Fighting around Sudan‘s largest oil refinery set the sprawling complex ablaze, satellite data analyzed by The Associated Press on Saturday shows, sending thick, black smoke over the country’s capital.

Forces loyal to Sudan’s military under army chief Gen. Abdel-Fattah Burhan later claimed they captured the refinery, owned by Sudan’s government and the state-run China National Petroleum Corp. The facility represents a long-sought prize for the military in its civil war with the rebel Rapid Support Force.

International mediation attempts and pressure tactics, including a U.S. assessment that the RSF and its proxies are committing genocide, have not halted the fighting.

The al-Jaili refinery sits some 60 kilometers (40 miles) north of Khartoum, the capital. The refinery has been subject to previous attacks as the RSF has claimed control of the facility since April 2023 and their forces had been guarding it. Local Sudanese media report the RSF also surrounded the refinery with fields of landmines to slow any advance.

But the facility, capable of handling 100,000 barrels of oil a day, remained broadly intact until Thursday. On that day, an attack at the refinery set fires across the complex, according to satellite data from NASA satellites that track wildfires worldwide.

Satellite images taken by Planet Labs PBC on Friday for the AP showed vast areas of the refinery ablaze. The images, shot just after 1200 GMT, showed flames shooting up into the sky in several spots. Oil tanks at the facility stood burned, covered in soot.

Thick plumes of black smoke towered over the site, carried south toward Khartoum by the wind. Exposure to that smoke can exacerbate respiratory problems and raise cancer risks.

In a statement released Thursday, the Sudanese military alleged the RSF was responsible for the fire at the refinery.

The RSF “deliberately set fire to the Khartoum refinery in al-Jaili this morning in a desperate attempt to destroy the infrastructures of this country,” the statement read.

“This hateful behavior reveals the extent of the criminality and decadence of this militia … (and) increases our determination to pursue it everywhere until we liberate every inch from their filth.”

The RSF for its part alleged Thursday night that Sudanese military aircraft dropped “barrel bombs” on the facility, “completely destroying it.” The RSF has claimed the Sudanese military uses old commercial cargo aircraft to drop barrel bombs, such as one that crashed under mysterious circumstances in October.

Neither the Sudanese military nor the RSF offered evidence to support their dueling allegations. But on Saturday, multiple videos emerged of Burhan’s forces claiming to have entered the refinery’s compound, the sound of heavy gunfire heard in the background.

Sudan’s military spokesman, Brig. Gen. Nabil Abdallah, also told the AP they had taken control of the refinery. The RSF did not immediately address the claim, nor another by Sudan’s military they had broken a monthslong siege on the Signal Corps headquarters in northern Khartoum.

China, Sudan’s largest trading partner before the war, has not acknowledged the blaze at the refinery. The Chinese Foreign Ministry did not respond to a request for comment.

China moved into Sudan’s oil industry after Chevron Corp. left in 1992 amid violence targeting oil workers in another civil war. South Sudan broke away to become its own country in 2011, taking 75% of what had been Sudan’s oil reserves with it.

United Nations Secretary-General António Guterres “is following with great concern the recent escalation of fighting in Sudan” a statement from his office Friday said, specifically mentioning the oil refinery attack.

“The secretary-general urges the parties to refrain from all actions that could have dangerous consequences for Sudan and the region, including serious economic and environmental implications,” the statement said.

Losing the refinery would have a major effect on the economies of both Sudan and South Sudan.

“The destruction of the refinery would force the Sudanese people to rely on more expensive fuel imports,” warned Timothy Liptrot in an analysis for the Small Arms Survey in May 2024. “As the conflict progresses, a norm that exists among the RSF and (the Sudanese military) against damaging Sudan’s accumulated capital is breaking down, with permanent damage to Sudan’s refining infrastructure becoming increasingly possible.”

Sudan has been unstable since a popular uprising forced the removal of longtime dictator Omar al-Bashir in 2019. A short-lived transition to democracy was derailed when Burhan and Gen. Mohammed Hamdan Dagalo of the RSF joined forces to lead a military coup in October 2021.

Al-Bashir faces charges at the International Criminal Court over carrying out a genocidal campaign in the early 2000s in the western Darfur region with the Janjaweed, the precursor to the RSF. Rights groups and the U.N. say the RSF and allied Arab militias are again attacking ethnic African groups in this war.

