Vladimir Putin’s spokesman has said Moscow hopes Hungary will continue its economic cooperation with Russia, while warning that Budapest’s recent actions could affect bilateral ties.
Kremlin hopes Hungary will continue economic cooperation
The Kremlin hopes “reason will prevail” in Hungary and that Budapest will continue its economic cooperation with Russia, Kremlin spokesman Dmitry Peskov said on Thursday. His comments came just hours after Russia announced that it was expelling 10 Hungarian diplomats in response to Hungary’s decision in September to expel 10 Russian diplomats.
Peskov said the Hungarian government had so far been cautious and had not taken what he described as “rash steps” concerning economic cooperation with Russia. He said Moscow therefore remained hopeful that the two countries could continue working together economically. At the same time, however, Peskov did not rule out a deterioration in economic relations.
“Unfriendly steps” by Budapest could have an impact on economic cooperation, he said, according to Russian state news agency TASS.
Russia responds to diplomatic expulsions
Hungary expelled 10 Russian diplomats in early September. The Hungarian authorities did not publicly identify the diplomats, but the move came amid concerns over Russian intelligence activity. Russia announced its response on Thursday, ordering 10 Hungarian diplomats to leave the country.
This dispute marks another strain on relations between Budapest and Moscow, although Peskov’s comments suggest the Kremlin does not currently want the dispute to spill over into economic cooperation. The remarks also come against the backdrop of important changes in Hungary’s foreign and energy policy.
Russian oil company still linked to potential NIS deal
According to Telex, Peskov’s comments may also be significant in light of the ongoing possibility that Russian oil company Gazprom Neft could sell its stake in Serbia’s NIS oil company to Hungary’s MOL. NIS operates Serbia’s only oil refinery, and the future of Gazprom Neft’s stake has become complicated by sanctions imposed on Russia. Gazprom Neft has nevertheless remained open to selling the stake to MOL. The deal has not yet been completed.
Meanwhile, Hungary has also been exploring energy cooperation with other European partners. Hungarian Foreign Minister Anita Orbán recently held talks with Latvian Foreign Minister Baiba Braže, with the two countries agreeing to restart foreign and security policy consultations that have been suspended since 2019.
The Russian embassy in Budapest responded with a sarcastic social media post after the talks, questioning whether Hungary had found its “new strategic energy partner” in Riga.
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For whom would such an economic partner actually be of interest? Apart from raw materials—and often low-quality ones at that—the country has nothing to offer.
The financial situation of Russian companies continues to deteriorate. In January–July, they earned a total of 13 trillion rubles, according to Rosstat: this is the difference between the profits of profitable companies and the losses of unprofitable ones. This is the lowest figure since 2020, when COVID-19 lockdowns were in effect, reports The Moscow Times.
Compared to last year, Russian businesses’ earnings fell by 15.7%, and when adjusted for inflation, real profits declined by 21%. For the first seven months, they were nearly half (44%) of what they were in 2021, before the war.
Profitable companies saw their nominal profits decline by 5.3% over the year, while the losses of unprofitable companies rose by a quarter (25.6%). One in three firms is in the red: the share of profitable companies has fallen to 66.6%, nearly the same as in 2020 (65.7%).
Economic growth slowed sharply last year and has nearly come to a halt this year; companies are complaining about low demand in various surveys. They are caught in a squeeze: inflation remains high, costs are rising, but weak demand prevents them from fully passing these costs on to prices, and profits are falling. The desire to raise prices is hampered by difficulties in implementing it due to demand issues, explained economist Dmitry Polevoy.
High wages and interest rates are putting pressure on corporate profits, notes Alexey Klimyuk of Alfa-Capital, while the growing tax burden leaves them with even less money. He believes this is the reason for the decline in investment: businesses lack sufficient capital, and borrowing is too expensive. For this reason, the Institute of Economics of the Russian Academy of Sciences (INP RAN) identified the decline in profits as one of the key risks to the economy this year.
Over the past seven months, wages have risen by 12.2%, or 6% in real terms, according to Rosstat. Strong consumer demand is propping up the economy, continuing to keep it from sliding into a recession, according to analysts at Promsvyazbank.
But it is becoming increasingly difficult to profit from this demand. In the retail sector (excluding automobiles), profits fell by 20% year-over-year. Gazprombank analysts note Russians’ heightened price sensitivity, which “is shifting consumer traffic toward discounters and online delivery”. According to their estimates, discounters accounted for 94% of new retail space opened by the largest FMCG chains in the first quarter.
Meanwhile, investment goods are failing to find buyers due to a decline in investment, says Moscow State University professor Natalia Zubarevich. Sergey Tsukhlo of the Institute of Economics at the Russian Academy of Sciences notes a “complete loss of optimism” among industrial enterprises regarding future production.
Klimyuk points out another consequence of falling profits: companies’ credit ratings are deteriorating, and with them, lending terms. As a result, the number of defaults is rising, he concludes.
