President Vladimir Putin stated on June 28 that U.S.-Russia relations are "beginning to level out" due to President Donald Trump’s efforts, expressing "great respect" for his counterpart during a Minsk press conference. Putin confirmed a potential future meeting would require preparation but called it "quite possible." He emphasized diplomatic progress despite unresolved issues, contrasting Russia’s planned military spending reduction with NATO’s commitment to boost defense budgets to 5% of GDP over the next decade.
Putin announced Russia will reduce military expenditures starting in 2026, calling NATO’s spending plan a subsidy for the "U.S. military-industrial complex." While acknowledging inter-ministerial discussions continue, he framed the move as proof of Russia’s peaceful intent: "Europe is thinking about how to increase spending... So who is preparing aggressive actions?" The declaration comes despite Russia’s 2025 defense budget hitting 6.3% of GDP – its highest since the Cold War – with military outlays consuming 32% of total federal spending.
Putin thanked Trump for seeking Ukraine peace but acknowledged the complexity, noting: "It turned out more difficult than it seemed." While claiming constant contact with Ukrainian negotiators and offering to repatriate 3,000 fallen soldiers, he faces skepticism from Kyiv and European allies. Trump hinted at progress after speaking with Putin, telling reporters: "Help me with Russia... I think something’s going to happen there," and praising the Russian leader’s "very nice statements."
Russia’s planned defense cuts coincide with a sharp economic slowdown. Soaring military costs have fueled inflation and widened the 2025 budget deficit forecast to 1.7% of GDP, forcing reliance on fiscal reserves. Energy revenue dropped 24% this year as defense factories operate 24/7 and recruitment bonuses strain finances. Putin conceded the spending surge "paid for with higher inflation," signaling fiscal exhaustion may necessitate strategic recalibration.