The Biden administration also sanctioned Burhan in its last days over his forces’ “lethal attacks on civilians, including airstrikes against protected infrastructure including schools, markets and hospitals.” It also said Burhan’s troops were “responsible for the routine and intentional denial of humanitarian access, using food deprivation as a war tactic.”

The RSF and Sudan’s military began fighting each other in April 2023. Their conflict has killed more than 28,000 people, forced millions to flee their homes and left some families eating grass in a desperate attempt to survive as famine sweeps parts of the country.

Other estimates suggest a far higher death toll in the civil war.

The fragility of the truce between Israel and Hamas was laid bare on Saturday, after Israel accused Hamas of withholding a hostage, prompting a halt in the movement of Gazan civilians back to their homes in the north.

The ceasefire deal was already a brittle agreement, with Israeli statements often calling it a “framework” as opposed to a deal.

Tensions escalated this week when 29-year-old Arbel Yehud, a civilian who Israel says should have been freed Saturday, was not among the four women released. Israel, in turn, did not allow Gazan civilians to return north past the Netzarim Corridor, which was meant to take place Saturday under the ceasefire and hostage deal.

Both Hamas and Israel have accused the other of failing to stick to their end of the bargain, raising questions about how well the ceasefire that took more than 15 months to reach would hold.

Baskin explained that Hamas “will not give anything for free,” in reference to Yehud’s captivity. He added that “Israel’s threat not to allow the displaced to move north” does little to convince Hamas to help push for her release.

The former negotiator warned that “carrying out the threat” of not allowing displaced Palestinians to move north “could lead to a halt in the release of the hostages” and advised Israel to try to keep the deal alive.

“It is better for Israel to talk less and let the mediators do more,” Baskin added, urging Israel to “convey to Qatar and Egypt that it is ready to adopt the three-week deal that Hamas agreed to in September.

‘How will the US respond?’

Israeli military spokesperson Daniel Hagari said on Saturday that “Hamas didn’t fulfil the agreement in terms of its obligation to return civilians first,” adding that “we will insist that Arbel Yehud return” along with the rest of the hostages.

Hamas said that Israel “continues to procrastinate in implementing the terms of the ceasefire agreement and the prisoner exchange by maintaining the closure of al-Rasheed Street and preventing the return of displaced persons walking from the south to the north.”

The Palestinian militant group added that it holds Israel “responsible for any delays in the implementation of the agreement and the repercussions that may arise on the remaining phases.”

There are questions as to how the United States under President Donald Trump would respond to the violations alleged by both sides.

“The question is now, after clear violations by the Israelis, how will the US respond? Will they use pressure to ensure adherence, or are we seeing the breakdown of this pause in hostilities so soon after the signing?” Hellyer said.

A choreographed show of force

Tensions simmered as the second exchange of Israeli hostages and Palestinian prisoners took place. The militant group used it to choreograph a poignant show of force despite Israel’s warnings.

In the nearly three-minute video, the four women are seen seated inside a van, smiling and posing. The women were seen thanking Hamas’ military wing, the Al Qassam Brigades, “for the good treatment,” including for providing food and water. They also thanked them for “protecting” them from shelling.

None of the four women are native Arabic speakers. In the video, they can be heard speaking in Hebrew accents.

Hamas’ propaganda videos have left a sour note over the years. Previous Hamas’ videos of the four soldiers’ kidnapping by Hamas on October 7, 2023 had gone viral. The women were dressed in civilian clothes at the time of their taking, including pajamas when they were pulled from their bedrooms. Videos showed them covered in blood.

Experts say that deals like this are bound to be filled with complications, especially as Hamas tries to use what leverage it has over Israel, and as Israel tries to retrieve hostages while destroying the group.

Yohanan Tzoreff, a senior researcher at the Institute for National Security Studies (INSS) in Tel Aviv, said concerns about violations, delays, or crises come with “any deal with an organization like Hamas.”

Such concerns “are rooted in the many past grievances between the two sides, numerous bloody conflicts, and, of course, the heinous attack carried out by Hamas on October 7,” Tzoreff said.

“The issue of hostage release became a test for both sides,” he said, adding that Israel “finds itself facing a dilemma: how to secure the hostages’ release while fully achieving the second goal of dismantling Hamas.”

