The Russian economy has been on a wild ride since the start of the war. After the initial shock and a brief recession, it rebounded sharply into positive territory thanks to significant government stimulus in the form of military spending, which spilled over into related industries.

However, this effect is wearing off and economic growth is heading towards zero. The International Monetary Fund expects it to reach a sluggish 0.6 percent in 2025, similar to the stagnant economy of the eurozone over the past three years, with forecasts for the coming years not much more positive.

Thanks to the fact that price growth there has slowed down since the spring, the Russian central bank has been able to afford to lower interest rates. However, at 16.5 percent, interest rates are still too high to kick-start further economic growth. The Russian business community is saying that interest rates must fall below 14 percent in order to stimulate investment and consumption (which is not subsidized by the state).

Increasing production will not be easy either due to the shortage of labor, which Russia is seeking in the surrounding developing countries of the former Soviet Union. In this regard, gradual demobilization would help in the event of peace, but it is questionable how successfully war veterans would be able to find employment with their skills in the labor market.

Further fiscal stimulus from the state is out of the question. Not only would it be inflationary, but the Kremlin's resources are increasingly limited.

While it initially benefited from the sharp rise in oil prices, this source is now drying up. The latest US sanctions on Lukoil and Rosneft, which deter buyers in India and China by threatening to cut them off from the US financial system, are unpleasant, but there are several loopholes in the mechanism for circumventing them.

The main problem in the coming months is the global decline in oil prices. This is mainly due to the slowdown in the global economy, which goes hand in hand with weakened demand for energy sources. However, the supply of black gold has also grown, as we recall Trump's "drill baby, drill" and OPEC's decisions to increase export limits.

Moscow is thus forced to bail out its budget with new taxes if it does not want to draw on the last assets of its National Wealth Fund. This is evidenced by the upcoming change in VAT, which will jump from 20 to 22 percent, while political circles are talking about stabilizing spending instead of increasing it.

Ordinary people are gradually beginning to feel the effects of the invasion of Ukraine and all the factors slowing down the Russian economy that have resulted from this war. The Kremlin can afford to continue, but the benefits of the stimulus have expired. Moreover, a significant part of the production that the state managed to increase for a certain period of time through spending ends up destroyed on the battlefield and does not serve to raise living standards.

Peace that would fulfill Russia's basic goals in Ukraine thus appears to be an increasingly advantageous option.

On the other hand, experts point out that even the end of the fighting, demobilization, and the reorientation of industry toward the production of everyday goods or dual-use goods and the lifting of sanctions will not save Russia. Some even argue that the local economy will have to go through a recession in the first few months.

Well-known independent Russian economist Vladislav Inozemcev states that although peace will not mean immediate prosperity, after the end of the war, the Russian economy would "certainly fare better than during its continuation."

The clock is ticking much louder for Ukraine

In summary, Russia is open to peace, perhaps even inclined towards it, but not so much as to ask for peace and sign a document that is disadvantageous to it. Kyiv must find out where the Kremlin has drawn its red lines and, ideally, stop its demands just before reaching them.

However, it is already clear that NATO membership or the presence of allied troops in Ukraine will be ruled out. Similarly, the cession of conquered territories in four areas that Russia considers its own.

The question of Ukraine-controlled territories in Donbas and their legal status may still be open, but the initial US proposal for a demilitarized zone under Russian administration was not so disastrous for Kyiv.

While Moscow can play a patient game, the clock is ticking louder for Kyiv. In recent weeks, the front line in the Zaporizhzhia region has shifted significantly. It has moved inland towards another key town, Hulajpole.

The strategic Pokrovsk has essentially fallen, Myrnohrad is cut off from supplies, and the Russians have opened the way to Kramatorsk and Sloviansk, two cities in the Donetsk region still controlled by Ukraine (together with the fortified belt, these are probably the main reason for the diplomatic struggle over the rest of Donbas).

Moreover, the breach of the defenses at Pokrovsk has weakened the Ukrainian fortification belt, raising the question of whether the front will shift more significantly in the coming weeks and months than it has during the course of this year.

This news comes shortly before the onset of winter, which is expected to be particularly harsh. The Russians are essentially sparing no energy infrastructure except for nuclear reactors. The most pessimistic estimates speak of power outages of around 20 hours a day. This means not only a freezing population, but also stagnating (military) production.

It is therefore not too far-fetched to imagine that within a year or two, the Russians will conquer the rest of Donbas by force and the demilitarized zone will be a thing of the past.

Moreover, Kyiv must tread very carefully, as it could easily lose its strongest ally, and its European allies are unable to fully replace it.

Finally, local political leaders are also at risk of losing public support due to corruption scandals.

Ukraine has nothing to wait for, because even the "pro-Russian" American proposal is better than what it will achieve if it continues to hold on to the battle axe.

If European leaders want to help themselves and Kiev, they will not come up with counterproposals that are far beyond Moscow's red line (the possibility of Ukraine's membership in NATO).

Otherwise, they will have to continue financing a war that is already lost and risk that the United States will completely lose patience and wash its hands of the conflict for good—just as other powers such as China and India did long ago. The war with a world power will remain a European problem.

Moreover, as sunk costs skyrocket, it will become much more difficult for local leaders to admit and explain their strategic mistakes and misunderstanding of the reasons behind Russia's actions. And this will once again lead to foolish ideas that could fuel a conflict of global proportions.