Andrei Klepach, the chief economist at Russia’s second-largest bank, has been fired after warning that Moscow would not win a prolonged economic war with Ukraine. The bank was state-controlled. The message from above was blunt enough: speak honestly about the war economy, and the institution will show you the door.
Klepach had served as chief economist at VEB since 2014. Russian media reported on a scathing speech he delivered to fellow economists in May, and he was fired days later. In those remarks, first reported by the Moscow Times, Klepach said Russia was “falling behind” China and the US economically, and “in some respects, Ukraine”. He also warned that pressure from the war would inevitably lead to a “social crisis” that would erupt “when no one particularly expects it”.
The War Economy Eats Its Own
Klepach’s comments cut straight through the official story. He said expectations of an imminent Ukrainian economic collapse were misplaced and that a prolonged standoff with Ukraine would not lead to Russia’s victory. “We will not win this competition in a war of attrition with Ukraine,” Klepach said. “We have an illusion that everything will collapse there. It hasn’t collapsed, and it won’t. Our costs are growing.”
That kind of language doesn’t survive long inside a state-controlled bank during wartime. VEB did not offer a reason for Klepach’s firing. An acquaintance of Klepach told the business outlet Vedomosti that his departure was “connected to his personal, harsh assessments of the country’s economic and political development, which cannot possibly align with the corporation’s position”. The independent Russian outlet the Bell reported, citing sources, that Klepach was fired on orders from the Kremlin and that his dismissal was directly linked to his May address.
Alexandra Prokopenko, a former adviser to the Russian central bank and a fellow at the Carnegie Russia Eurasia Center, described Klepach as a respected economist who was unafraid to voice views that diverged from the official line. She said: “Klepach’s dismissal – he is one of Russia’s best macroeconomists – is unlikely to delay the looming crisis he has been warning about.” Prokopenko said Klepach’s forecasts were “based on assessments of reality rather than a desire to please anyone” and were often more pessimistic than the official figures.
Budgets, Deficits, and the Price of Command
Russia’s economy is facing its most difficult period since the start of Vladimir Putin’s full-scale invasion of Ukraine in 2022. It is being strained by massive wartime spending, western sanctions and Ukraine’s growing ability to strike at Moscow’s oil and gas industry. In the first four months of 2026 alone, Russia’s budget deficit hit 5.87tn roubles ($81bn), well above the government’s 3.79tn-rouble target for the entire year.
Some of 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. Publicly, though, the line remains the same. Klepach’s firing shows how little room there is for dissent when the state needs economists to decorate its war machine with optimism.
Recently, Ukrainian strikes have hit dozens of warehouses belonging to Wildberries, Russia’s largest e-commerce retailer, destroying billions of dollars’ worth of stock. The attacks have raised questions about the company’s financial stability and dealt a severe blow to thousands of independent sellers who depend on the platform for their livelihoods. The war reaches far beyond generals and ministries. It lands on warehouse shelves, small sellers, and the people who keep the machine moving.
More Taxes, More Pressure, More War
Putin has given no indication that he is prepared to scale back the war or rein in spending. Instead, the Kremlin has sought additional revenue by raising taxes on smaller businesses and putting pressure on oligarchs to contribute more towards the war effort. That’s the familiar state answer: squeeze the bottom, lean on the rich, keep the guns funded.
Russia’s finances have also been bolstered by this year’s surge in oil prices after the US war in Iran, providing Moscow with billions of dollars in additional revenue and helping cushion some of the mounting economic pressure. Even there, the logic is the same. War feeds war. Revenue from one conflict helps prop up another, while workers, sellers, and ordinary people absorb the costs.
Klepach’s firing doesn’t change the numbers he pointed to. It just shows how the Kremlin handles inconvenient arithmetic.