Russia’s Greater Resources Are Beginning to Decide the War as the Battle Moves to the Cities

Four years after the full-scale invasion, the decisive contest is spreading beyond the trench line. Russia and Ukraine are increasingly attacking the systems that allow the other country to continue fighting: electricity, fuel, ports, transport, industry, finance, air defence and political cohesion. Russia possesses greater domestic depth. Ukraine has answered by constructing an extraordinary military-industrial ecosystem tied to European finance and production. The eventual settlement may therefore be determined less by who captures the next village than by which state can replace what modern warfare destroys.

South of Sloviansk and Kramatorsk, the map moves reluctantly. Russian troops advance through fields, tree lines and ruined settlements while Ukrainian forces build fortifications, move reserves and try to keep roads open. Every few days another village appears in military maps,accompanied by arrows extending a little farther towards the remaining Ukrainian-held cities of northern Donetsk.

Seen on a map, the progress can look either inexorable or insignificant, depending upon the scale chosen. one of Russia’s largest military-analysis Telegram channels and hardly a source inclined to minimise Russian advances, recently offered a more useful description. It cautioned that talk of a breakthrough towards the Sloviansk-Kramatorsk agglomeration remained premature. The more immediate danger to Ukraine, it argued, lay in the gradual approach towards the transport and logistical nodes upon which the defensive system depends.

Russia does not need to enter Kramatorsk tomorrow for conditions inside Kramatorsk to deteriorate. A road brought within drone range, a petrol station destroyed in Sloviansk, an electrical substation damaged behind the line, a warehouse hit farther west or a railway connection made progressively more dangerous can all weaken a defensive position before the front itself gives way. The struggle is increasingly over the machinery behind the army.

The battlefield is moving backwards

Follow Russian military reporting through recent weeks and the pattern becomes difficult to miss. They have recorded strikes on petrol stations in Sloviansk, Balakliia and Kherson; sustained attacks against ports around Odessa and Chornomorsk; warehouses and vehicles in Sumy and Chernihiv; substations; fuel-storage facilities; grain and oil terminals; ships; and military logistics. Its reporting has increasingly described a systematic campaign against the infrastructure that allows Ukrainian forces to be supplied and cities behind the front to continue functioning.

Aanother large Russian military channel, has similarly reported attacks on substations and other infrastructure supporting the Kramatorsk-Sloviansk defensive area, while Russian military reporting more broadly has described repeated strikes on railway and logistical infrastructure farther behind the front. These are Russian claims and should be read as such; they do not independently establish the damage inflicted at every target. They do, however, reveal what Russian military commentators believe the campaign is trying to achieve.

Russia has attacked Ukrainian energy infrastructure for years, so none of this is wholly new. The more consequential development is the apparent integration of those attacks with pressure at the front: transport nodes, electrical supply, storage and fuel distribution are being treated less as collateral elements of the war and more as operational targets in their own right.

The same transformation is visible in reverse, repeated Ukrainian attacks on oil refineries, energy infrastructure and logistics centres deep inside Russia. Russian military bloggers have complained of the difficulty of defending a vast industrial and commercial rear against relatively inexpensive long-range drones, while other channels have recorded attacks against Crimea, refineries, warehouses and large distribution facilities. Both sides have therefore converged on a similar premise: the opponent’s rear is no longer safely behind the front.

The map is a lagging indicator

This creates a problem for the way the war is normally reported. Territory is wonderfully visible; power-grid resilience is not. A village can be coloured red or blue on a map, while the deterioration of a railway network, the availability of diesel, accumulated transformer losses, shortages of trained technicians, the weakening of an air-defence network or the financial burden of replacing all of them simultaneously are harder to represent.

As Russian forces move closer to an urban agglomeration, drones require less time and distance to reach roads and depots behind it. Logistics must operate under greater protection. Headquarters disperse. Vehicles change routes and schedules. Fuel has to be stored differently. Repair facilities move farther from the fighting. None of these changes necessarily produces an immediate territorial collapse, but together they alter the conditions under which a defensive line can be sustained.

Ukraine has built a war economy of extraordinary scale

The Russian argument holds that Ukraine possesses almost no domestic capacity and survives only because foreigners keep it alive. Ukraine’s own figures make that claim difficult to sustain. Since 2022, the country’s defence-industrial transformation has been remarkable, and the Ministry of Defence says that 95 per cent of the drones procured for its armed forces are now Ukrainian-made.

Autonomous interceptor drones have undergone combat testing, and Kyiv has begun allowing selected partners to train military AI using real battlefield data. The resulting ecosystem bears little resemblance to an army passively receiving foreign equipment. Battlefield experience produces data, data changes designs, soldiers choose equipment through digital procurement systems, successful designs attract contracts and international partners begin manufacturing Ukrainian systems abroad.

Canada and Norway are participating in joint production of Ukrainian drones, while Germany and Ukraine have signed agreements covering air-defence technology and unmanned ground vehicles. Ukraine is therefore creating a form of strategic depth through technology, co-production and integration with much larger foreign industrial bases. The strength of that model is real, but so is its dependence on the financial and political system surrounding it.

