Russian Foreign Minister Sergey Lavrov suggests that “the time has come for a conversation with the U.S. about how Washington sees future economic ties with Russia.”
He’s wrong. The time has not come to return to business as usual with Russia and shouldn’t, not until Vladimir Putin is replaced by a Russian leadership willing to work cooperatively with the West and withdraw from Ukraine.
Putin invaded a sovereign country, and if the U.S. went back to the status quo we would be dealing with a Russian president currently under an international arrest warrant from the International Criminal Court for the war crime of unlawful deportation and transfer of at least 20,000 Ukrainian children.
The administration is making its own overtures. President Trump has suggested readmitting Russia to the G-7 economic group and plans to invite Putin to the G-20 meeting in Miami. Meanwhile, Putin has dangled the unlikely prospect of $12 trillion worth of business deals in front of President Trump as an incentive to push Ukraine into an ersatz peace agreement.
But even if Trump and the West can look past Russia’s invasion and current occupation of parts of Ukraine, there are several fundamental reasons why nations should give Russia a hard pass in terms of promoting business ties.
The first are the legal and financial risks. The U.S. State Department has warned that Russia’s kleptocratic environment undermines fair competition and the rule of law, making businesses susceptible to extortion, property seizures and U.S. law enforcement action. Businesses increasingly risk severe civil and criminal penalties navigating the many economic sanctions, and companies could be implicated in Russia’s commission of war crimes.
Some 15,000 active sanctions from Western nations make most financial transactions “toxic” and increase the risk of secondary sanctions for business partners. The rule of law that would protect business ventures doesn’t exist in Russia. Successful companies frequently find their assets confiscated and business taken over either by the state or Russian companies. And currency regulations prohibit companies from “unfriendly countries” transferring funds abroad, effectively trapping profits in Russia.
Russian economy is circling the drain
The second major reason is that Putin has put Russia on an economic road to perdition. Russian demographics — declining birth rates and lower life expectancy rates — bad before the war started, are much worse due to extremely high casualty rates in Ukraine and military age males leaving the country. The life expectancy of Russian men in 2021 was 64 years – similar to that of men in Eritrea, Rwanda and Pakistan.
That helps explain why Putin is kidnaping Ukrainian children.
Another reason is that Putin has put the Russian economy on an unsustainable war footing. When a nation spends 40% or more of its annual income on military and security forces as Russia is, the rest of the economy suffers. High military spending and labor shortages have pushed inflation to 6% and interest rates over 20%, crushing private investment and demand.
To fund the budget deficit, Russia is increasing the value added tax to 22% and raising corporate tax rates. Even Putin has noticed the forecasts for 2026 predict a sharp slowdown in annual GDP growth to just 0.8% – 1.1%. About one-third of Russian companies are operating at a loss. And shortages impacting middle class Russians are starting to cause political unrest.
Economy struggling across sectors
War-driven growth: The economy is heavily focused on military production, which is driving industrial activity but creating severe imbalances. Technology and supply gaps are common, and sanctions have crippled access to critical semiconductors, industrial equipment and aviation parts.
Labor shortages and inflation: Severe shortages of workers due to military mobilization and emigration are pushing up wages and inflation, putting pressure on the central bank to keep interest rates high and causing an acute brain drain, especially in high-tech and civilian manufacturing.
Energy sector vulnerabilities: Despite high oil price revenues in early 2026, the oil industry faces a crisis with many companies operating at a loss.
Shrinking private sector: The state sector is thriving, but civilian industries are suffering under high taxes and diminishing consumer purchasing power.
Long-term outlook: Experts describe the Russian economy as a “death zone”—eating into its own resources with serious potential for long-term stagnation or crisis.
Russia doesn’t have the cards.
International relations specialists weigh specific elements of national power to compare nations such as military capability, economic strength, population dynamics, political structure and diplomatic standing.
Appraising these elements it’s clear Russia is a second-rate power and on the way to becoming a third world nation. China is beginning to dominate the Russian economy, the Russian army is second rate, the economy is in serious trouble, Russian diplomatic standing isn’t worth mentioning and analysts tracking Russian demographics conclude Russia cannot recover from the downward spiral Putin has set in motion.
Even if you can stomach dealing with a war criminal who kidnaps children and intentionally targets civilians, Russia’s economic fundamentals argue strongly that engaging in business ventures with Russia now would be a bad idea. And why should we rescue Putin from the economic disaster he has created?