Extractive companies significantly increased their profits—by 36%, largely due to rising oil prices caused by the crisis in the Middle East; food and beverage producers—by 34% and 32%, oil refineries, which are profiting from rising fuel prices, and part of the defense industry. Manufacturers of “other transportation equipment” improved their financial results by 61%, while those of “computers, electronic, and optical products” saw a 20% increase.
https://ru.themoscowtimes.com/2026/09/30/pribili-rossiiskih-kompanii-ruhnuli-do-minimuma-s-pandemii-a207467
Fico’s Pro-Russian Government Faces Collapse! This was reported by Reuters.
In Slovakia, there is talk of early parliamentary elections due to the crisis within the ruling coalition led by Prime Minister Robert Fico. This was triggered by the resignation of Deputy Prime Minister and Minister of the Environment Tomáš Taraba.
Along with the opposition, deputies from the Slovak National Party (SNS)—which is part of the governing coalition and had previously nominated him for the position—voted in favor of Tarabu’s dismissal.
Consequently, this situation has cast doubt on the government’s survival one year before the scheduled parliamentary elections.
https://www.reuters.com/world/slovak-coalition-frays-with-ministers-removal-early-election-mooted-2026-09-29/
The Czech Republic is prepared to fulfill its NATO obligations and send troops to assist the Baltic states in the event of a possible Russian attack. This was stated by Czech Prime Minister Andrej Babiš, according to Reuters.
https://www.reuters.com/world/czechs-would-be-ready-respond-attack-baltics-prime-minister-babis-says-2026-09-29/?taid=6abbdaa7aae84d0001b86aba&utm_campaign=trueAnthem:+Trending+Content&utm_medium=trueAnthem&utm_source=twitter
Representatives of the Russian Finance Ministry openly state that additional revenue from tax hikes is being channeled into arming the military and modernizing defense plants.
The Kremlin is urgently seeking funds for military purposes, as the state budget shows a significant shortfall: according to official figures, the deficit stood at nearly 60.5 billion euros in the first half of the year.
By the end of July, the budget deficit amounted to around three percent of annual GDP—nearly double the originally planned figure. Assets in Russia’s reserve fund fell to approximately 1.5 percent of economic output. Consequently, the Kremlin is increasingly borrowing money from domestic banks.
At the same time, GDP growth is losing momentum. After peaking at over 4 percent year-on-year in 2023–2024, the government now expects growth of only 0.6 percent for this year. The economy contracted in the first quarter but recovered slightly in the second, driven by rising oil prices. Thanks to Trump!
Representatives of the Finance Ministry openly state that additional revenue from tax hikes is being channeled into arming the military and modernizing defense plants.
The Kremlin is urgently seeking funds for military purposes, as the state budget shows a significant shortfall: according to official figures, the deficit stood at nearly 60.5 billion euros in the first half of the year.
By the end of July, the budget deficit amounted to around three percent of annual GDP—nearly double the originally planned figure. Assets in Russia’s reserve fund fell to approximately 1.5 percent of economic output. Consequently, the Kremlin is increasingly borrowing money from domestic banks.
At the same time, GDP growth is losing momentum. Following a peak year-on-year growth rate of over 4% in 2023–2024, the government expects growth of just 0.6% this year. The economy contracted in the first quarter and saw a slight recovery in the second.
Consequently, the Ministry of Finance plans to tax the so-called “passive” income of Russian citizens at rates ranging from 13% to 22% in the future. This category includes items such as interest on bank deposits, dividends, returns on securities transactions, proceeds from real estate sales, and payouts from insurance and gift contracts. Currently, the rates for such “passive” income stand at 13–15%.
According to economist Dmitry Polevoy—cited by *Meduza*—extending progressive income tax to earnings from deposits, dividends, investments, and real estate sales could generate an additional 500–700 billion rubles annually for the state budget.
Another initiative by the ministry involves introducing value-added tax (VAT) on purchases made via foreign online stores. Media reports indicate that the top rate of 22% will apply immediately, despite earlier discussions regarding a phased increase.
In addition, a fee of 100 rubles—approximately one euro—is planned for shipments from abroad valued at no more than 200 euros, which are currently exempt from customs duties.
At the same time, Russian media report that the Federation Council is deliberating on higher taxes for the self-employed. Andrey Yepishin, Deputy Chairman of the Budget and Finance Committee, announced that couriers and drivers who effectively work full-time will henceforth be required to pay the standard tax rate of 13%, rather than the 4–6% rate previously applicable to the self-employed.
According to the Ministry’s calculations, these changes will affect approximately 4 million people, or about 2.74% of the population. The Ministry explicitly emphasizes that these adjustments are not intended to reduce the income of military personnel who have participated in the war.
The government is also introducing a “windfall tax” for large enterprises. A 30% levy on excess profits is planned for selected companies in the mining and metals sectors, while the rate for gold producers is set at 20%.
https://minfin.gov.ru/ru/press-center?id%5F4=40635
Russian writer and “Z-patriot” Zakhar Prilepin has accused the Kremlin and the oligarchs close to it of reviving Nazi ideas in Russia. He made this sensational statement in an interview with the Russian propaganda outlet Delb.
Prilepin predicts a civil war and a “bloody battle” in Russia due to the rise of this dangerous ideology.
