Andrei Klepach, chief economist at Russia's second-largest bank, has been fired after warning that Moscow cannot win a prolonged economic war with Ukraine and that the country's mounting wartime costs will trigger a social crisis. His dismissal offers a rare glimpse into the fiscal pressures straining Putin's war machine — and the Kremlin's intolerance of dissent on economic reality.
Klepach had served as chief economist at the state-controlled development bank VEB since 2014. He was sacked days after delivering a scathing speech to fellow economists in May, first reported by the Moscow Times. In those remarks, he said Russia was "falling behind" China and the US economically, and "in some respects, Ukraine". He warned that pressures on Russia's economy would inevitably lead to a "social crisis" that would erupt "when no one particularly expects it".
The Fiscal Picture
Klepach's comments directly contradicted Vladimir Putin's claims that Moscow was successfully weathering the economic pressures of the war and that Ukraine's economic exhaustion was only a matter of time. "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."
Russia's economy is facing its most difficult period since the start of Putin's full-scale invasion of Ukraine in 2022. 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. The gap reveals the unsustainable trajectory of wartime spending, strained further by western sanctions and Ukraine's growing ability to strike at Moscow's oil and gas industry.
VEB didn't offer a reason for Klepach's firing. An acquaintance 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.
Reality vs. Official Line
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. "Klepach's dismissal – he is one of Russia's best macroeconomists – is unlikely to delay the looming crisis he has been warning about," she said. 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.
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. 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.
Revenue Squeeze
Putin has given no indication that he's 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. Russia's finances have 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.
The silencing of Klepach — a 12-year veteran of VEB and one of Russia's most credible macroeconomists — underscores the Kremlin's preference for loyalty over expertise as the war enters its fifth year.
Why This Matters:
Klepach's firing reveals the fiscal strain beneath Putin's wartime narrative. Russia's budget deficit has already blown past the full-year target in just four months, and the Kremlin is resorting to higher taxes on small businesses and oligarch shakedowns to keep the war funded. For Europe, this matters in two ways. First, it shows that economic pressure on Moscow is working — western sanctions and Ukrainian strikes are forcing real trade-offs. Second, it's a reminder that authoritarian regimes suppress inconvenient truths until the crisis becomes unavoidable. Europe's continued support for Ukraine, including military aid and sanctions enforcement, is forcing Moscow into an unsustainable fiscal corner. The question isn't whether Russia can afford this war indefinitely. It's whether Europe can maintain the pressure long enough to make the cost unbearable.