Stuck on the Battlefield, Russia Wages ‘Total War’ on Ukraine’s Economy
The economic damage from Russian strikes, resulting in lost sales, disrupted workdays and logistical snarls, is in the billions of dollars.
Firefighters at the site of a drone attack on a warehouse in Brovary, Ukraine, this month.Francisco Seco/Associated Press
By Andrew E. Kramer
Smoke rising from an oil refinery after a strike in Moscow on Sunday.Reuters
Nearly empty shelves at a supermarket in Kyiv in August.Roman Pilipey/Agence France-Presse — Getty Images
Sheltering in a metro station in Kyiv in July. All-day attacks are keeping more people underground and away from their jobs and businesses.Alina Smutko/Reuters
President Volodymyr Zelensky of Ukraine addressing the U.N. General Assembly in New York on Wednesday. He has appealed to European allies for billions of dollars to plug a budget shortfall, in addition to a $100 billion loan already approved.Dave Sanders for The New York Times
By Andrew E. Kramer
Reporting from Kyiv, Ukraine
Sept. 25, 2026, 5:02 a.m. ET
original article contains links
The war of attrition between Russia and Ukraine is expanding to encompass both countries’ economies.
Military targeting officers are operating as economists in reverse. Increasingly, the objectives of missile and drone strikes are declining output, lost jobs and logistical bottlenecks.
Ukrainian officials are calling the current Russian campaign “total war” for its focus on economic impact, rather than on narrower goals like battlefield gains or infrastructure damage. While Moscow has targeted commercial assets throughout the war, its assaults have grown significantly in scale.
The intensifying Russian bombardment has followed Ukraine’s own effort to damage the Russian economy. Kyiv has used its expanding arsenal of domestically made drones to fire on Russia’s oil industry, its most valuable sector, while also targeting Russian e-commerce companies.
Russia has shifted its focus to economic warfare as its advances have largely stalled on the battlefield. “In a war of attrition, the economy becomes the prime target,” said Orysia Lutsevych, head of Ukraine Forum at Chatham House, a London-based research group.
Moscow is seeking, Ms. Lutsevych said, to raise the cost to Europe of sustaining Ukraine’s war effort. The growing bill provides fodder for far-right parties in countries like Britain, France and Germany that oppose giving aid to Ukraine.
Last month, President Volodymyr Zelensky told European allies that Ukraine needed $27 billion to plug a budget shortfall, after the European Union had already finalized a loan of more than $100 billion earlier this year.
The economic damage from Russia’s campaign will reach about $10 billion by the end of the year, Ukraine’s economy ministry has estimated. Much of the cost is indirect, in lost sales, disrupted workdays and logistical snarls.
The European Bank for Reconstruction and Development on Thursday lowered its previous expectation of 2.2 percent economic growth this year in Ukraine to 1.5 percent. Some economists have said that Ukraine might end the year with zero growth.
Growth is also sluggish in Russia, where the Kremlin is struggling to fund the war’s ever-increasing costs. The Russian federal budget deficit reached $68 billion by the end of August, compared with the $44.5 billion planned for the entire year. On Thursday, Russia’s Finance Ministry said it would need to raise taxes to finance next year’s budget, following a major increase introduced the previous year.
Long-range Ukrainian attacks have opened cracks in the semblance of normal life that the Russian government has tried hard to preserve in cities far from the border with Ukraine. The strikes against oil refineries have led to fuel shortages and long lines at gas stations. Attacks on the warehouses of Russia’s two largest online retailers disrupted logistics and left many small businesses without inventory.
In the other direction, Moscow has waged a broad assault on Ukrainian exports and consumer spending. Attacks on warehouses have removed goods from shelves. Strikes on ports, locomotives, border crossings and ships at sea have crimped exports. In recent days, Russia has expanded its strikes to internet infrastructure, disrupting service for some 100,000 households.
Russia changed its tactics in late August, increasing the number of daytime hours that major Ukrainian cities are under air alerts. Some retail businesses close during attacks, lowering sales.
The all-day strikes are bringing the economy close to a “standstill” as people spend so much time in bomb shelters, said Tymofiy Mylovanov, a former economy minister who is now president of the Kyiv School of Economics. The university is planning a new addition that will be built entirely underground, for student safety.
Dimitar Bogov, chief economist of the European reconstruction bank, said labor shortages and the increased bombardments meant that Ukraine was entering “its most difficult period of the war.” While spending power among the population remains strong, he said, people “are not able to spend.”
Ukraine’s economy contracted by about 20 percent in the first year of the all-out invasion, which began in February 2022, but it has grown since then.
An important area of growth is defense technology, which more than doubled in 2024. More recent figures are not available because Ukraine has classified economic statistics related to defense industries, which are targets of the Russian military.
Business is also growing in solar and wind power, providing electricity from small, numerous and widespread sources, making the grid less vulnerable to missile strikes.
While Ukrainian exports of steel, iron ore and grain have dropped by about a third durin/g the war, rising foreign aid has compensated for those losses. The inflow and outflow of foreign currency has remained positive, with central bank reserves growing from $29.1 billion before the invasion to $48.7 billion now.
The latest barrages, however, are shifting the balance. A new Russian targeting system has been effective at hitting locomotives, even when they are rolling, cutting into Ukrainian exports. Ukraine, which had about 1,800 locomotives before the war, has lost about 500. It is now losing one a day on average.
Russia has timed its attacks for their seasonal effects. It hit grain silos in the summertime to knock out storage before and during the harvest. The European Union is rushing mobile grain silos to Ukraine, but lost sales are expected to cause farmers to default on loans, with likely knock-on effects in the banking sector.
Maintaining consumer spending, partly driven by high military salaries, is a key challenge. Ukraine is not at risk of hunger, but rather a slumping economy, with a lower tax base to fund the war.
A Kyiv-based wine distributor illustrates the difficulties. The company, Good Wine, operates a flagship outlet in the capital and stores around Ukraine. It has contracts with about 1,000 wineries around the world. Logistics are an ever-intensifying headache.
The company’s main warehouse in Kyiv was hit in tank crossfire at the start of the war. In total, 1.6 million bottles shattered in the explosions and fire. The owners gave away scorched but intact bottles, and rebuilt.
This year, the warehouse was hit again in a Russian long-range strike. Two other company warehouses and a commercial kitchen were also hit. No employees were killed, but about $9 million in inventory, including a collection of rare vintages, was lost.
Many Ukrainian companies are rethinking logistics. Broadly, the options are just-in-time delivery, distributed storage or going underground.
Models for warehouses buried about 20 feet deep that would be impervious to most munitions are under consideration. A Ukrainian company has designed an underground data center.
At least three Ukrainian companies offer custom bunkers to individuals and businesses. One, Bunkerok, founded in 2023, is now installing about 170 a year. Another emerging bunker maker is called Hobbit House.
Good Wine is leaning toward distributed storage so that no single strike can upend its business model, said Dmytro Krymsky, a co-founder.
“Every day the war goes on, everything becomes more expensive,” he said. “It’s really hard to run a business in Ukraine.”
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Evelina Riabenko, Ivan Nechepurenko and Constant Méheut contributed reporting.
Andrew E. Kramer is the Kyiv bureau chief for The Times, who has been covering the war in Ukraine since 2014.
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