Wild Strawberries: Russian businesses under pressure from Ukraine attack on retail warehouses.

Supporting small and medium-sized businesses is one of Vladimir Putin’s priorities, even in times of war, and has been framed as the backbone of resistance to Western sanctions.

But the Russian state could not protect the sector from the impact of the war, and since the beginning of the year there have been many shocks to businesses.

VAT was raised from 20% to 22% in January, more funding was earmarked for defence, and tax breaks were scrapped for some businesses.

According to business intelligence platform Contour Focus, 209,000 small and medium-sized companies closed in the first quarter of 2026. This is 9 percent higher than the first three months of 2025.

Widespread internet shutdowns and crackdowns on popular messaging apps added to the woes, with Moscow businesses losing tens of millions of dollars in a single week in March, according to some estimates.

And so came the oil crisis sparked by attacks on Ukraine’s oil tanks, refineries and supply lines.

“There are already a lot of nails and they keep hammering them in,” Professor Ruben Iniklopov of Pompeii Fabra University in Barcelona told the BBC.

Small businesses in Russia have already shown their resilience, but inflation is high, the budget deficit is widening, and oil and gas revenues are 23% lower than in the first six months of last year.

Russia has a very large financial reserve, accumulated in peacetime, but the war in Ukraine is consuming more and more resources, starving the development of the civilian economy.

Additional report by Olga Shamina