Fighting with M23 rebels in eastern Democratic Republic of Congo left six United Nations peacekeepers dead, UN officials said Saturday.

Two South African peacekeepers were killed Friday, while a Uruguayan Blue Helmet was killed Saturday, a UN official told The Associated Press. The official spoke on condition of anonymity because they weren’t authorized to speak on the matter publicly.

Additionally, three Malawian peacekeepers were killed in eastern Congo, the United Nations in Malawi said in a statement Saturday.

The UN Security Council moved up an emergency meeting on the escalating violence to Sunday morning (10 a.m. ET). Congo requested the meeting, which had originally been scheduled for Monday.

M23 has made significant territorial gains in recent weeks, encircling the eastern city of Goma, which has around 2 million people and is a regional hub for security and humanitarian efforts.

The United Nations said it would temporarily relocate nonessential staff from Goma, such as administrative staff.

“Essential personnel remain on the ground, sustaining critical operations such as food distribution, medical assistance, shelter, and protection for vulnerable communities,” the U.N. statement read.

M23 is one of about 100 armed groups that have been vying for a foothold in mineral-rich eastern Congo, along the border with Rwanda, in a decades-long conflict that has created one of the world’s largest humanitarian crises.

On Thursday, M23 took control of the town of Sake, which is only 27 kilometers (16 miles) west of Goma and one of the last main routes into the provincial capital still under government control, according to UN Secretary-General António Guterres.

South Africa’s department of defense confirmed the deaths of the two South African peacekeepers in a statement Saturday. It said seven South African soldiers from the Southern African Development Community Mission, also known as SAMIDRC, were also killed during clashes with M23 over the last two days.

“After two days of fierce fighting with the M23 rebel group in the eastern DRC, the South African contingent, alongside its counterparts, was able to halt the advancement of the rebel group towards Goma,” South Africa’s department of defense added.

Since 2021, Congo’s government and allied forces, including SAMIDRC and U.N. troops, have been keeping M23 away from Goma.

The UN peacekeeping force, also known as MONUSCO, entered Congo more than two decades ago and has around 14,000 peacekeepers on the ground.

South Africa’s second-biggest party, the Democratic Alliance, said Saturday an additional 18 South African soldiers were injured in the clashes with M23. The rebel offensive “coincided with the inauguration of US President Donald Trump,” the party’s statement read.

The United States has previously played a key role in attempting to protect civilians in eastern Congo, making several high-level statements and visits, said Kate Hixon, advocacy director for Africa at Amnesty International USA.

“The Rwandan-backed M23 is clearly exploiting the presidential transition in the US to advance on Goma — putting thousands more civilians at risk,” Hixon told The Associated Press.

Uruguay’s military in a statement issued Saturday identified its member killed in Congo as Rodolfo Álvarez, who was part of the Uruguay IV Battalion. The unit, according to the statement, is working “uninterruptedly to comply with the United Nations mandate, as well as to guarantee the evacuation of non-essential civilian and military personnel from the city of Goma.”

“Various measures have been taken to improve the security of our troops, who are operating in adverse conditions,” the military said. It added that four Uruguayan peacekeepers were also injured. Three of them remained in Goma while a fourth one was evacuated to Uganda for treatment.

South Africa’s defense minister, Angie Motshekga, was visiting the country’s troops stationed in Congo as part of the UN peacekeeping mission the day the soldiers were killed.

Congo, the United States and UN experts accuse Rwanda of backing M23, which is mainly made up of ethnic Tutsis who broke away from the Congolese army more than a decade ago.

Rwanda’s government denies the claim, but last year acknowledged that it has troops and missile systems in eastern Congo to safeguard its security, pointing to a buildup of Congolese forces near the border. UN experts estimate there are up to 4,000 Rwandan forces in Congo.

Sydney restaurateur Judith Lewis couldn’t save the mezuzah, a framed parchment inked with Hebrew prayers, that was hanging in her family’s café when arsonists set it alight in the early hours one Sunday in late October.

The symbol of Jewish faith was badly damaged in the blaze that destroyed Lewis’ Continental Kitchen, which had served Sydneysiders kosher food for more than 50 years at a location just 20 minutes walk from Bondi Beach.