The externally financed state

Those numbers measure both determination and dependence. The increase became possible partly because European financing for 2026 provides tens of billions of euros, including a very large component directed towards defence and security.

Ukraine remains a functioning economy with a formidable domestic defence sector, and there is no immediate reason to assume that European support will disappear. The strategic consequence is subtler. A substantial part of the civilian state’s ability to reproduce itself from year to year now rests on financial decisions made beyond Ukraine’s borders. Teachers, pensions, healthcare, reconstruction and government services, as well as increasingly large parts of defence procurement, depend upon an international financial architecture surrounding the Ukrainian state.

Russia’s depth has a price

Russia confronts a different problem. Its advantage lies in depth rather than unlimited wealth: a much larger domestic economy, the ability to borrow in its own currency, substantial energy resources and an industrial system that can be redirected towards military production without requiring annual approval from an external coalition.

The burden of sustaining that system is nonetheless increasingly visible. Russia’s 2026 budget allocates approximately 12.93 trillion roubles to national defence, close to 29 per cent of federal expenditure, while national security and law enforcement add another roughly 3.91 trillion roubles. By the end of June, the federal budget was already running a deficit of about 5.73 trillion roubles, equivalent to roughly 2.5 per cent of GDP and considerably above the original annual trajectory. First-half expenditure reached about 24.35 trillion roubles, around 16 per cent above the equivalent period of 2025.

Oil and gas revenues, historically central to Russian public finances, fell sharply year on year in the first half. Russian industrial output has weakened but remains broadly intact, while the central bank has begun reducing interest rates from exceptionally restrictive levels. At the same time, Russian officials and economists increasingly acknowledge weaker demand, fiscal strain and disruption in parts of the fuel market.

Taken together, those indicators describe an economy carrying a very large military burden without yet approaching systemic breakdown. That matters because the strategic comparison is not between an untouched Russia and an exhausted Ukraine. Both states are absorbing significant damage. The difference lies in the resources available to replace what is being lost and in the political structures through which those resources are mobilised.

Moscow retains greater internal capacity to finance the war, while Kyiv has access to an external coalition whose combined economic weight is vastly larger than Russia’s. The competition is therefore between two different forms of depth: Russia’s domestic mass and Ukraine’s integration with a broader international system.

Ukraine as a transnational military state

Ukraine was generally imagined as equipment flowing from one sovereign military system into another. That model is disappearing. Ukraine is becoming entwined with European and North American defence production at the level of factories, software, procurement, testing and intellectual property.

A Ukrainian system can now be designed in Kyiv, improved through battlefield feedback in Donbas, manufactured partly abroad and financed from European budgets. Ukraine’s Defence City programme gives special regulatory treatment to dozens of defence manufacturers; by late July, the Defence Ministry reported 45 participating companies with more than UAH93.5 billion in qualifying arms revenue.

Territorial compromise, neutrality, security guarantees and the future relationship with NATO or the European Union cannot remain indefinitely separate from questions of domestic legitimacy. Russia faces a different political problem. Its military Telegram channels regularly contain criticism of command, air defence, procurement and bureaucratic inertia, usually from writers who want the war prosecuted more forcefully rather than abandoned. Such criticism does not amount to a peace movement, but it does show that prolonged war is altering institutions and expectations inside Russia as well as Ukraine.

Both states are militarised, though through very different political and economic arrangements. Ukraine’s transformation is bound increasingly to European finance and transnational defence production; Russia’s is rooted in domestic mobilisation, fiscal reallocation and an expanding military share of the state.

Russia is stronger

Taken together, the military, industrial and fiscal evidence points to a Russian structural advantage in a prolonged war of attrition, though it is neither costless nor unlimited. That advantage rests less on spectacular battlefield performance than on population, territory, industrial capacity, domestic financing, energy resources and the ability to sustain the state without annual approval from an external coalition.

Ukraine has compensated for that asymmetry extraordinarily well.

The compensation mechanism nevertheless contains an unavoidable dependency. European money can sustain Ukrainian institutions and expand weapons production, but it cannot readily replace every kind of loss. Experienced soldiers, damaged electrical infrastructure, depleted formations and demographic decline cannot be replenished as simply as a budget line. Russia’s vulnerabilities run in the opposite direction: Ukrainian strikes can damage refineries, logistics hubs, energy facilities and commercial infrastructure at increasing distances, while defence spending consumes a very large share of the federal budget and fiscal pressure continues to rise.

So far, however, those Russian pressures have not reached the point at which Moscow appears forced to choose between sustaining the war and sustaining the state. Ukraine is closer to that boundary because the two are already financially inseparable, even as its domestic defence industry becomes more capable.

This is why the slow movement around Kramatorsk matters without necessarily being decisive in itself. The fate of the city will depend partly on what happens in the fields and defensive lines around it, but also on roads, electricity, fuel, replacements and factories much farther away. The map may eventually show when the balance changed. It may not show where it changed.