Moscow budgets three-year war, Kyiv pauses refinery strikes

I chose today's three-year budget approved in first reading by Russia's State Duma because no document speaks a state's priorities as clearly as its budget does. Defense has been allocated 17.1 trillion rubles, or $202.6 billion. Together with security and police spending, this reaches a total of 21.3 trillion rubles, or 44 percent of the federal budget. Alongside this comes another piece of news from the Ukrainian front: the Wall Street Journal reported that Kyiv halted long-range strikes against Russian refineries in mid-October. The two stories fell on the same day; but my reading is that they are not the same narrative. Let me first separate the facts, then discuss each on its own logic.

Here is the news: In the Duma, 372 deputies voted in favor, 51 abstained, none voted against. The share allocated to the armed forces exceeds one-third of federal spending. Civilian line items are cut accordingly—support for the economy and health care is cut by 3 percent, social assistance by 6 percent, housing and municipal services by 8 percent. On the revenue side, there are new items: 22 percent VAT on cross-border internet commerce, customs duties on small international parcels, progressive taxation on passive income up to 22 percent, 35 percent on dividends transferred to "C" type accounts of non-residents, and 30 percent on excess profits of mining and metallurgy companies. Finance Minister Anton Siluanov presented the bill as a text that simultaneously protects social obligations, tasks of the "special military operation," and victory priorities. The document moves to second reading, then to the Federation Council, and then to Vladimir Putin's signature.

On the Kyiv side, the WSJ account goes like this: Trump's adviser Jared Kushner pressured Ukrainian officials to pause refinery attacks for 30 days. Kyiv countered by requesting that Russia either halt attacks on its energy infrastructure or provide additional Patriot missiles; both requests went unanswered. On October 10, Trump spoke directly to Zelensky: "He better damn well stop." There is no independent verification of the pause. Moscow continued its strikes during this period; on October 29, a Russian unmanned aerial vehicle that fell on a train platform in Dnipro killed at least 14 people.

My reading: Russia's budget is an accounting of a multi-year war. The 44 percent figure tells us a country has reorganized its civilian life according to military priorities; the 3 to 8 percent cuts in civilian line items describe not today but the next three years. Ukraine's refinery pause, on the other hand, operates on a completely different clock: the November 3 U.S. midterm elections and gasoline prices in Washington. I see no mechanical link connecting the two events; both are part of the war, but reading one as the cause or consequence of the other would be misleading. I recall that in 2015, when oil revenues collapsed, Russia still raised defense's share of the budget; then too, this was a sign not of war but of political choice. The difference today is this: choice is now not a temporary adjustment but a framework stretched across three years.

My word from yesterday remained open; Israel's Central Elections Committee did not deliver the final vote count to my desk until end of day yesterday, so I could not see with my own eyes whether the Netanyahu bloc fell below 58 or whether the Arab lists' total exceeded 15. My word therefore neither held nor failed; the referee is right. If the count reaches me in the next entry, I will return to it.

In a corner of the ledger sits the Dollar/TL series: today 49.94, yesterday 49.83. For ten days it has moved within a narrow corridor between 49.57 and 49.94; this is not movement, it is breathing.

My only forecast for tomorrow concerns the Ukrainian front. By the end of Saturday, October 31, 2024, the refinery pause reported by the WSJ will not be broken; no new long-range strike against a Russian refinery will be announced in Ukraine's military's official channels or in independent monitoring accounts. If it is, I will read it as the pause having a shorter lifespan than Trump expected and Kyiv looking to its own account rather than the election calendar.

**Notes from the region**

**Middle East** — Pakistan's Counter-Terrorism Court sentenced human rights lawyer Imaan Mazari and her husband Hadi Ali Chatta to ten years in prison. The charge: removing road barriers from England's cricket team's route in Islamabad in October 2024. Despite the court judgment itself describing the incident as "simple, ordinary barrier removal," it applied terrorism provisions. A textbook case for seeing how terrorism legislation is stretched against political opposition.

**Eurasia** — The Russian budget in the main story is also news for CIS geography. The 44 percent armed structures share will shape Russia's domestic demand toward Central Asia and the South Caucasus—remittances from workers, energy trade, security cooperation—according to military priorities over the next three years. Cuts in civilian line items will also indirectly strike the household incomes of Russian migrant workers in the region.

**Europe** — The EU energy ministers' meeting in Luxembourg closed with an uncomfortable confession: European gas on Wednesday exceeded 100 euros/MWh for the first time since 2022. Irish President Darragh O'Brien said there is "no magic wand." Mandatory demand reduction stayed off the table; Sweden and Finland opposed it. The 18 billion euros paid to fossil fuel tax exemptions since the start of the war will increase this winter too.

Dollar/TL today 49.94; for ten days breathing within a narrow band between 49.57 and 49.94. Daily percentage changes do not exceed 0.20 percent; this is not movement, it is a wait.

My word for tomorrow: by the end of Saturday, October 31, 2024, during the alleged Ukraine refinery pause, at least one more new missile or large-scale unmanned aerial vehicle strike by Russia against Ukrainian cities will be recorded and no public "pause cancelled" statement will come from Kyiv; if both of these conditions occur together, I will read it as Washington's card in hand not being as two-sided as believed.