Don's Weekly, 29 December 2025: Part 1
by Donald Hill (intro, bits & pieces by Tom Cooper)
Hello everybody!
It’s Monday and thus the time to interrupt my ‘vacation’, and update us on what’s going on.
…where, that with ‘vacation’ is relative. Not only am I all the time at home and, actually, working (even if ‘slower and less than usually’), but one can’t avoid this war no matter where one goes or what is one doing.
…and so, a few days ago, ran into an Ukrainian and, of course, became involved into a vivid chat about this war. At some point in time, and a bit fed up of all the daydreaming and wishful thinking coming my way, have recalled something I have got to hear quite often, some 40 or so years ago…
Back in the 1980s, during the Iran-Iraq War (now hold on, racists: keep quiet and read to the end), the commentary from ‘the West’ was always something like:
‘pity both of them can’t lose’.
I.e. ‘the West’ was considering it ‘ideal’ for both Iran and Iraq not only to remain bogged down in that war, but was hoping both would lose it, too; ‘the West’ was thus also ‘pulling strings correspondingly’ (in the background, of course)…
‘Adjusted for inflation’, in the case of the war War in Ukraine, and from the standpoint of our glorious governments and oligarchy, things are something like this:
‘pity both of them can't lose, but fine if Russia is bogged down in Ukraine: now just don't enable Ukraine to win, please’…
At that point in time, the discussion was over: at least my vis-a-vis was disgusted by this conclusion - even though, apparently, realising it’s ‘on the mark’…
Read: it remains extremely hard to explain Ukrainians presently not in Ukraine (and especially: those NOT serving in the ZSU), that Ukraine could stop Russia ‘with ease’ - if its leadership wouldn’t be both as incompetent and as idiotically corrupt as it is. That ‘quality management’ would result in a far more effective use of what Ukraine has got; in far better training of the ZSU; in magnitudes-better treatment of ZSU-troops - and thus no mass-defections (mind: the ZSU had next to no defections back in 2022 and has stopped the Russians, two times; once in March and once in July). Alas… that thanks to Syrsky and his idiots, the ZSU is currently melting away at some 25,000 troops a month (without combat losses).
…also that all the time expecting ‘others’ to save Ukraine, and complaining if/when they don’t, while Ukrainian government can’t care about anything else but how to enrich itself - is simply no solution. Not even if ‘the West’ would be providing help in an ‘all out’ fashion. Actually (and hand on heart), thinking that way is almost as stupid as that government is.
Curiously, on the same day, and in an ‘online discussion’ with Ukrainians in Ukraine, I’ve been congratulated for such standpoints (though, and especially, when concluding I’ve ‘developed an allergy’ to both Zelensky/Yermak and Syrsyk/Budannov, and can’t hear either name any more)…
So… have had my shot at the ‘Gangs of Kyiv’ for today, so can ‘return’ to ‘military affairs’. Over to Don.
The Russian Economy
The Russian economy has been overly dependent on energy exports and the volume of its exports allowed it to weather many events. With the sanctions, oil revenue has been so low for so long that it can no longer sustain the economy.
A ‘Repo’ is an economic tool central banks can use to regulate the supply of cash. It is similar to a short-term interest-bearing loan against specific collateral. A Repo loan can last one day or be open-ended. The Russian central bank is using the Repo market to inject cash into the economy.
(Left) Commercial banks are borrowing money from the central bank at an increasingly high rate. These debts are increasingly difficult to pay back, so the debt load and the risks associated with them continue to increase.
(Right) The government is spending more money than it is taking in. Its deficit is growing. The ratio of domestically-owned debt compared to foreign-owned debt is increasing, meaning the risks are increasingly held within Russia.
An economy is strongest when money is moving around: A company pays the employees. The employees buy food and houses and spend extra “free money” on entertainment and other non-critical products. The businesses that provide these goods and services pay their employees. The companies/businesses and their employees are all paying taxes. The government collects taxes for revenue and either buys from the same-, or from other factories, plus is investing into education and health…
(Left) There is less “free money” in the economy. After buying essentials, the average Russian household has almost half the money available that it did two years ago.
(Right) Withdrawals on bank deposits are increasing. It isn’t enough to cause a collapse, but it indicates a lack of trust in the system.
