The Crisis of Effective Contracts: Why the Kremlin's calculated balance of manpower did not become a formula for victory, and why this is unlikely to be rectified in 2026
The contract-based model for replenishing the Russian army, which over the past two years has allowed the Kremlin to conduct intensive offensives without regard for high battlefield losses, now appears to be approaching a crisis, or at the very least shows clear signs of exhaustion.
In recent weeks, eight Russian regions have sharply increased enlistment bonuses for new recruits (the steepest rise since early summer), while in three other regions, payments have been reduced several times over. In reality, since it is possible to enlist as a contract soldier outside one’s actual region of residence, an effective 'war contract' is ensured by 20–25 regions offering the highest payments. Their composition changes over time, allowing costs to be spread across more regions. A year ago, the average one-off bonus across 24 leading regions was 1,230,000 roubles; by June 2025 it had risen to 1,950,000 roubles, and by mid-October it approached 2,170,000 roubles. In other words, the cost of an effective contract has increased by 75% over the year and by 30% over the past four months.
This burden is becoming increasingly felt at the regional level, although only around half of the regions, that is those with higher budgetary capacity, participate in the system. Reduced corporate tax revenues and high interest payments are driving deficits in regional finances, and next year, against a backdrop of significant fiscal strain at all levels, contract bonuses could become an almost critical burden.
However, the main indicator that the model is failing is the extremely limited success of the Russian army on the battlefield. By all calculations, difficulties in mobilisation in Ukraine, despite steady Russian reinforcements of around 35,000 personnel per month, should have led to a two- to threefold advantage in manpower and a qualitative turning point in combat operations. Yet this has not happened. This suggests that the drone defences (the so-called drone wall) employed by the Ukrainian army are 'grinding down' Russian commercial reinforcements. The Kremlin’s calculated balance of manpower has not become a formula for victory.
For success on the front line next year, the Kremlin would need to increase monthly reinforcements to at least 45,000 personnel. Given current trends, achieving this would require more than doubling the enlistment bonus. This appears unlikely under current budgetary conditions. Consequently, the Kremlin is considering alternative forms of compulsory mobilisation. Expanding the draft age limit to 30 and tightening control over compliance could open up certain possibilities: the Kremlin might allow conscripts of older ages to be sent to the front.
Bonus swings: how the effective commercial ‘war contract’ system works and what it costs
In October, enlistment bonuses from the Ministry of Defence rose noticeably again in some Russian regions. Since the end of September, they have increased sharply in eight regions, most significantly in Voronezh (from 505,000 roubles to 2.1 million), Tyumen (from 1.6 million to 3 million), and Tomsk (from 2 million to 3 million). Such waves of increases are, however, nothing new. From June to the end of July, payments rose in seven of 85 regions, most notably in Tula (from 800,000 to 2.6 million roubles); the average increase was roughly 640,000 roubles, according to data from the GOGOV aggregator on contract signing bonuses. From the end of July to September, bonuses increased in another six regions, with an average rise of 516,000 roubles.
The average one-off regional payment for signing a contract across all Russian regions was 1.07 million roubles in June, 1.12 million in July, and 1.16 million by the end of September. However, in reality, not all regions participate in the signing bonus race. Of the 85 regions for which statistics are available, a quarter (21) offer bonuses no higher than the 400,000 roubles recommended by Putin, and in two regions the bonus falls below this level (300,000 in Komi and 100,000 in Chechnya). The median bonus for signing a contract rose from 800,000 roubles in June to 1 million by mid-September.
However, since it is possible to sign a contract outside one’s actual region of residence, the most indicative figures are those from the leading regions, where the majority of contracts are signed. The average bonus across 24 leading regions offering payments above 1.5 million roubles was 1,945,000 in June, 2,008,000 in July, 2,087,000 in September, and 2,167,000 by 20 October. Thus, average payments in the leading regions are rising by roughly 40,000–50,000 roubles per month, with some acceleration in October (up to 80,000 roubles).
According to calculations by Vazhnye Istorii, at least 12 regions this year increased the enlistment bonus as a temporary promotion, after which the payment reverted to its previous level. For example, the largest current regional payment in Tyumen Oblast is only valid from 7 October to 30 November. According to the region's military commissar, interest in signing a contract doubled in the first two days of the promotion. These 'temporary promotions' can also be extended. In early October, Novosibirsk Oblast, which had increased its bonus from 1 July to 30 September to 1.6 million roubles, extended the promotion indefinitely. In the Vladimir region, they are still being offered contracts with a bonus of 2.1 million roubles, even though the temporary increase was supposed to expire on 30 September.From this, it can be concluded that there is some federal-level mechanism for monitoring the inflow of contract soldiers, which puts pressure on regions to maintain the necessary level.
