Russia fires economist who said it cannot win war of attrition

Russia's state development corporation VEB.RF has removed its chief economist, Andrei Klepach, after remarks in which he said the country cannot win a prolonged war of attrition against Ukraine and is falling behind economically and technologically.

The independent outlet The Bell was first to report the dismissal on Sunday, August 16, citing two people who know the economist. It came one day after Russian media, following The Moscow Times, drew wide attention to remarks Klepach made in late May, which then circulated across Russian outlets over the weekend.

VEB.RF confirmed to the Russian business daily Vedomosti that Klepach had left the post of chief economist but declined to say why. Klepach, appointed to the role in 2014 and in it for about 12 years, confirmed his own dismissal to Reuters.

The speech that circulated

Klepach delivered the address, titled "Russia's Economy and Geopolitical Challenges," on May 21 at a meeting of the Moscow Exchange's Nikitsky Club, a forum of economists, academics and government officials. His words drew little notice at the time and spread only in August, after excerpts were published.

In the speech, he said Russia was losing the technological and economic race not only to China and the United States but, in some respects, to Ukraine, which he tied to the financial support Kyiv receives from the West. The Ukrainian economy, he added, was surviving despite everything.

Klepach argued the economy could withstand the war and Western sanctions, but that technological backwardness, falling investment, a declining healthcare system and widening inequality could set off a social crisis when few expected it.

Sberbank cut its 2026 growth forecast for Russian output on July 29 to a range of zero to 0.5 percent, from 0.5 to 1 percent. The Bank of Russia lowered its own 2026 forecast to a range of zero to 1 percent on July 24. The budget deficit reached 5.87 trillion roubles, about $81 billion, in the first four months of the year, against a full-year target of 3.79 trillion roubles, according to Finance Ministry data published on May 8.

From boom to contraction

After rapid expansion in 2023 and 2024, driven largely by government military spending and investment in the defense industry, the economy turned down this year, Klepach said. Investment activity had fallen sharply, he said, and civilian sectors from aircraft manufacturing and construction materials to light industry and food production had slid into recession.

He described losses from Ukrainian strikes on ports, oil and gas facilities, chemical plants and logistics as a noticeable macroeconomic barrier to growth.

We won't win the competition in this war of attrition. We're under the illusion that everything [in Ukraine] will collapse. It hasn't, and it won't. Meanwhile, the costs we bear are mounting.

He also pointed to tighter United States sanctions imposed in late 2025, saying they had led India and China to reduce their purchases of Russian oil despite their repeated statements that they do not comply with the restrictions.

A firing within a day

The dismissal followed the coverage by less than 24 hours. One source told The Bell that VEB.RF chairman Igor Shuvalov removed Klepach after a phone call 'from above.' A second source linked the decision to the May speech.

An acquaintance told Vedomosti that the corporation had objected to Klepach's 'harsh personal assessments' of Russia's economic and political development, views that did not match VEB.RF's own position.

I don't believe Russia will collapse, but I'm almost certain we're coming up against a social crisis.

In predicting that upheaval, Klepach compared the potential crisis to the February Revolution of 1917 and the collapse of the Soviet Union in 1991, while maintaining that the country itself would hold together.

A Kremlin insider

Klepach's assessment carried weight because of where he sat. He headed the macroeconomic forecasting department at the Economic Development Ministry from 2004 and served as deputy minister from 2008 to 2014. He then moved to VEB, where he was also deputy chairman before stepping down from its board in 2019 and staying on as chief economist.

The Bell, which broke news of the dismissal, called Klepach one of Russia's best macroeconomists and said his forecasts rested on assessments of reality rather than a desire to please.

A message to the elite

Klepach was not an opposition figure but an official embedded in the state apparatus. CNN said his remarks and his departure were a reminder both of the internal criticism directed at President Vladimir Putin as the war drags on and of the cost incurred by those who speak out.

Ukraine has intensified aerial attacks on Russian infrastructure since May in what CNN described as an effort to bring the war home to ordinary Russians and to press the business elite to push for an end to the fighting.

The firing also lands as the European Union prepares a further round of sanctions. Reuters, citing EU diplomats, reported that the bloc's diplomatic service will propose listing about 1,600 Russian individuals and entities tied to the military-industrial complex, to be put to member states in early September and adopted in October.

What is still unclear

A European intelligence source told Fox News Digital that Russia's deeper economic problems should not be confused with immediate financial pressure on President Vladimir Putin. Higher oil prices, the source said, had helped Moscow cover more of its budget deficit and could give the Kremlin more time before economic limits force difficult choices about the war.

For Washington and its European allies, the open question is whether years of economic pressure are beginning to constrain Moscow's ability to sustain the war, or whether Russia can keep absorbing the costs while replenishing what it needs to fight.

VEB.RF confirmed only that Klepach had left the post of chief economist and that a successor had been chosen, without naming one. It declined to explain why, and neither the corporation nor the Kremlin has publicly addressed the account, attributed to sources by The Bell, that the decision came after a call from above.

Klepach's speech was a rare public acknowledgment from a senior Russian economist of the strains on the wartime economy. He dismissed the expectation of an imminent Ukrainian collapse, arguing that a prolonged standoff would not deliver a Russian victory. The social crisis he foresaw, he said, would arrive precisely when few expected it.

For now, the assessment that cost him his job remains on the record, circulated widely in Russian media even as the state moved to contain it. Whether Russia's economy bends under the war's mounting costs, as he predicted, is the question his firing leaves unanswered.