Production of machinery, vehicles, construction materials, appliances, and equipment has been decreasing throughout 2025 and the rate of decrease was even higher in November. With diminishing production there are fewer sales, less use of the products, less money to pay employees and other businesses, less money for the employees and businesses to spend and less money for the government to tax.
The Ministry of Finance is now more concerned about how much cash is flowing in the economy than the debt and the interest of that debt. It is not focusing on long-term issues because of the severity of short-term issues.
“Russia’s economy is alive but fragile. The buffers from 2022 are gone. Trust, liquidity, and confidence are now holding together a fragile system teetering on the brink. In this state, one major shock wouldn’t be absorbed, it would push it off the edge.”
Russia vs Ukraine
Russia’s economy is still functioning, but cannot be sustained in this manner indefinitely. They do not have an infinite amount of men but have been able to send a steady supply to Ukraine. At some point, the flow of manpower will be reduced or Russia will need to take extraordinary measures to secure the manpower, but no one has predicted when that might be. They are paying for the present with their future, but their present could still last for another year or two.
Ukraine’s economy cannot function without foreign aid. There is a plan for Europe to fund it until 2027. After that, it will become more expensive and test the will of the EU. Ukraine’s manpower shortage is critical. Their senior military leadership increases the manpower problem with the choices they make. Their ammo and equipment resources are improving with time. Western sanctions and Ukrainian long-ranged attacks in Russia are Ukraine’s best option to eliminate the Russian threat and with attrition to Russian air defenses and the Ukrainian long-ranged increasing, the rate of destruction will increase.
Russia will not occupy the entirety of Ukraine by military force. It’s just a question of how much territory will be destroyed and how many Ukrainians will be killed or wounded. Wars are always a battle of wills, and this one pits the will of Ukraine and its allies to sustain its economy, versus the amount of damage they can do to the Russian economy until it collapses.
Conclusion is obvious: at some point in time, the Russian economy is going to collapse. This is unavoidable also because of another obvious reason: Pudding has invested everything at his disposal - all of the Russian armed forces, all of the Russian manpower, all of the Russian economy, all of the Russian contacts abroad, and all of the Russian capability to vage an informal war against ‘the West’ - to win this war. Except for his nukes, he’s not holding back. All of his cards are on the table. Ukraine is fighting with one hand ties to its back - by its very own government (by the virtue of the same being both incompetent and deeply corrupt… just mentioning this for the case I didn’t mention it yet… today). And another tied behind its back by ‘the West’. Which is why it ‘has got no cards’.
Problem: if Ukraine - and especially the Ukrainian armed forces - collapse, literally, ‘whether 5 minutes or 2 days before Russia does so’ (and that’s another affair in this conflict where mathematics is speaking a very clear language), Pudding has won this war.
(…to be continued…)
“Russia will be helping [with Ukraine’s reconstruction]. They want Ukraine to succeed, including providing power at very low prices.”
Thus spake the President of the United States after the recent press conference.
A number of people who know about these things have evidence that Trump has been a Kremlin asset since the 90s; as the man is totally amoral and utterly shameless, I imagine their 'hold' is actually quite pragmatic: 'Russia is very rich, and we must work together so that you are very rich too', an approach which would have appealed to him.
Putin reiterates every chance he has that Russia will only be content with the total destruction of Ukraine as a sovereign state. Of course he wants to help Ukraine's reconstruction if it's a vassal state providing cheap power to Russia, and the deal he and Trump will make will be based on how much each of them can make out of it. The wishes of the Ukrainian people and European allies have always been irrelevant. Including the current leadership of the Ukraine in the enrichment process makes absolute sense - but the 'peace' thus claimed could well trigger another Maidan, this time led by a hardened and practised army finally rejecting its incompetent leadership.
Who knows? But it's hard to remain optimistic when so many factors undermine the will of the Ukrainian people: the need for fundamental organizational reform of government and armed forces; the hugely successful Kremlin campaigns of disinformation throughout allied countries; a 'leader of the Western world' more akin to rotting lettuce than a visionary statesman; and a fundamental failure in European courage to face down the clear and open threat posed by Putin and his secret police/gangster pals.
Thank you, Tom and Don, for your unceasing and insightful analysis.
Your summary is unfortunately right on target. If Ukraine collapses first then Putin wins. And vis versa. So let’s continue our support and put pressure on our politicians to do the same.