Lewis has bought new mezuzahs, but can’t bring herself to hang them in the café’s new premises in the nearby suburb of Darlinghurst. She’s not sure why. “I’ve got them sitting on my desk and I’m a little bit hesitant to put them up … something’s holding me back at the moment,” she said.

Many among Australia’s 117,000-strong Jewish population are anxious after a spate of antisemitic attacks in its two biggest cities, Sydney and Melbourne – including arson attacks on synagogues, and swastikas scrawled on buildings and cars.

Around a dozen people have been arrested but Jewish leaders are demanding more action from government officials, who say they don’t want to see anti-Israel sentiment spill into violence on Australian streets after 15 months of war in Gaza.

Authorities are investigating 15 “serious allegations” among more than 166 reports of antisemitic attacks received since mid-December, when Special Operation Avalite was formed to address rising antisemitism, Australian Federal Police Commissioner Reece Kershaw said in a statement Tuesday.

Officers are looking beyond suspects accused of carrying out the crimes, to “overseas actors” who may have paid for their services, he added, a line of inquiry repeated in subsequent days.

Prime Minister Anthony Albanese told reporters Wednesday: “It’s unclear who or where the payments are coming from.”

Albanese wouldn’t be drawn further on the police investigation but said Five Eyes – Australia’s security alliance with the United States, the United Kingdom, Canada and New Zealand – was “playing a role.”

“This isn’t something that began yesterday,” he said. “These things are ongoing, which is why people have been rounded up, arrested, charged, and are currently in jail without bail.”

Text messages suggest paid jobs

Ten people have been charged under Strike Force Pearl, a police task force formed in the state of New South Wales in December to investigate antisemitic hate crimes in Sydney’s eastern suburbs.

“We don’t know who the principals are,” Webb said. “(We) can’t rule out that they’re only domestic, or that they might be international.”

Text messages exchanged between two men who pleaded guilty to one of the Sydney arson attacks point to the involvement of a third person pulling the strings.

Local media, citing court documents, reported that a mobile phone seized from one of the men contained a reference to a third person who went by the handle “jamesbond” on the encrypted app Signal.

“Jamesbond” seemed to berate the other two over an arson attack on Curly Lewis Brewing, a popular bar near Bondi Beach that was set alight on October 17.

“…Its not even 2 per cent burned f*** me dead,” said the message, according to local media, citing the court documents. One of the suspects later wrote to the other: “I’m starting to think he sent us to the wrong place lol,” local media reported.

One of the men told police he was acting under duress because he owed drug money and had received death threats, according to local media, citing court documents.

Lewis from Lewis’ Continental Kitchen believes the perpetrators may have intended to target her premises, located on Curlewis Street, but got the bar’s name confused with the street. Her place was allegedly set on fire just three days later by two other suspects.

Lewis believes the attacks were orchestrated by an outside player. “I don’t know who’s directing these fires and this graffiti and all this damage, because it’s definitely not the people who are doing it,” she said. “I’m really concerned about the higher-up level.”

Racist hate crimes

Security has been upgraded at Jewish sites in Sydney including synagogues, schools and places of business, and authorities are adopting increasingly tough language against those accused of antisemitic crimes.

“It is completely disgusting, and these bastards will be round up by New South Wales Police,” said NSW Premier Chris Minns on Tuesday, hours after a childcare center near a synagogue was torched.

Some Jewish groups have accused the government of being slow to respond, a claim advanced by the leading opposition party, which has given the attacks – and the response to them – an extra political dimension just months before a federal election.

Liberal Party leader Peter Dutton told Sky News Wednesday the rise in antisemitic attacks “was entirely predictable because of what we saw on the steps of the Opera House.”

He was referring to the events of October 9, 2023 – two days after the deadly Hamas-led attack on Israel that started the Gaza war – when hundreds of demonstrators waved Palestinian flags to protest a decision to light up the Sydney Opera House in the colors of the Israeli flag.

Dutton has repeatedly criticized Albanese for what he says was a “weak” response to the protest, and continues to push the government to escalate the issue. Albanese, who’s due to call an election in the coming weeks, denies he’s been slow to act.

“What we need to do is to bring the country together, not look for difference, not look for division, not look for political advantage,” he said.

A similar message was sent Wednesday in a joint statement by multi-faith and human rights groups that said Muslims, Arabs and Palestinians had also been targeted by hate crimes.

