Russia has indicated it would accept a mooted US security deal guarantees for Ukraine, but has hardened its line saying it will pull out of talks completely unless Kyiv indicates it is willing to pull out of the Donbas completely.

“In recent negotiations, the Russian side explicitly said they would accept the security guarantees offered to Ukraine by the US. Concerning control over the demilitarized zone, this is a matter for the military subgroup. That is where the most progress has been made. They have reached conclusions on how monitoring will be conducted once the war ends,” said Kyrylo Budanov, head of the President’s Office and a member of Ukraine’s negotiating team.

Budanov cautioned that territorial questions remain unresolved. “Negotiations over territory are ongoing, with compromises being sought between two vastly different positions,” he said.

Getting an agreement on a real Article 5-like security guarantee for a post-war Ukraine is essential to Bankova as it would guarantee Ukraine sovereignty and prevent a new invasion. It is one of the two main outstanding sticking points in the negotiations, the other being the control over the part of Donetsk in the Donbas that is still not under Russian control.

In a negative development fresh satellite images of the Donbas show the AFU build new and extensive defences behind the line of contact in Donbas, suggesting Bankova is preparing for the possibility of the talks failing. Last week Ukrainian President Volodymyr Zelenskiy reportedly told his Cabinet to prepare for “three more years of war,” the Wall Street Journal reported. Bankova immediately denied the report after it was published.

The talks continue and are set to resume in Geneva this week as various deadlines loom. US President Donald Trump has called for fresh presidential elections and a referendum on giving up the remaining 15% of Donetsk to Russia by mid-May and an end to the war by June, or the US will walk away.

Budanov stressed that Kyiv’s priority was securing binding security guarantees before addressing other elements of a settlement. “We don’t have much time. Ultimately, we will have to declare: either we have found a solution and are ending this war, or... we continue to fight, which we are doing quite effectively and professionally,” he said.

US Special Envoy Steve Witkoff signalled that Washington would not endorse an agreement prematurely, pledging not to agree to a peace deal “until Ukrainians feel confident that Moscow will cease hostilities”. He added that this would require robust security guarantees from the US, supported by strong assurances from Europe.

Zelenskiy has warned that the window for securing a peace agreement is closing. He said there is an opportunity to reach a deal between now and the US midterm elections on November 3, arguing that Washington has the capacity to help bring the war to an end but must increase pressure on Moscow and provide more advanced weapons to Kyiv.

Over the weekend, the Kremlin threatened to withdraw from negotiations unless Kyiv signalled readiness to withdraw from parts of the Donetsk region it still controls. According to people familiar with Moscow’s position, Russia is prepared to sign a draft agreement if Ukraine pulls its forces from eastern Donetsk, after which a summit involving Russia, the US and Ukraine could formalise a deal including mutual troop withdrawals.

That deal might be close. A trilateral meeting between the presidents of the US, Russia and Ukraine in Geneva sometime before May has been proposed where the issue of land will be discussed, although the meeting has not been formally proposed by any of the presidents. Both Bankova and the Kremlin have indicated they would be open to such a meeting.

A similar formula was suggested in the failed 2022 Istanbul peace deal, where the issue of land was postponed and proposed to be settled by a face-to-face meeting between Putin and Zelenskiy in the first year of the war.

The Kremlin has also offered some compromises to help get a deal over the line. Russian officials have said they would withdraw from the Sumy, Kharkiv and Dnipropetrovsk regions and halt further advances in Kherson and Zaporizhzhia under a US-led ceasefire arrangement. However, Putin has dug his heels in over control of the Donbas and has refused to compromise on the control of that region.

Moscow also opposes the proposed deployment of European troops in Ukraine calling the idea a “dealbreaker”, but has reportedly dropped its earlier demand to limit the size of Ukraine’s armed forces. The AFU currently has some 800,000 men under arms, giving it by far the largest army in Europe. Zelenskiy has said that in lieu of Nato membership, Ukraine has to provide its “own Nato” – a large army to ensure the security of the country.

