among those profiting from the forced labor system is an organization linked to Artem Chaika, the son of Russia’s former prosecutor general.

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Pyongyang uses its labor force as a vital source of hard currency. In 2015, Marzuki Darusman, the former UN Special Rapporteur on human rights in North Korea, reported that foreign employers paid the regime in Pyongyang “significantly higher amounts” than the workers themselves were told they were earning, allowing the government to collect an estimated $1.2 to $2.3 billion annually.

Meanwhile, the workers themselves often received little or nothing in exchange for working grueling shifts of up to 20 hours a day — all while living in conditions of constant surveillance and with insufficient food. In one of his messages, Tkachuk noted that each group of North Korean workers must include a designated “senior” supervisor — a minder tasked with overseeing and controlling the group on behalf of the regime.

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According to Cedric Ryngaert, Head of the Department of International Law at Utrecht University in the Netherlands, given the findings of The Insider’s investigation are correct, Russia is likely to violate UN Security Council resolutions 2375 and 2397, both adopted in 2017. These resolutions, among other conditions, require member states to stop issuing work permits to North Korean labourers and repatriate all of them to their home country within 2 years.

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Archived

Russia’s Finance Ministry is aggressively increasing its borrowing in a bid to cover growing fiscal gaps and hedge against an increasingly uncertain economic future as military spending surges and oil and gas revenues slump.

Six months into 2025, the ministry has already borrowed more than 2.7 trillion rubles (approximately $35 billion), or 56% of its annual borrowing plan.

This week alone, it raised 195 billion rubles (around $2.5 billion) through two new issues of government bonds, known as OFZs, hitting its second-quarter fundraising target of 1.3 trillion rubles (about $16.9 billion).

Russia is paying steep yields — 15.2% on six-year bonds and 15.5% on 11-year debt — amid high interest rates aimed at taming inflation.

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Foreign direct investment in Russia fell to just $3.3 billion in 2024, its lowest level since 2001, according to new data published by the United Nations Conference on Trade and Development (UNCTAD).

The data, released during Russia's flagship St. Petersburg International Economic Forum, shows a 62.8% decline in investment between 2023 and 2024 and a 50% drop from the pre-war year of 2021, when Russia attracted $38.8 billion.

Even if the war were to end tomorrow, few serious businesses would consider Russia as an attractive investment destination given the political risks that would remain, Sergei Aleksashenko, a former deputy governor of the Russian Central Bank who now lives abroad, told Reuters.

According to the Central Bank itself, foreign investment in Russia’s non-financial sectors has declined by 57% over the past three years. Total accumulated FDI fell from $497.7 billion at the start of 2022 to $216 billion as of January 2025, the lowest level since 2009.

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In 2024, Russian pharmacies had 134 fewer essential drugs than the year before. Of these, about 15% treat cancer. The remaining are antibiotics, anticonvulsants, immunosuppressants, insulin for pregnant women and drugs for migraines, allergies, tuberculosis, HIV, malaria and so on.

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For example, Endoxan, used as chemotherapy and to suppress the immune system, disappeared in May 2024, as did other drugs used in the treatment of lung and biliary tract cancer.

Last summer, doctors and patients complained about a shortage of the laxative Senade, which is included in the official list of essential drugs.

In October, many regions ran short of antibiotics with different active ingredients.

In November, immunoglobulin, which is extremely important for pregnant women with the Rh negative blood type, disappeared across almost all of Russia.

Meanwhile, even in Moscow and St Petersburg there was a serious shortage of saline solution for several months. For example, in the northern capital’s clinics the wait for procedures with saline solution took up to two months, and pharmacies had only ampoules of 5-10 milliliters.

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Sanctions, restrictions and the (poor) quality of generics have led to the emergence of a real black market for brand-name, original drugs. Suppliers buy batches of them in Turkey, India and European countries and then sell them through messenger chats.

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The most popular drugs on the internet are those for cancer treatment. This is unsurprising: most antitumor drugs cannot be found in pharmacies anymore.

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The Russian consultancy RNC Pharma estimates the cost of imported drugs increased a third in 2024.

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Prices have risen for the most common therapies as well, such as over-the-counter anti-inflammatory drugs and asthma drugs. The reason is that many locally produced medications are made with imported components, which have become much more expensive.

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Meanwhile, Russia produces many cheap generics, for which reason, however, brand-name drugs are leaving the country due to low selling prices. Another problem is that Russian generics do not undergo the required cycle of clinical trials. Their real efficacy is unknown, and they often have many more side effects.

This is the case not only for cancer drugs but also, for example, HIV drugs. In addition, Russia does not produce combination drugs, meaning patients on local treatment regimens need to take several pills at once instead of one, which is much less convenient.

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In the prevailing conditions, patients with orphan diseases find themselves in a hopeless situation. Their drugs are often very expensive, and almost no family can afford them on their own, even though they mean the difference between life and death.

In 2024, 77% of orphan disease patients complained about difficulties in obtaining drugs.

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Prices [for medications] will rise further and there will be even fewer medications on shelves – a fact acknowledged even by official Russian sources.