“Political leaders should condemn recent hate crimes and acts of discrimination. However, they should not seek to politicize racist attacks for political gain,” the statement said.

The Australia Palestine Advocacy Network (APAN) condemned the attacks in a statement Thursday, saying they were part of a wave of “racism-driven hate crimes” across the country. APAN said many Palestinians and their supporters did not report harassment and abuse against them for “fear of retribution and inaction.”

Michelle Berkon is a member of Jews Against the Occupation ’48, a minority group of Jewish Australians who condemn the Israeli government’s actions in Gaza and actively support the Palestinian cause.

She said it was “very malicious” to suggest, as some have, that Palestinians or their supporters were behind the antisemitic attacks. “Who stands to benefit from this? It’s certainly not the Palestinians, is it?” she said.

‘Outrageous’ arson sentence

Authorities insist that the theory of “overseas actors” paying local criminals is just one line of inquiry. They’re also looking into whether any young people have been radicalized online or encouraged to commit antisemitic acts.

The 10 people arrested so far by NSW Police are aged between 19 and 40. One of the two men who exchanged text messages over the Curly Lewis Brewing fire, a 31-year-old man, was sentenced Wednesday to 18 months in prison, with a non-parole period of 10 months.

Lewis, whose café was burned to the ground, said the sentence was too lenient, calling it “outrageous.” “He should be given the full sentence of 10 years,” she said. Police said they would appeal the sentence.

On the heels of a national cabinet meeting, involving all state and territory ministers, police commissioners across Australia met and issued a joint statement, saying a strong policing response is needed now more than ever to keep the community safe.

Max Kaiser, executive officer of the Jewish Council Australia, says policing alone won’t address the broader issue of racism in Australia – that requires education and a community approach that brings together different faiths.

“It’s important that there obviously is some form of targeted police response to these particular incidents,” he said. “But unfortunately, there’s a strong intersection between a law-and-order, tough-on-crime response and politics in Australia.”

“Everyone wants the perpetrators to be caught, and the attacks brought to an end, if that’s possible, but the underlying issues are still there, and they can’t be solved through more arrests.”

Lewis wants the perpetrators to pay for what they did, with a hefty sentence behind bars. “They destroyed our thriving business of 55 years,” she said, of the café started by her parents, one of the first in Sydney to offer kosher food.

But she’s been heartened by the response of suppliers and community members who’ve rallied around the café, helping it to reopen, albeit with fewer staff and a steep drop in trade, just three weeks later.

“The one thing that really, really stunned me was, right from the beginning, after the fire, people would come up and say, ‘Tell us what we can do. We can clean, we can do whatever you want,’” Lewis said.

“Everyone wanted to help, and it was fantastic.”

American tech billionaire Elon Musk made a surprise address at the campaign launch for Germany’s Alternative for Germany (AfD) party as thousands of people gathered across the country to protest the rise of the far-right party.

Musk, who spoke to the crowd in a live video, was met with huge cheers by the roughly 4,500 AfD supporters gathered inside a hall in the eastern German city of Halle on Saturday.

While speaking with party leader Alice Weidel, AfD’s candidate for chancellor, Musk reiterated his belief that AfD is Germany’s “best hope” in the upcoming general election on February 23.

Germany, Europe’s largest economy, is heading to snap elections in February after Chancellor Olaf Scholz lost a vote of confidence and his governing coalition collapsed after months of instability.

AfD has seen an upswell in support, recently becoming the first far-right party to win a state election in Germany since the Nazi era and performing well in opinion polls for the upcoming election. At the same time, the party has been criticized for its staunch anti-immigrant stance. All of Germany’s mainstream political parties have said they will not work with the AfD.

Musk, a close ally of US President Donald Trump, stressed the importance “that people take pride in Germany and being German,” a sentiment that was met with rapturous cheers at the AfD rally.

The billionaire also addressed the issue of immigration — a key issue in the election — urging Wiedel and her supporters not to lose their national pride in “some kind of multiculturalism that dilutes everything.”

Meanwhile, tens of thousands of Germans protested in Berlin and other cities on Saturday against the far-right party.

In the western German city of Cologne, police estimated a crowd of 40,000 people were demonstrating, according to the Associated Press. About 35,000 protestors gathered at Berlin’s iconic Brandenburg Gate, according to police estimates, where they sang anti-fascist songs, carried banners denouncing AfD, and displayed illuminated letters spelling “hope and resistance,” AP reported.

