Russia's Economy Is Going Off The Rails
Soviet centralization is back in style
Russian business news website RBC is reporting that railroad employees in the heart of the country started taking two days’ unpaid leave per month in July because RZD, the state railroad company, is having trouble making payroll.
One anonymous source tells RBC “the decision is not formal in nature, concerns exclusively the company's management staff (central office and road departments), and does not affect blue-collar workers.” Another says that “a significant failure to present cargo” at the railhead is to blame.
RDZ wants “to increase fines for failure to present cargo on agreed applications tenfold” to stop their bleeding. “The amount of the fine has not been revised since 1998,” RBC reports. “Amendments to the legislation may be considered in the State Duma during the autumn session.”
“Net profit fell 95% to 2.7 billion rubles ($33.8 million) in the first half of 2025, according to Russian Accounting Standards,” The Moscow Times adds. “The rail company now expects to lose 87 billion rubles (about $1 billion) in revenue this year as cargo volumes continue to slide.”
Net profits have vanished at RDZ. The real Russian economy no longer exists, so manufacturers are not shipping cargo. Already struggling to maintain a skiled labor force in a tight market, RDZ is now using furloughs to avoid bankruptcy.
The eyes of the world are on Donald Trump and Vladimir Putin this weekend, but the high-level diplomacy obscures a deteriorating situation inside Russia. An economy is a system of systems, and railroads are the connective system that links the entire Russian economy together. No railroads, no Russia.
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