Putin struggles to pay his troops

 ISW:

The Kremlin's recent economic policies indicate that the Russian economy will likely face significant challenges in 2025 and that Russian President Vladimir Putin is worried about Russia's economic stability in the long term. The Kremlin recently adopted several policies that aim to cut Russian government spending on wounded Russian servicemen, combat inflation, and address long-term demographic problems such as low birth rates and labor shortages. These policies demonstrate that the Russian economy is not as resilient to Western sanctions, monetary constraints, and the cost of the war effort as the Russian government postures. These policies also demonstrate that the Kremlin will not be able to sustain the protracted war effort for years and decades to come while shielding Russian society from economic challenges. Consistent Western and international support for Ukraine's resistance on the battlefield will further exacerbate Russia's economic problems.

Putin modified compensation promised for Russian servicemen wounded while fighting in Ukraine — a clear indicator that the Kremlin is trying to cut the mounting short- and long-term costs of the war and restore balance to the Russian economy. Putin controversially changed Russian policy guaranteeing a one-time payment of three million rubles ($30,124) to all Russian servicemen who have been wounded in combat in Ukraine since March 2022.[1] Putin signed a decree on November 13 that restricted the one-time payments of three million rubles only to servicemen who sustained serious injuries in combat, only offering one million rubles ($10,152) to lightly wounded servicemen, and 100,000 rubles ($1,015) to servicemen who sustained minor injuries on the battlefield.[2] Putin's decree generated significant backlash from the Russian ultranationalist milblogger community, and Putin attempted to placate this community on November 14 by increasing the one-time payments to four million rubles ($40,136), but still only for Russian servicemen who sustain severe battlefield injuries that result in a disability.[3] A Russian milblogger noted that Putin's authorization to increase compensation for disabled servicemen does not alter the fact that the Kremlin is reneging on promises to thousands of Russian servicemen who joined the Russian military solely due to large financial incentives.[4] The milblogger added that Russian military medical commissions are also becoming increasingly — and often deliberately unfairly — selective in diagnosing Russian servicemen with severe injuries.

Putin originally introduced the policy offering all wounded Russian servicemen three million rubles to incentivize military recruitment after he had decided against declaring general mobilization in Spring 2022.[5] Financial incentives became the key pillar of the Russian military's recruitment campaign and personnel retention efforts over the past nearly three years, and the reversal of such incentives indicates that the system is becoming economically unsustainable for the Kremlin. ISW notably assessed in Summer 2022 that the Kremlin's reliance on high financial incentives for force generation was committing Russia to short- and long-term financial responsibilities to thousands of Russians, such as paying veterans pensions, compensations to families of deceased servicemen, and other state benefits.[6]

The Kremlin's efforts to combat inflation and high interest rates are also reportedly impacting the expansion of the Russian defense industrial base (DIB) and prospects for mobilizing the economy....
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Sanctions appear to be taking their toll on the Russian economy as well as the cost of the war effort both in materials and the significant manpower losses Russia has experienced.  Its war in Ukraine has exposed the weakness of the Russian conventional military as well as the weakness of the Russian economy.  Some of Putin's policies appear to be attempts to get domestic support for his war.