Andrei Klepach, chief economist at VEB, Russia’s second-largest state-controlled development bank, was terminated from his position following the disclosure of remarks he had made to fellow economists in May. In those comments, first publicized by the Moscow Times, Klepach expressed concerns that Russia was losing economic ground relative to China, the United States, and in some areas even Ukraine itself.
Klepach’s speech centered on structural weaknesses in the Russian economy stemming from wartime pressures. He cautioned that sustained military expenditures would trigger a social crisis, though the timing remained uncertain. He directly challenged prevailing assumptions within Russian leadership about Ukraine’s economic trajectory, stating that expectations of imminent Ukrainian collapse were unrealistic and that a war of attrition would not favor Moscow. These assessments contradicted official narratives promoted by President Vladimir Putin regarding Russia’s economic resilience and Ukraine’s supposed inevitable exhaustion.
While VEB provided no official explanation for the termination, sources indicated the dismissal was directly connected to Klepach’s May address. According to reporting by the independent outlet the Bell, the Kremlin had ordered his removal. The episode reflects broader patterns within Russian governance, with analysts noting that senior officials increasingly face pressure to align with the president’s stated positions rather than offering candid economic assessments.
Klepach’s departure occurs amid significant strain on Russian finances. Budget deficits in the first four months of 2026 reached 5.87 trillion roubles, substantially exceeding annual targets. Recent Ukrainian military strikes have damaged major commercial infrastructure, including facilities operated by the nation’s largest e-commerce company, further pressuring economic stability. While elevated oil prices have provided temporary financial relief, some of Putin’s advisers have privately expressed concern that current spending levels remain unsustainable. Putin has shown no willingness to reduce military expenditures, instead pursuing additional revenue through increased business taxation and greater demands on wealthy oligarchs.
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