Russia’s state development bank VEB has fired its chief economist Andrei Klepach after he delivered a scathing assessment of the wartime economy, warning that Moscow is losing its war of attrition and that a social crisis looms on the horizon.
Klepach, who held the role at VEB since 2014 and is one of Russia’s most prominent macroeconomists, made the remarks in a May address to a financial forum. The speech was first reported by the Moscow Times on August 14 and prompted his dismissal within days, according to the independent outlet the Bell, which cited sources saying the Kremlin directly ordered the firing.
Falling Behind in Every Direction
In the speech, Klepach said Russia was falling behind China and the United States economically, and in some respects, Ukraine. He warned that pressures on Russia’s economy from the ongoing war would inevitably lead to a social crisis that would erupt when no one particularly expects it.
We will not win this competition in a war of attrition with Ukraine, Klepach told the forum. We have an illusion that everything will collapse there. It has not collapsed, and it will not. Our costs are growing. He also criticized Russia’s over-dependence on China and said uncoordinated monetary, budgetary, and industrial policy had contributed to this year’s economic slowdown.
Budget Deficit Surges Past Targets
The dismissal comes against a backdrop of deepening fiscal strain. Russia’s budget deficit hit 5.87 trillion roubles, or roughly 81 billion dollars, in the first four months of 2026 alone, well above the government’s full-year target of 3.79 trillion roubles.
Some of President Vladimir Putin’s closest advisers have privately warned him that the current level of wartime spending is becoming unsustainable, according to two sources with knowledge of the discussions cited by the Guardian. Russia’s economy is facing its most difficult period since the start of the full-scale invasion of Ukraine in 2022, strained by massive wartime spending, western sanctions, and Ukraine’s growing ability to strike at Moscow’s oil and gas infrastructure.
VEB confirmed in a written response that Klepach was no longer its chief economist, but did not explain the reason for his departure. Klepach himself confirmed his dismissal to Reuters. There is currently no sign of serious social unrest in Russia, where tight wartime censorship, protest bans, and long jail sentences for dissidents remain firmly in place.
Sources: the Guardian; Reuters; the Moscow Times; the Bell; ABC News Australia
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