“Those who fuel racism and attack climate protection are not just campaigning, they are endangering lives,” climate activist Luisa Neubauer told the crowd reported AP.

Musk has become increasingly engaged in the European political landscape. In recent weeks, he has kindled an alliance with AfD party leader Wiedel. Earlier in January, the two discussed Germany’s election, economic, and political issues.

But the involvement of Musk — the world’s richest man and the owner of the social media platform X — has also been met with apprehension among government leaders in Europe.

In the United Kingdom, the prime minister accused Musk of spreading “lies” after the billionaire provoked a social media backlash against the British government. Musk has also pushed for the release of jailed far-right political activist Tommy Robinson and amplified a social media uproar that fueled anti-immigration riots.

The German government has even accused Musk of trying to influence its election over his endorsement of the AfD.

Despite the scrutiny, Musk has continued to voice his support for the populist political movements that have galvanized numerous European elections. He has also drawn parallels between the political climate in Germany and the United States while emphasizing the global impact the approaching election could have.

“I think it could decide the entire fate of Europe, maybe the fate of the world.” he told AfD supporters on Saturday, “that is the significance of this election.”

Among 34,000 people in the town of Oświęcim is just one Jew – a young Israeli named Hila Weisz-Gut. It’s an interesting choice of residence, given the most famous feature of the town is its proximity to the Nazi concentration and extermination camp Auschwitz – where at least 1.1 million people, mainly Jews, died between 1940 and 1945.

Nearly every member of Weisz-Gut’s grandmother’s family was lethally gassed there upon arrival in a cargo transport from Hungary. Today, Weisz-Gut can see Auschwitz III-Monowitz, where her grandmother survived, from her bedroom window.

She moved from Israel to join her Polish husband in Oświęcim, his hometown, in 2023, fully aware of her own family’s tragic history.

For Weisz-Gut, maintaining a Jewish presence in the town – even if tiny – is vital. As the 80th anniversary of the liberation of the camp nears, on January 27, a disturbing trend is emerging across Europe, monitoring groups say – the rise of antisemitism.

Factors in this may be anger over the war in Gaza and a growing far-right presence in some countries, where electoral successes have lent far-right politicians and their supporters a louder voice. The European Union Agency for Fundamental Rights said some organizations had reported a 400% increase in antisemitic incidents since the October 7, 2023 terror attacks in Israel.

The story of Oświęcim, whose population was nearly 60% Jewish in 1939 before the Nazis arrived, serves as a stark reminder of what unbridled antisemitism can unleash.

Weisz-Gut currently works at the town’s Oshpitzin Jewish Museum, educating Israeli visitors about the region’s once-vibrant Jewish community. The museum has said she is the only Jewish person living in Oświęcim.

This past year, living so close to Auschwitz has taken on greater significance for Weisz-Gut. On October 7, 2023 she sat horrorstruck as she watched social media videos of Israelis running for their lives at the Nova music festival after Hamas militants attacked. Her mother, who lives 10 minutes from the Lebanese border in northern Israel, has had to take refuge in an underground shelter amid strikes launched by Hezbollah.

Since the attack, Weisz-Gut has felt forced to take account of the specter of increasing prejudice in Europe on a personal level. While on a trip to London, she said, her mother and husband urged caution, suggesting she remove her Jewish star necklace. She also wore long sleeves to cover a tattoo in Hebrew. “Since the war with Gaza, people don’t separate between Jewish people and Israeli people,” she said. “There are no clear boundaries.”

The Community Security Trust, a Jewish security charity, recorded 1,978 antisemitic incidents across the UK in the first half of 2024, a record high. A sharp uptick in anti-Muslim hate has also been reported in the UK since the October 7 attacks.

France, which has the largest Jewish population in Europe, recently reported a sharp rise in antisemitism since October 7, with reported incidents increasing by 284%. In Germany, there has also been a steep increase in reported antisemitic crime, according to a government report, with greater incidence of violence.

Much of the problem occurs online and via social media. “The digital world is the Wild West. There are no rules, there is no law. There are almost no consequences,” explained Derviş Hızarcı, the head of the board at KIgA, a Berlin-based organization whose international network, ENCATE, fights hatred and antisemitism. “I think online hate is the biggest challenge after October 7.”