“We are heading down this path… Certain financial groups are pouring enormous resources into the nationalist, xenophobic movement in Russia. It is being pumped, and pumped, and pumped with money, and is supported from certain offices within the administration (of the President of the Russian Federation-ed.) and receives a constant financial infusion. This is treason against the country; for some, it’s also sheer stupidity: people on the ground simply don’t understand what’s happening. But for others, it’s profitable: they know exactly why they’re doing it, and they don’t even try to hide it… “Keep an eye on their posts—they’re die-hard fans of Franco, Mussolini, Pinochet, and all that right-wing scum. They constantly appeal to them, refer to them, reminisce about them, and quote them,” said the Z-patriot.
This last comment you provided about the Nazification of Russia is what we have been observing for some time. It truly is straight out of George Orwell when they act as complete Nazis while they say they are seeking to root out Nazis in Ukraine. What Russia is doing to thousands of Ukrainian children which they kidnapped and took to Russia is absolutely horrifying. They are indoctrinating them with Russian hatred of Ukraine, punishing them for any disobedience and preparing them to fight against their own people. Meanwhile Putin has mandatory propaganda lessons for all school children to instill hatred of Ukraine and desire for war. Some elementary school children are made to parade around with toy machine guns.
And that is not all; the business sector is being saddled with additional costs that are essentially unsustainable. Companies are certainly not happy when they are posting nothing but losses and eating into their capital reserves.
Putin has effectively shifted the cost of protecting businesses from Ukrainian drones onto Russian companies. Companies that are unable to ensure the security of their facilities risk having the government take over their operations, according to Financial Times.
In late August, Putin signed a decree authorizing the imposition of “temporary administration” at critical infrastructure facilities that are not protected against drone attacks. Three days later, the government established a special commission to implement the new rules.
A former Kremlin official told the FT that the initiative came from the military and intelligence services. “They complained that businesses were sitting on their hands and didn’t even want to lift a finger. Putin agreed,” the source told the publication.
After the decree was issued, the number of companies seeking help from drone defense specialists rose sharply. According to expert Vyacheslav Plaksin, demand increased roughly fivefold in a short period of time.
Another problem for businesses is the cost of such protection. For one company, the system cost 220 million rubles, and an entrepreneur from a border region told the FT that he spent over 1.5 billion rubles on air defense systems.
At the same time, there are still no clear rules regarding exactly which facilities should be protected and by what means. Many electronic warfare systems require special permits.
The Kremlin’s new powers are raising concerns among business owners that they could be used to seize assets. “This has become yet another new tax,” says Alexandra Prokopenko, an expert at the Carnegie Russia Eurasia Center.
According to the FT, Moscow is effectively asking businesses to foot the bill themselves for the increasingly expensive defense against the war that Russian authorities are waging against Ukraine.
https://www.ft.com/content/957f68f9-9f74-4857-9773-d3be3ef3f305
Details of a conversation between U.S. CIA Director John Ratcliffe and representatives of Russian intelligence agencies recently surfaced in the global media. According to the authoritative German publication Frankfurter Allgemeine Zeitung, John Ratcliffe clearly explained to the Russians that, as a result of Ukraine’s far-reaching sanctions and massive military spending, the Kremlin’s economy faces a collapse similar to that experienced by the Soviet Union as a result of the Cold War.
Thanks to our systematic efforts, the enemy’s revenues are shrinking, while its war expenditures are rising. In terms of the share of military spending, Russia has long since caught up with the Soviet Union: this year, the “national defense” budget accounted for 30% of all spending. It is worth adding here that the Russian Ministry of Finance has allocated a record 35% for next year’s budget.
Bloomberg reveals Putin’s long-term war plans: The Kremlin is budgeting for record-high spending.
Russia plans to spend 17.1 trillion rubles (205 billion US dollars) on military purposes in 2027. This represents an increase of more than 40% over planned spending for 2026 and nearly 380% more than in 2021—the year before the war began.
According to the report, the new budget indicates that Moscow is preparing to continue the war in Ukraine over the coming years.
Russia’s military spending is projected to reach 16.6 trillion rubles in 2028 and 16.3 trillion rubles in 2029. Thus, following a sharp rise in 2027, only a slight decline in expenditure is anticipated.
This marks a significant departure from Moscow’s plans just a year earlier. At that time, Russian authorities had hoped to curb the growth of military spending, reduce the budget deficit, and replenish reserves depleted by the war.
Bloomberg notes that the new budget is being drafted against the backdrop of US-brokered negotiations that are effectively at a standstill, while Russia continues to launch attacks on Ukrainian cities and infrastructure. So much for the Russian dictator’s willingness to negotiate or pursue peace.
At the same time, Klug—an analyst at the German Institute for International and Security Affairs (SWP)—observed that the increase in military spending alone does not prove Russia is preparing for a direct war with NATO. In his view, the main reason for the increased spending lies in the changing nature of the war—specifically Ukrainian attacks on targets deep within Russian territory—which are forcing Moscow to increase defense spending.
https://www.bloomberg.com/news/articles/2026-10-02/russia-s-spending-plans-show-putin-preparing-for-years-of-war