In the early months of the war, Western intelligence assessments shared a comfortable assumption: Russia's defence industrial base was brittle, its economy too integrated into global financial systems to sustain prolonged high-intensity conflict, and sanctions would eventually bite hard enough to force a strategic recalculation. That assessment was wrong in almost every important respect.
Three years into the largest land war in Europe since 1945, Russia's defence economy has not collapsed. It has adapted. Moscow has redirected an estimated 40% of GDP toward defence and security spending — a wartime mobilisation that, by any historical standard, is extraordinary for a country that was supposed to be too economically vulnerable to sustain it. The Ural region's manufacturing corridor, Chelyabinsk's steel and armaments complex, and the Nizhny Tagil tank production lines are running triple shifts. Artillery shell output, according to Western intelligence estimates, is running at approximately 3 million rounds per year — roughly triple the combined production capacity of all NATO member states combined.
The numbers are not comfortable reading if you sit on the procurement side of a European defence ministry. Russia's shell production figure of 3 million rounds annually translates to roughly 8,200 rounds per day available to front-line forces. At peaks of the Bakhmut and Avdiivka fighting in 2023 and 2024, Russian forces were expending between 10,000 and 15,000 rounds per day. The gap between production and expenditure is being bridged, in part, by North Korean transfers — an arrangement that would have seemed implausible as recently as 2021 but is now confirmed by multiple Western intelligence services. By late 2025, an estimated 3 to 4 million 152mm rounds had transited from North Korean stockpiles to Russian front-line units.
Ukraine's front lines have stabilised in a meaningful sense — there has been no collapse of the kind that some predicted following the delayed US military aid package of early 2024. But stabilised is not the same as reversed. The initiative, for most of the past eighteen months, has rested with Russian forces operating on interior lines with a numerical advantage in artillery that Ukraine's Western partners have been unable to fully offset.
"Europe spent thirty years assuming that Russia would eventually become a normal country. That assumption is now costing billions to correct."
The analytical failure was not one of intelligence collection — it was one of interpretation, shaped by assumptions that belonged to a different era. Western analysts consistently underestimated Russian industrial adaptability for reasons that, in retrospect, reflect more about the analysts than about Russia. The assumption was that a market economy operating under comprehensive sanctions would behave like a Western market economy under sanctions. Russia's command-economy heritage, the willingness of the state to impose industrial priorities at political gunpoint, and the depth of its relationships with non-Western supply chain partners all undermined that model.
Sanctions did damage real sectors of the Russian economy. Consumer goods, automotive production, civilian technology imports — all took genuine hits. But defence production proved more insulated than expected. Import substitution for military electronics, while imperfect, was more achievable than projected. Iranian drone technology, Chinese dual-use components, and re-exported Western semiconductors via third-country channels all contributed to a production ecosystem that kept moving.
Poland, the Baltic states, and Scandinavia deserve credit for reading the strategic environment more accurately than their larger Western European partners. Poland's defence budget is approaching 5% of GDP — a figure that would have seemed fantastical in a Brussels defence planning document five years ago. The Baltics have been on effectively a war-footing assumption since 2014, and the institutional consequences of that posture are now visible in procurement timelines, stockpile levels, and conscription policy that their larger NATO partners are scrambling to match.
NATO's stockpile depletion is a genuine and documented problem. The transfer of equipment and ammunition to Ukraine — necessary and morally correct — has created a replenishment deficit that European defence industry, running at extended capacity, cannot fill quickly. Rheinmetall, BAE Systems, and Nexter are all operating at or near their current production ceilings, and adding meaningful capacity requires capital investment, workforce expansion, and facility construction that takes two to three years minimum from decision to output.
For procurement officers operating within NATO frameworks or allied government structures, the urgency is real and the timelines are genuinely short. The window between political recognition of the problem and industrial capacity to address it is precisely where licensed intermediaries with established supply chain access become indispensable. Non-NATO standard ammunition, certain protective equipment categories, and manufactured-to-specification components are all areas where the compliant alternative supply chain — operating through licensed trading channels in neutral regulated jurisdictions — is filling gaps that Western prime contractors simply cannot close at pace.
Europe's strategic awakening from its post-Cold War assumptions is real, and the political will to fund it appears more durable than previous cycles. But political will and industrial capacity are different things. The next three years will test whether the continent can translate one into the other quickly enough to matter.