Russia is Losing – Time for Putin's 2026 Hybrid Escalation

The Kremlin's strategic wager was clear: that an incoming Trump administration would force a peace deal on Kyiv and Europe’s capitals, locking in Russia's territorial gains and fracturing Western unity before Moscow’s own clock ran out. And if it didn’t, the US would withdraw support. That strategy has stalled. Instead of softening, Ukrainian and European positions have hardened and held their red-lines. This year’s proposals did not divide; they solidified. Even the release of the Trump National Security Strategy with its polarising rhetoric outlined US commitment to NATO and Ukraine via the Hague 5% spending pledge – ultimately hardening the collective defence investments and resolve of the allies Putin hoped to fracture.

Since retreating from Kyiv in April 2022, Russia has now failed in four of its five strategic objectives: political subjugation, economic sustainability, regime stability and international standing. Only in territorial control does it hold a pyrrhic advantage. But a declining power is often more dangerous than a rising one. Facing an economic spiral and depleted conventional forces, Vladimir Putin is entering a window of maximum danger. We must prepare not for a resurgent Russia but for a desperate one: 2026 will be the year of hybrid escalation. Escalation, which the UK’s Foreign Secretary, in December 2025, on the 100th anniversary of Locarno, boldly stated was already ‘flagrantly visible’.

What Does Putin Want in 2026? A Three-Pillar Offensive

The trap Putin has now created for himself is psychological: a regime that justified its authoritarian model by promising to restore Russian greatness cannot acknowledge strategic defeat without risking political collapse. Shaped by his KGB culture and witness to Soviet demise, any peace deal that can be perceived other than complete ‘victory’ – is no longer a policy option available to him. It would delegitimise the entire regime. Therefore, escalation becomes not a choice but a necessity.

Russia must demonstrate to its domestic audience and to the West that it retains the initiative and remains a great power. Next year, it will manifest across three specific hybrid warfare pillars:

1. Sabotage will target Europe's expanding defence production infrastructure and Ukraine-bound supply chains. As continental ammunition factories ramp up and logistics networks become more visible, they become prime targets – like last year’s arms factor explosion in Cugir, Romania. Expect attacks designed to delay weapons deliveries, drive up security costs and force governments to divert resources from Ukraine support to domestic protection.
2. Subversion, especially information warfare as seen in Moldova – will intensify dramatically during key European elections including Hungary, in early 2026 and the US Mid-Terms. Pro-Russian populist parties already top polls across major European capitals. Every percentage point and every political message amplified to their advantage offers Russia hope of weakening sanctions and Western political resolve.
3. Coercion through conventional military demonstrations will escalate from sporadic to systematic. Expect increasingly aggressive airspace and naval violations – like this year’s 12 minute ‘reckless’ Gulf of Finland incident. Plus, nuclear rhetoric calibrated to create psychological pressure. The intended message: supporting Ukraine risks direct escalation with Russia, so perhaps restraint is wiser.

Three Constraints Forcing a 2026 Hybrid Escalation 

1. An Unsustainable Wartime Economy

Russia's fiscal mathematics tells a story Western pessimists miss. While Russia’s true fiscal state remains classified, it is undoubtedly bleak. Interest rates top 16%. The IMF recently cut its forecast to just 0.6% growth, with confidential central banks reports warning of 1990s inflation and impending 1980s style collapses in oil prices. It has burnt through half its liquid sovereign wealth fund. Its official total military expenditure in 2025 is estimated at 15.5 trillion roubles – spending that has quintupled since 2021. Official military figures fail to account for additional war-related costs – not least tens of billions maintaining occupied Ukrainian territories, supporting border regions under attack and compensation payments to troops and their families.

Energy revenues, accounting for 50% of state income, are equally catastrophic: Russia's oil and gas revenues fell 34% year-on-year in November 2025, forcing a spike in annual borrowing. With hidden costs spread across multiple budgets, the real war burden likely approaches well beyond 9% of GDP – a level approaching late-Soviet spending. The USSR in Afghanistan spent just 2-3% on a conflict that equally proved unsustainable. With conventional military options increasingly foreclosed by these economic constraints, less expensive, hybrid warfare becomes Russia's only affordable escalation tool.

2. Structural: Conventional Military Options Are Exhausting

The Kremlin's conventional weakness is forcing greater reliance on hybrid tactics as a substitute for military capability it no longer possesses. Russia is spending billions making battlefield ‘advances’ of 50 m a day in areas like Kharkiv – slower than the Somme offensive. In two years, they have claimed little more than 2% of additional ground in total in the country. With Russia reaching an estimated 1.4 million casualties it is depleting its Soviet-era equipment reserves. Leaked defence communications reveal Moscow is having to establish a 10-year production line for 2600 tanks to replace the 4000 confirmed destroyed in the war.

At current attrition rates, recoverable equipment will be exhausted by late 2026 or early 2027 – the same timeline as an expected fiscal crunch. Nor can military supplies from North Korea and China fill the deepening gaps in equipment and ammunition. With the conventional military toolkit shrinking rapidly and the West's industrial capacity ramping up, hybrid warfare becomes not just affordable but necessary – Moscow's only real tool to impose costs and maintain the illusion of offensive capability.

3. Europe has not implemented hybrid deterrence - yet.

Europe has been slow to build credible hybrid deterrence – a capability it is only now recognising and wanting to address. Its failure to establish clear thresholds for ‘grey-zone’ attacks has created a gap: Incidents of sabotage, cyberattacks and information operations are still largely treated as isolated crimes rather than elements of a well-formed Russian hybrid doctrine. NATO is finally moving – with its top commander and Secretary General outlining shifts in policy – here too Putin’s window for action is closing.

But despite these signals, Europe still does enter 2026 with the potential of weakened resolve to deter specific hybrid activity. Politically Far-Right parties – often with pro-Russian sympathies – are topping polls in a year of major elections on the continent. Economically, EU governments have been constrained by slow growth, sticky inflation and energy supply uncertainties. Militarily, many are only at the beginning of their rearmament cycles. Combined, it limits their ability to take a decisive hybrid response specifically in 2026, strengthening the Kremlin’s belief that these tactics can succeed in the year ahead.

Europe's Strategic Choice for 2026

The fundamental strategic choice is straightforward: double down. The evidence proves that the West's current strategy – arming Ukraine, imposing sanctions, hardening critical infrastructure – is fracturing Russia's military, economic and political cohesion. Even if painfully slow, and with Ukraine bearing a terrible human cost.

Doubling down means more than maintaining current support for Ukraine. Europe must follow its recent announcement to establish credible deterrence against hybrid warfare or watch Putin attempt to fracture Western unity through a thousand cuts. The current approach – treating each incident as isolated – is creating a vacuum Moscow, not only can exploit – but must exploit.

Putin is betting Europe lacks the resolve to impose meaningful costs below the Article 5 threshold. The evidence suggests he is right: no Russian officials have faced consequences for any of the mysterious arms factory explosions, the Baltic cable severances or the parcel bomb campaign. But proving him wrong doesn't require matching Russia's conventional strength – it requires clarity about what the West won't tolerate. 2026 will reveal whether Europe has learned this lesson, or whether Putin's collapsing window will succeed in breaking what his military invasion could not.

© RUSI, 2025.

The views expressed in this Commentary are the authors', and do not represent those of RUSI or any other institution.

For terms of use, see Website Terms and Conditions of Use.

Have an idea for a Commentary you'd like to write for us? Send a short pitch to commentaries@rusi.org and we'll get back to you if it fits into our research interests. View full guidelines for contributors.