Moscow calculates benefits of Gulf conflict, coming short

As the aerial conflict in the Persian Gulf moves into week three, assessments generally assume Russia is a key beneficiary. Persisting with inflexible demands in the peace talks with the United States and Ukraine, Russian President Vladimir Putin had apparently assumed that some external shock would break the deadlock that hardened at the start of the year.

The expected calamity has arrived, but neither the course of battle nor the correlation of political forces shaping the broader picture of the confrontation gives Russia a tangible new advantage. Pressure from U.S. President Donald Trump to bring Moscow’s war against Ukraine to an end has all but disappeared, but the pressure from the costs of Russia’s war of attrition has grown heavier, despite some new loopholes in the sanctions regime (Riddle, March 5; Carnegie Politika, March 10).

After several meetings with the top brass in January, Putin has seemingly lost interest in executing the winter offensive, which yielded scant territorial gains at the cost of heavy casualties (Mediazona, March 13). Since mid-February, Ukrainian forces have staged a series of counterattacks. The proposition that Russia holds the strategic initiative, which Putin strongly promoted, has lost relevance (Meduza, February 28; The Insider, March 13). The volume of Russian drone/missile attacks on Ukrainian cities has also decreased. In contrast, the effectiveness of significantly more precise Ukrainian strikes, including on the Kremniy El microchip plant in Bryansk, has risen (Radio Svoboda, March 11). The Russian Foreign Ministry made a formal démarche to France and the United Kingdom regarding the use of Storm Shadow missiles in that strike, while jingoist commentators continue demanding retaliation  (RBC, March 13; TopWar.ru, March 14).

Putin has given priority to Russia’s crisis in state finances. The final figures on the scale of the 2025 deficit reached nearly 4 percent of gross domestic product (GDP). The provisional assessments for the first two months of 2026 indicated an even greater hole in the budget (The Moscow Times, March 13). Even mainstream economic experts in Russia now predict a bad combination of stagnation and high inflation, while some cautiously critical opinions dare to suggest that the model of channeling generous funding to the military-industrial complex is unsustainable (Nezavisimaya Gazeta, February 26; Izvestiya, March 10). Russian economists in exile produce even darker forecasts by scrutinizing the discrepancies in the increasingly censored official statistical data (Re: Russia, March 11).

The expectations in Moscow of extra revenues from the spike in oil prices are remarkably muted and further curtailed by calculations of various losses (Forbes.ru, March 11; MK.ru, March 13). For once, the opportunities to increase oil exports are blocked by a series of spectacular Ukrainian strikes on refineries and critical energy infrastructure (RBC, March 13; Meduza, March 14). The United Arab Emirates and other Gulf states were key hubs in supply chains that helped Russian industry circumvent sanctions, and the sharp interruption has caused cascading production chokes (The Bell; Forbes.ru, March 5). Potential investors from this region, whom Kirill Dmitriev, the CEO of Direct Investment Fund and Putin’s special envoy, cultivated for years, now have other concerns, so the severe shortage of investment in Russia’s economy is set to deepen (The Moscow Times, March 13). The tourism industry, for which Dubai was a major destination, has reported significant losses, and recurrent alarm sirens in Sochi, triggered by Ukrainian drones, are scaring away domestic vacationers (Interfax, March 12; Sochi Bloknot, March 13).

These repercussions exceed all possible gains. The intensity of the budget crisis is not alleviated, and steps such as another small cut in the key rate by the Central Bank cannot make any difference (The Moscow Times, March 11; Vedomosti, March 13). This profound economic weakness undercuts Russian attempts to engage in diplomatic intrigues, and Putin’s conversations with the leaders of Iran and the United Arab Emirates, as well as with Trump, have yielded no practical results (Meduza, March 10; President of Russia, March 11). Moscow has persistently tried to position itself as a champion of the “anti-colonial” struggle in the Global South and as a promoter of a new world order shaped by organizations such as BRICS rather than the Board of Peace inaugurated by Trump (Valdai Discussion Club, March 11). [1][1]A loose political-economic grouping originally consisting of Brazil, Russia, India, the PRC, and South Africa. Pundits in Moscow now struggle to explain away the failure of BRICS to take any position on the U.S.–Israel conflict against Iran, which joined the organization in January 2024 (RIAC, March 11).

The efficiency of Russian diplomacy further is diminished by the apparent lack of coordination with the People’s Republic of China (PRC), which has taken a cautious stance on the conflict with Iran (MK.ru, March 9). Beijing is spared the reputational losses that Moscow suffered from the collapse of the al-Assad regime in Syria, the U.S. operation terminating the Maduro rule in Venezuela, and a possible meltdown of the post-Castro regime in Cuba (Novaya Gazeta Europe, March 14). Steadily growing economic base and readiness to invest provide a solid foundation for the PRC’s foreign policy. Russian experts, however, focus on the limitations of this policy in countering U.S. efforts to project military power (Nezavisimaya Gazeta, March 11). Beijing is vulnerable to regional strife that threatens its investments and is reluctant to resort to forceful measures to protect its interests. Still, it is hardly worth learning from Russia’s experience in conflict manipulation (Carnegie Politika, March 5).

Moscow sticks to the view that the Iranian regime will withstand the U.S.–Israeli assault. It is worried, however, that this setback could make U.S. policy more hostile toward Russia’s ambitions (Business Online, March 15). Volatility in global energy markets can boost Russia’s export revenues, but it cannot restore its position as a major supplier and a key influencer in the Organization of the Petroleum Exporting Countries (OPEC+) cartel, because its reputation as an energy superpower is damaged beyond repair by the fallout from its war against Ukraine. The shift of international attention away from this deadlocked and destructive war does not open any new opportunities for Moscow to achieve its maximalist goals, while its capacity for sustaining hostilities is dwindling due to the exhaustion of economic and human resources. The talks on a peace deal are in limbo, but the imperative to end the disastrous war is not weakened—and may even gain new strength from the much-needed opening of new formats and channels.

• Pavel K Baev is a Research Professor at PRIO
• This text is also published by Eurasia Monitor