At the same time, against the backdrop of rising payments, some regions sharply reduced theirs, with three cutting bonuses to the minimum 400,000 roubles. This occurred in the Republic of Mari El, which had been among the leaders since February (with 2.6 million roubles), in Chuvashia (with 2.1 million) and Tatarstan (with 2.7 million). As noted by the Conflict Intelligence Team, the simultaneous sharp reduction in bonuses appears coordinated among regions that previously competed for contract soldiers. While increases are usually loudly announced by governors on their Telegram channels and in local media, reductions occur quietly. The relevant information is often only available in scanned decrees posted on regional government websites. For instance, the Tatarstan government did not issue a news release about the bonus reduction but simply updated banners advertising contracts for potential recruits, according to Idel.Realities.
However, reductions in several regions cannot yet be interpreted as a stable trend. Similar episodes have occurred before. From January to June, a number of regions with particularly high payments significantly lowered their bonuses (→ Re:Russia: From Living Force to Dead). Having met their recruitment targets through extremely high payouts, regions have paused, allowing others to take the top positions in the bonus rankings. About ten regions consistently appear among the bonus leaders, while around 25 rotate, alternately increasing or decreasing their bonuses. This distributes the burden of intensive contract recruitment across a larger number of regions. Therefore, it is reasonable to focus on the average figure for leading regions, which indicates the effective cost of a contract accessible to most applicants. Currently, this stands at around 2.2 million roubles, having risen 11% over four months and 75% over the year since the end of September 2024.
The burden of an effective contract and the dynamics of regional budgets
According to Deputy Chairman of the Security Council Dmitry Medvedev, 336,000 people signed contracts with the Ministry of Defence in the first nine months of the year, averaging just over 37,000 per month. Economist Janis Klug, who monitors recruitment trends based on regional budgets, estimated in August that 35,000 people were recruited per month; the same figure was cited by Ukraine’s Deputy Chief of Military Intelligence Vadym Skibitsky (→ Re:Russia: On The Eve of The ‘Decisive Breakthrough’).
On average, the situation with signing bonuses seems to be as follows. Around 20–30 leading regions (with some variation) are expected to ensure a monthly inflow of contract soldiers of roughly 35,000 people per month, i.e. 1–1.5 thousand per region. At the current average bonus in the leading group, this corresponds to a total cost of 2.2–3.3 billion roubles per month. For example, in Tatarstan, which is a relatively prosperous region, with last year’s consolidated budget at 675 billion roubles, such spending (2.7 billion roubles) represents around 4.8% of current monthly expenditures, calculated as one twelfth of the annual budget. Clearly, regions do not bear this burden entirely, thanks to various federal transfers and programmes. Nevertheless, bonuses are a significant expense, particularly given that regional spending on the 'special operation' extends far beyond them.
The reduction of bonuses in relatively prosperous Tatarstan is directly linked to worsening fiscal conditions in the republic, signalled by local authorities in September.The main cause of the deficit is lower corporate tax revenue and rising interest expenses. This is a general situation across regions amid a sharp economic slowdown, which is only expected to worsen. According to AKRA's calculations, as of early August, non-consolidated regional budgets (excluding local budgets) saw expenditures rise 13% year-on-year, i.e., at one-and-a-half times the rate of inflation, while revenues grew only 4%, half the rate of inflation, meaning they fell in real terms (excluding Moscow, which skews the overall picture). This led to an interim deficit, unusual for this time of year (last observed only in 2013).
According to operational data from the unified budget system portal at the end of September, regional budgets had a combined deficit of 724.8 billion roubles, whereas a year earlier they had a surplus of 472.1 billion, Vedomosti has reported. 68 regions had interim deficits, compared to 45 the previous year. The expenditure/revenue dynamics remain roughly the same: expenditures rose 15%, revenues 6%. Thus, the problem (the gap between revenues and expenditures) is systemic, though currently limited in scale. Regions still have liquidity reserves but have already begun seeking ways to increase income, for example by removing regional tax privileges. Amid worsening federal budget issues next year, regions will need to find ways to limit spending, and contract payments will become a highly tangible burden. The current trend indicates that maintaining the effectiveness of the contract requires constant increases in its cost, roughly 30–75% per year.