The negotiations come as Russia’s war economy shows signs of strain. More than 80 regions are affected by fiscal pressure, with 74 recording rising budget deficits. In 2025, the combined regional deficit widened by 250% from the previous year to RUB1.478tn, the highest level in the observed period. Last year the budget deficit came in at 2.6% of GDP – well over the initial estimate of 0.5% -- and even that amount is believed to be an underestimate as some payments were put off to the start of this year. January saw a deficit of RUB1.7 trillion (0.7% GDP) against the forecast of 1.7% of GDP for the full year. But economists say the Ministry of Finance (MinFin) will struggle to hold the deficit to that level this year with economic growth unlikely to break above 1% this year and the continued expansion of military spending.

The main problem is oil and gas revenues collapsed last year, down by a quarter in 2025 due to a global oil glut. Oil revenues fell to a quarter of the total budget income last year and have already fallen to 20% in January, according to Russian Finance Minister Anton Siluanov.

However, the Kremlin may catch a lucky break after the US launched Operation Epic Fury on February 28, attacking Iran with multiple missile strikes and sparking what is widely expected to turn into a regional war. Tehran has struck back and has already closed the Straits of Hormuz which transits a fifth of the world’s oil supplies. Oil prices jumped $10 at the open of trading on March 2 to $82 per barrel and may go as high as $150 if the war is protracted. Trump said over the weekend he expects the conflict to last four weeks, but analysts say the US could well be underestimating Iran’s ability to fight back.

Some European officials believe Russia’s growing economic stress could weaken the Kremlin’s negotiating leverage, although others caution that Moscow may instead choose to abandon talks if territorial concessions are not forthcoming. The new war in the Middle East is also likely to distract the White House from the Ukraine talks and weaken its resolve to pressure Moscow, improving Putin’s hand.

Russia has indicated it would accept a mooted US security deal guarantees for Ukraine, but has hardened its line saying it will pull out of talks completely unless Kyiv indicates it is willing to pull out of the Donbas completely.

“In recent negotiations, the Russian side explicitly said they would accept the security guarantees offered to Ukraine by the US. Concerning control over the demilitarized zone, this is a matter for the military subgroup. That is where the most progress has been made. They have reached conclusions on how monitoring will be conducted once the war ends,” said Kyrylo Budanov, head of the President’s Office and a member of Ukraine’s negotiating team.

Budanov cautioned that territorial questions remain unresolved. “Negotiations over territory are ongoing, with compromises being sought between two vastly different positions,” he said.

Getting an agreement on a real Article 5-like security guarantee for a post-war Ukraine is essential to Bankova as it would guarantee Ukraine sovereignty and prevent a new invasion. It is one of the two main outstanding sticking points in the negotiations, the other being the control over the part of Donetsk in the Donbas that is still not under Russian control.

In a negative development fresh satellite images of the Donbas show the AFU build new and extensive defences behind the line of contact in Donbas, suggesting Bankova is preparing for the possibility of the talks failing. Last week Ukrainian President Volodymyr Zelenskiy reportedly told his Cabinet to prepare for “three more years of war,” the Wall Street Journal reported. Bankova immediately denied the report after it was published.

The talks continue and are set to resume in Geneva this week as various deadlines loom. US President Donald Trump has called for fresh presidential elections and a referendum on giving up the remaining 15% of Donetsk to Russia by mid-May and an end to the war by June, or the US will walk away.

Budanov stressed that Kyiv’s priority was securing binding security guarantees before addressing other elements of a settlement. “We don’t have much time. Ultimately, we will have to declare: either we have found a solution and are ending this war, or... we continue to fight, which we are doing quite effectively and professionally,” he said.

US Special Envoy Steve Witkoff signalled that Washington would not endorse an agreement prematurely, pledging not to agree to a peace deal “until Ukrainians feel confident that Moscow will cease hostilities”. He added that this would require robust security guarantees from the US, supported by strong assurances from Europe.

Zelenskiy has warned that the window for securing a peace agreement is closing. He said there is an opportunity to reach a deal between now and the US midterm elections on November 3, arguing that Washington has the capacity to help bring the war to an end but must increase pressure on Moscow and provide more advanced weapons to Kyiv.

Over the weekend, the Kremlin threatened to withdraw from negotiations unless Kyiv signalled readiness to withdraw from parts of the Donetsk region it still controls. According to people familiar with Moscow’s position, Russia is prepared to sign a draft agreement if Ukraine pulls its forces from eastern Donetsk, after which a summit involving Russia, the US and Ukraine could formalise a deal including mutual troop withdrawals.