Still, Weisz-Gut remains committed to living a Jewish life in Europe, specifically in the town co-opted by the Nazis to create the largest death machine in modern history.

“For me, it’s a statement that they tried to break us and exterminate us, but they failed,” she said of her presence in a place so associated with the Nazi regime. “We are the generation that is here to say ‘you didn’t succeed. No more. Not again.’”

Since Moscow’s full-scale invasion of Ukraine in 2022, Russia’s economy has surpassed expectations. Its figures are, if not rosy, not ruinous either. Last year, the war economy likely grew faster than the United States and all major European economies. Unemployment is at a record low. And if the ballooning defense budget has cramped other spending, that’s only temporary.

These statistics send a message to audiences at home and abroad, said Elina Ribakova, senior fellow at the Peterson Institute for International Economics. To the Russian public: “We’re still standing.” To Ukraine’s allies: “We can outlast you.”

Projecting an image of Russia’s economic strength has real-world consequences. Some in the West have questioned whether the sanctions imposed by Ukraine’s backers – and dismissed by President Vladimir Putin as mere “logistical hurdles” – work at all. If they don’t, why bother?

But other experts say this image of resilience is a mirage – one carefully curated by the Kremlin to make its adversaries think Russia’s economy is in good shape. As the war nears its third anniversary, this mask is starting to slip.

To explain Russia’s apparent economic might, analysts have turned to metaphor. Some have used the phrase “on steroids,” to describe growth that is rapid, but unnatural and unsustainable.

Russia may soon feel the pain after the party. Increasingly disgruntled Russian officials have warned that Russia’s economy is hitting the limits of what it can produce, driving up prices. Inflation accelerated last year despite the central bank hiking interest rates to 21% in October, a two-decade high.

While signing a flurry of executive orders on his first day back in the White House, US President Donald Trump said Russia’s economy was a sign that the country was in “big trouble,” and that Putin was “destroying Russia by not making a deal” on Ukraine.

Evidence of that trouble includes the impact of new sanctions, persistent labor shortages and signs of a credit bubble. Despite recent battlefield gains, analysts say Russia’s worsening economic problems could bring Putin to the negotiating table sooner than expected and may make sanctions relief a more powerful bargaining chip for the West.

Shadow budget

Throughout the war, the Kremlin has made extensive use of a strategy known as “reflexive control,” aimed at shaping an adversary’s perceptions in a way that leads the adversary – in this case, Ukraine’s Western backers – to choose actions that benefit Russia.

Weapons are a case in point. Every time the West has considered sending new technology to Ukraine – first, modern tanks, then fighter jets, then long-range weapons – the Kremlin has warned of dire consequences, potentially involving a nuclear strike. This has slowed the supply of weapons to Kyiv, benefiting Moscow.

The economy is no different. The Kremlin wants to convince Ukraine’s allies, particularly the United States, of Russia’s economic strength. If Russia can fund its war for years, the US might support a ceasefire that favors the Kremlin’s goals. Controlling perceptions is paramount, observers say.

And so, it helps to boast of Russia’s economic might. At his marathon annual press conference last month, Putin said Russia’s economy was growing “in spite of everything,” outstripping Europe and the US.

Economic growth and low unemployment have become Putin’s “trump cards,” Alexandra Prokopenko, a fellow at the Carnegie Russia Eurasia Center, wrote recently.

But these headline numbers conceal concerning trends. Russia is hiding the true cost of its war by using a shadow “off-budget financing scheme,” according to a new report by Craig Kennedy, an associate at the Davis Center for Russian and Eurasian Studies at Harvard University.

While Russia’s “highly scrutinized” defense budget remains at sustainable levels, there has been a parallel and “largely overlooked” surge in corporate borrowing. These loans look private but really are disguised state spending, Kennedy wrote.

On February 25, 2022 – day 2 of the full-scale invasion – Russia enacted a law that empowers the state to force banks to lend to businesses providing goods and services for the war on terms set by the state, he noted.

Between the middle of that year and late 2024, Russia saw an “anomalous” 71% surge in private credit, by an amount equal to 19.4% of its gross domestic product, according to Kennedy. He estimates up to 60% of these loans (as much as $249 billion) have been made to war-related firms. “These are loans that the state has compelled banks to extend to largely uncreditworthy, war-related businesses on concessionary terms,” he wrote.

