Russian officials are warning Putin of an economic crisis this summer, reports say, as his war in Ukraine becomes too big to fail.

President Vladimir Putin shows no intention of ending his war in Ukraine, with the Kremlin’s finances growing dire and oil revenues dwindling in months.

Russian officials have warned Putin of a possible economic crisis in the summer, sources said The Washington Post. They point to weak oil revenues, which crashed by 50% in January from a year earlier, and a widening budget deficit even after Putin raised taxes on consumers.

A Moscow business executive also said post A crisis could come in “three or four months” amid rising inflation, restaurants closing and thousands of workers out of a job.

Economic tensions have risen since Russia’s invasion of Ukraine four years ago. As sanctions took hold and Putin mobilized the economy for a protracted war, a tight labor market and high inflation forced the central bank to keep interest rates high. Current easing has failed to prevent spending cuts among many consumer segments.

As companies felt the squeeze from higher rates and weak consumption, many workers went unpaid, furloughed or saw their hours cut. As a result, consumers are having trouble servicing their debts, raising fears of a crash in the financial sector.

“A banking crisis is possible,” a Russian official said The Washington Post in December on condition of anonymity. “A default crisis is possible. I don’t want to think about a continuation or escalation of the war.”

In June, Russian banks raised red flags on a potential debt crisis as high interest rates affect borrowers’ ability to repay loans. Also that month, the head of the Russian Federation of Industrialists and Entrepreneurs warned that many companies were “in a state of default”.

The Center for Macroeconomic Analysis and Short-Term Forecasting, a state-backed Russian think tank, said in December that the country could face a banking crisis by October if the debt crisis worsens and depositors withdraw their funds. post.

“The state of the Russian economy has deteriorated significantly,” think tank head Dmitry Belosov wrote in a note. Financial Times. “The economy has entered the brink of deflation for the first time since early 2023.”

Russia’s economic woes could worsen as Europe imposes further sanctions on the so-called shadow fleet of tankers used to transport Moscow’s oil. It would add to recent US penalties on Russian oil companies Rosneft and Lukoil.

The West’s tough sanctions regime has forced Russia to offer steep discounts on crude oil exports, while the recent slump in global oil prices has hurt its top revenue generator.

Despite the poor fiscal outlook, Moscow is still spending heavily on weapons and incentives to lure new recruits into the military. To cover revenue shortfalls, Russia has tapped its sovereign wealth fund, but that too is now running out.

Russia also suffered staggering losses on the battlefield, with an estimated 1.2 million killed or wounded since the war began. Last month, NATO Secretary General Mark Rutte said that more than 30,000 Russian troops died in December alone – an average of 1,000 each day – to gain only minimal territory.

At the same time, European officials point out that Russia is losing strategically, Ukraine is likely headed for EU membership, NATO is getting bigger after adding new member states, and Europe has significantly increased defense spending.

“So people are saying that Russia wants to continue the war because they want more territory – that’s rubbish,” Finnish President Alexander Stubb told the World Economic Forum last month. “Russia must continue the war because this war is too big for Putin to fail. When you add to that the Russian economy is in a mess, which means they can’t afford to pay their soldiers which means zero growth, dead reserves, interest rates and double digit inflation. So Putin can’t end this war. That’s my biggest concern.”

Indeed, as Russia engages in on-again, off-again negotiations to end the war, it continues to bombard Ukraine with missiles and drones, targeting its energy infrastructure.

Russian, Ukrainian and American officials have reported that there has been no progress in the two-day talks in Abu Dhabi. Ukrainian President Volodymyr Zelensky said in a statement issued on Saturday that the US wants to end the war in June and is planning a new round of talks.

“The US proposed for the first time that the two negotiating teams – Ukraine and Russia – meet in a week in Miami, USA. We confirmed our participation,” he said.

This story was originally featured on Fortune.com