That deal might be close. A trilateral meeting between the presidents of the US, Russia and Ukraine in Geneva sometime before May has been proposed where the issue of land will be discussed, although the meeting has not been formally proposed by any of the presidents. Both Bankova and the Kremlin have indicated they would be open to such a meeting.

A similar formula was suggested in the failed 2022 Istanbul peace deal, where the issue of land was postponed and proposed to be settled by a face-to-face meeting between Putin and Zelenskiy in the first year of the war.

The Kremlin has also offered some compromises to help get a deal over the line. Russian officials have said they would withdraw from the Sumy, Kharkiv and Dnipropetrovsk regions and halt further advances in Kherson and Zaporizhzhia under a US-led ceasefire arrangement. However, Putin has dug his heels in over control of the Donbas and has refused to compromise on the control of that region.

Moscow also opposes the proposed deployment of European troops in Ukraine calling the idea a “dealbreaker”, but has reportedly dropped its earlier demand to limit the size of Ukraine’s armed forces. The AFU currently has some 800,000 men under arms, giving it by far the largest army in Europe. Zelenskiy has said that in lieu of Nato membership, Ukraine has to provide its “own Nato” – a large army to ensure the security of the country.

The negotiations come as Russia’s war economy shows signs of strain. More than 80 regions are affected by fiscal pressure, with 74 recording rising budget deficits. In 2025, the combined regional deficit widened by 250% from the previous year to RUB1.478tn, the highest level in the observed period. Last year the budget deficit came in at 2.6% of GDP – well over the initial estimate of 0.5% -- and even that amount is believed to be an underestimate as some payments were put off to the start of this year. January saw a deficit of RUB1.7 trillion (0.7% GDP) against the forecast of 1.7% of GDP for the full year. But economists say the Ministry of Finance (MinFin) will struggle to hold the deficit to that level this year with economic growth unlikely to break above 1% this year and the continued expansion of military spending.

With Kremlin finances under growing pressure, MinFin is planning to cut spending this year for the first time since the war started four years ago.  In January, the federal budget was executed with a deficit of RUB1.72 trillion compared to the planned annual deficit of RUB3.786 trillion (1.6% of GDP).

“Without spending cuts, given current revenues, the deficit could be at least 1.5 times larger than planned. The government plans to cover almost the entire gap between budget expenditures and revenues through domestic borrowing, The Bell reports.

The main problem is oil and gas revenues collapsed last year, down by a quarter in 2025 due to a global oil glut. Oil revenues fell to a quarter of the total budget income last year and have already fallen to 20% in January, according to Russian Finance Minister Anton Siluanov.

The current budget plan assumes an average oil price of around $60 for this year, but MinFin is reportedly considering lowering that estimate to $45-$50. However, a protracted war in the Middle East could upend the oil markets and bring the Kremlin a significant windfall after the US launched Operation Epic Fury on February 28.

Tehran has struck back and has already closed the Straits of Hormuz which transits a fifth of the world’s oil supplies. Oil prices jumped $10 at the open of trading on March 2 to $82 per barrel and may go as high as $150 if the war is protracted. Trump said over the weekend he expects the conflict to last four weeks, but analysts say the US could well be underestimating Iran’s ability to fight back.

Some European officials believe Russia’s growing economic stress could weaken the Kremlin’s negotiating leverage, although others caution that Moscow may instead choose to abandon talks if territorial concessions are not forthcoming. The new war in the Middle East is also likely to distract the White House from the Ukraine talks and weaken its resolve to pressure Moscow, improving Putin’s hand.

A round of discussions was held in Geneva last week in bilateral meetings with the US and in a trilateral format involving Switzerland. Rustem Umerov, secretary of Ukraine’s National Security and Defence Council, said a detailed reconstruction plan had been developed with US partners. A further round of talks is being organised, with the aim of making a trilateral leaders’ meeting as substantive as possible. As bne IntelliNews reported, the expansion of the delegations on both sides and the return of Vladimir Medinsky as the head of the Russian delegation, who led the Istanbul talks, suggests the two sides are now digging into the details and trying to thrash out a full and final agreement, although the last round of negotiations in Geneva were described as “tense” by participants.