If the October effective contract value of 2.2 million roubles is taken as the average for the second half of the year, and assuming it rises further, maintaining recruitment at 35,000 per month would cost all levels of government around 460 billion roubles in the second half of the year. By our calculations, in July this year, total spending on 'manpower' under intensive combat conditions amounted to around 4 trillion roubles, or 2% of annual GDP. Increases in bonuses add roughly 60 billion roubles, which is small at the national level but represents a significant contribution to regional fiscal strain amid growing economic and federal budget challenges.
Drones and cannon fodder: why the balance of manpower has not become a formula for victory
The clearest sign of an impending crisis – or at least the exhaustion of the effective commercial contract model, which had allowed the Kremlin to conduct intensive offensives with little regard for high battlefield losses since the end of 2023 – is the extremely limited success of the Russian army’s advance.
By all accounts, difficulties with mobilisation in Ukraine and the depletion of its human resources, combined with steady Russian reinforcements of around 35,000 personnel per month, should have produced a qualitative turning point on the front line. According to some sources, Ukrainian mobilisation in 2024 added no more than 200,000 troops, resulting in at least a twofold numerical superiority for Russian forces, while the manning of many Ukrainian units does not exceed 30%. Vladimir Putin, who rejected any even favourable compromises from Donald Trump, undoubtedly counted on this accumulated numerical advantage. Yet no turning point has occurred.
According to The Economist's own calculations, Russian losses increased by 60% in 2025 (53,000–252,000 killed) compared with the early years of the war. However, according to the British Ministry of Defence, Russian losses in 2025, while slightly lower, remain roughly at last year’s level. Data indicate that in September the average daily Russian losses were 950 personnel, slightly higher than in August (931), but lower than the same period last year (1,271). In October, however, Russian losses began rising again, exceeding 1,000 per day between 2 and 12 October. By contrast, Ukrainian losses are several times lower. This situation prevents Russia from achieving a sufficient advantage in its offensive. In other words, the drone defences (the so-called drone wall), which allow Ukraine to offset Russia’s current numerical superiority, are effectively balancing the disparity in manpower deployment.
It follows that, all else being equal, for a new offensive in 2026 to succeed, the Kremlin would need to substantially increase monthly recruitment of contract soldiers, to at least 45,000 per month (assuming the effectiveness of Ukraine’s drone defences does not rise significantly). This, in turn, would require sharply higher enlistment bonuses at two to two-and-a-half times the current level, which appears unrealistic under current fiscal conditions.
According to rumours circulating in Russia and some observed movements within the Russian military-political apparatus, the Kremlin is considering alternatives to the effective commercial contract. One option could be a one-off mobilisation drive to recruit roughly 200,000 personnel at once. Politically, however, this option is extremely undesirable for the authorities, especially amid the looming economic crisis.
In addition, in October, the government supported a proposal by the Ministry of Defence to allow reservists to be used in peacetime 'in the event of armed conflicts, during counter-terrorist operations, and for the deployment of armed forces outside Russia.' The law applies to those who signed contracts with the Ministry to join the mobilisation reserve BARS (Combat Army Reserve of the State), established in 2015. According to Andrei Kartapolov, Chair of the State Duma Defence Committee, this initiative would allow reservists to participate in operations 'outside Russia, for example in Sumy or Kharkiv oblasts.' However, this plan has been under discussion since 2022 and has always seemed fairly logical. The fact it has not been implemented raises doubts about whether it can be applied now. Most of this reserve has likely already been deployed under the guise of 'volunteers' or contract soldiers (sources from Novaya Gazeta Europe claimed in early 2023 that 20–30 volunteer battalions were formed from BARS).
Finally, another potential resource is the autumn conscription campaign, which began on 1 October, aiming to draft 135,000 people aged 18 to 30. The main change – extending the draft age to 30 – gives the Kremlin certain options. The most politically sensitive step is sending very young recruits to the front, while lifting age restrictions for older recruits seems feasible. From 1 January, conscription will become year-round: the State Duma passed the relevant amendments in their second reading, and evasion has become much more difficult following the launch of an electronic accounting system. The advantage of this approach is that it can be 'stretched' over the entire year. The primary group affected will be those previously deferred from service due to study commitments.
One way or another, the failure of the 2025 Russian offensive and the deteriorating fiscal situation at all levels have clearly highlighted the limits of the effective commercial contract, which had allowed the Kremlin to replenish Putin’s army with 'cannon fodder' for two years.