Trump urged to call Putin’s bluff as peace talks stall and Russia’s economy weakens

With a peace proposal backed by the United Kingdom, France, Germany and Ukraine circulating among allied capitals, leaders are pressing for an end to the war in Ukraine. The plan, drawn from Russia’s own documents, has yet to translate into a breakthrough because Moscow has withheld public statements about what it could accept or reject. After a five-hour session with Special Envoy Steve Witkoff and Trump’s adviser Jared Kushner, Vladimir Putin has not publicly defined purchasable terms, and foreign officials warn that the gap between the two sides remains wider than ever. Ukrainian President Volodymyr Zelenskyy has signaled a willingness to negotiate and make concessions, but insists that any deal should preserve Kyiv’s sovereignty and security. The United States has framed the plan as a starting point, not a final settlement, yet some European governments view it as tilted toward Moscow, complicating diplomacy on the ground.

Trump has said Russia is “much stronger” than Ukraine, a view that appears at odds with the realities of the war and the Western coalition’s support for Kyiv. The dialogue reflects a broader misperception among some officials about Moscow’s leverage: while Russia controls much of the Donbas area and has vast land, much of its territory is uninhabitable and its economy has eroded under sanctions. The war has exposed a mismatch between rhetoric and capability, and experts warn that Moscow’s strategy—delay, confusion, and the imposition of harsh terms—has repeatedly stalled negotiations without yielding durable gains. The response to the peace plan thus far underscores a stalemate fueled by divergent goals: Ukraine seeks secure borders and international guarantees, while Russia appears to push for concessions in areas that would redefine the conflict’s boundaries.

Ukraine’s leadership, for its part, wants negotiations to begin from a position of strength, but is not opposed to compromise if it preserves territorial integrity and sovereignty. Yet the plan’s terms—such as land concessions in Ukrainian-held territories, security assurances, and autonomy over military capacity—remain highly contentious. The question for Kyiv and its Western backers is whether a negotiated settlement can be constructed without conceding critical leverage on strategic capabilities or material assets, including minerals and energy infrastructure. Zelenskyy’s team seeks a credible seat at the table and meaningful international guarantees, while Moscow has shown a willingness to test the limits of Western patience and resolve.

From an economic vantage point, the conflict is pulling the rug out from under Moscow’s war economy. Official forecasts for 2025 place Russian GDP growth only around 0.6% to 0.9%, with long-term growth projections trimmed from earlier expectations. In reality, the output is increasingly oriented toward temporary wartime needs—ammunition, uniforms, fortifications—rather than investments in productive capacity. The economy is increasingly dependent on oil and gas revenues that are under pressure from sanctions and shifting demand, and the government’s fiscal position has deteriorated significantly. Russia’s 2025 budget deficit is projected to reach roughly ₽5.7 trillion ($72.5 billion), about 3% of GDP, up from earlier targets. Through the first eight months of 2025, the deficit ran at ₽4.2 trillion, a fourfold increase from the same period in 2024. Defense spending remains a heavy share of fiscal outlays, estimated at 6% to 8% of GDP, and combined with internal security, it accounts for a sizable portion of the budget. The Stockholm International Peace Research Institute recorded a total Russian military spend of ₽15.5 trillion ($195 billion) in 2025, marking a 125% rise since 2021.

The balance sheet is further strained by deteriorating external finances. Russia’s National Wealth Fund has shrunk from about $115 billion in January 2022 to roughly $35 billion by mid-2025 as reserves dwindle and trade pressures mount. Although the ruble has strengthened by about 46% so far in the year, that movement reflects policy measures—capital controls, high interest rates at 16.5%, and forced sales of foreign exchange by exporters—rather than an underlying improvement in economic health. Energy revenue, which accounts for a majority of federal income, is collapsing under sanctions: Goldman Sachs estimated oil export revenues falling by about 50% in the current year, with gas revenues also down by about a quarter from targeted levels. The impact extends to energy infrastructure: Ukraine’s drone operations have damaged key oil facilities and reduced refining capacity, and Rosneft has cut processing output by more than a fifth since mid-year. An enormous stockpile of roughly 350 million barrels of Russian oil sits in tankers, awaiting markets that have not fully reopened to sanctioned sales.

International trade remains deeply unbalanced. China accounts for roughly 30% of Russia’s exports and 50% of its imports, while Russia’s share of China’s trade is far smaller—3% of exports and 5% of imports—leaving Moscow exposed to policy shifts in a partner nation that has not aligned with Western sanctions. Other states—Turkey, the United Arab Emirates, Kazakhstan and Armenia—have emerged as hubs for circumventing restrictions, but often at elevated costs. A hollowing-out of manufacturing capabilities—autos, aviation, semiconductors—has accompanied sanctions, further constraining Moscow’s long-term prospects for growth.

The war economy has exacted a heavy human toll and weakened Russia’s broader economic base. An estimated more than a million Russian workers have left civilian jobs since 2022 through mobilization or emigration, many of them young, educated professionals. Enlistment bonuses, once generous enough to attract recruits, have been slashed from above ₽3 million to the federally mandated minimum—about ₽400,000 (roughly $5,000). In short, Moscow’s wartime mobilization is straining human capital and compressing the country’s potential for recovery even if the fighting abates. The daily realities of a war-driven economy—high defense spending, constrained growth, and fragile access to international finance—underscore the risks of a protracted stalemate.

Against this backdrop, the West’s position remains stronger than some assess. The alliance has a range of economic and political tools that could endure beyond the cessation of hostilities, but success depends on the readiness to wield them persistently. The United States and European partners have repeatedly signaled they will not entertain a settlement that surrenders core principles of borders, sovereignty, and security. The challenge is to translate this resolve into a negotiating posture that can produce verifiable terms on the ground while deterring any future aggression. The question is whether Washington will act with the strategic patience and willingness to deploy leverage over time, rather than seeking a rapid, ceremonial end to hostilities that might merely postpone a broader conflict.

This is not merely a contest over lines on a map. It is a test of whether Western democracies will defend the rules-based order they built after World War II. The calculus is stark: the West has more cards than Putin and Trump appear to acknowledge, but those cards are only as valuable as the will to play them. If Washington and its partners align on a path that preserves Ukraine’s sovereignty, deters future aggression, and constrains Moscow’s ability to sustain a prolonged war, the odds of a durable resolution improve. The coming weeks will show whether Trump’s approach to the peace proposal—and his broader read of Moscow’s true strength—will adapt to a reality in which Kyiv, not Moscow, may hold the leverage needed to shape the next phase of the conflict.