This means Russia is spending almost twice as much on the war as official figures indicate, Kennedy noted.

The funding scheme could lead to a far-reaching credit crisis, he warned, in large part by imposing heavy debt loads on war-related companies that are likely to default over time, which risks overwhelming banks with “a wave of toxic debt.”

Savers’ jitters

Kennedy’s analysis has provoked a range of responses. A Financial Times commentary said it showed Putin was sitting on a “ticking financial time bomb.”

Others are more temperate. Prokopenko and Alexander Kolyandr, a scholar at the Center for European Policy Analysis, have also disputed some of Kennedy’s findings, writing this month that fears of a banking crisis are “overblown.”

Tymofiy Mylovanov, head of the Kyiv School of Economics and Ukraine’s former economy minister, said the findings were concerning, but not necessarily destructive.

One such trigger could be panic among ordinary Russians, who know how it feels to have their savings wiped out. If they believe their deposits are at risk, this could spark bank runs.

Since the fall, rumors have swirled that the central bank could freeze customers’ deposits, which have ballooned as savers have rushed to profit from high interest rates. The Bank of Russia has called the idea “absurd.” But this has done little to reassure Russians, Mylovanov said.

“The fact that they are talking about it is a sign of trouble,” he said. “They cannot not talk about it.”

Meanwhile, the head of Russia’s New People party, Alexei Nechayev, has proposed a new law to prevent the central bank from freezing customers’ deposits without the Duma’s consent.

While the central bank tries to inspire confidence, some are voicing doubts about its governor, Elvira Nabiullina. Although she was credited with saving the economy at the war’s outset, some of Russia’s elite have since turned on her. The head of the state-owned defense conglomerate Rostec said the central bank’s high key interest rate was hampering exports, while the chair of oil giant Gazprom Neft said expensive credit could impact companies providing services to the oil industry, raising “serious concerns.”

Even Putin, a longtime supporter of Nabiullina, made a muted complaint during his year-end press conference, saying the central bank could have used instruments other than interest rate hikes and acted “more efficiently and at an earlier stage.”

Headwinds

Even without a credit crisis, Russia’s economy faces serious headwinds in 2025.

The International Monetary Fund estimates that Russian GDP grew 3.8% in 2024, but forecasts just 1.4% growth this year.

Putin recently conceded that “the amount of products has not grown as much as consumption has” – a classic recipe for price rises. Inflation accelerated to 9.5% last year, from 7.4% in 2023. Some supermarkets locked butter in cabinets to prevent thefts.

Although wages are up, this reflects problems in the labor market. Putin boasts of Russia’s record-low 2.3% unemployment rate, but this sword is double-edged. Low unemployment means higher wages, as Russian companies – short of 1.6 million skilled workers – must pay more to attract labor.

Russia could offset this by encouraging immigration, but Central Asian migrants – long used to plug gaps in the workforce – have faced rising xenophobia after recent terror attacks in Russia stoked ethnic tensions.

Most importantly, Western sanctions are beginning to inflict serious pain. A package announced by the Biden administration in its final days targeted Moscow’s “shadow fleet” – aging oil tankers used to dodge earlier sanctions on Russia’s oil exports. Dozens of these ships have dropped anchor around the world, unable to dock and unload due to the new measures. China and India – whose oil and gas purchases from Russia have helped fund its war – are reportedly looking for other suppliers.

Kyiv’s refusal to renew a gas transit agreement that allowed Russian gas to flow through Ukraine will cost Gazprom up to $5 billion a year in sales, Reuters has reported. The energy giant posted a loss of almost $7 billion in 2023 – its first in nearly 25 years – and is considering axing more than 1,500 jobs. Less money for Gazprom means less for Russia’s war chest.

The growing economic strain is causing Russia’s social contract to creak, said Prokopenko, the Carnegie fellow.

With this support “dwindling” – as war spending eats into budgets for other services – Prokopenko warned there was now “a clear divergence between the expectations of the population and the Kremlin’s capacity to deliver.”

Moscow cannot keep financing the war and the regular economy at the same time as maintaining broader economic stability, she said. Although the Kremlin has so far fudged all three, something may soon have to give.