Andrey Klepach, one of Russia’s most prominent economists and the chief economist of the state development bank VEB.RF, has been removed from his position after making unusually blunt warnings about the economic consequences of Russia’s war in Ukraine. His dismissal was confirmed by VEB and Klepach himself, although the bank did not publicly give a reason.
Who is Andrey Klepach?
Klepach is a veteran Russian economist who served as VEB.RF's chief economist from 2014. Before joining the bank, he spent about a decade at Russia's Ministry of Economic Development and served as a deputy minister from 2008 to 2014. He has therefore been part of Russia's economic establishment for many years.
What did he say?
The controversy centres on a speech Klepach delivered in May 2026 at the Nikitsky Club, a forum bringing together economists, academics and government officials. The remarks only became widely publicised in August.
Klepach warned that Russia was falling behind economically and technologically, not only compared with China and the United States but, in some respects, even compared with Ukraine. He attributed part of Ukraine's ability to continue fighting to extensive financial support from Western countries.
His most striking warning concerned the long-term war effort. He argued that Russia would not win a prolonged war of economic attrition, saying that Moscow was operating under the assumption that Ukraine's economy would eventually collapse, when in his assessment that was unlikely to happen. He warned that Russia's costs were continuing to rise and predicted that the economic pressure could eventually produce a social crisis.
Why is the war becoming expensive for Russia?
1. Klepach pointed to several pressures affecting Russia's economy:
2. Huge military expenditure as the war continues.
3. Western sanctions, which restrict access to technology, finance and international markets.
4. Ukrainian attacks on Russian infrastructure, including energy, logistics, ports and industrial facilities.
5. High domestic interest rates, which make investment more expensive.
6. Slower economic growth and weakening activity in some civilian industries.
7. A growing gap between Russia and major competitors in technology and economic development.
8. He also argued that Russia's post-2022 military-driven economic growth had begun to lose momentum, with some civilian sectors experiencing contraction.
What happened after his speech became public?
The Russian state news agency TASS reported on Sunday that Klepach was no longer VEB.RF's chief economist and that a successor had already been selected. VEB confirmed that he had left the position but did not explain why. Klepach subsequently confirmed his dismissal to Reuters.
Some independent Russian reporting cited sources who said the dismissal was connected to his comments. One report claimed the order came from the Kremlin, but that allegation has not been publicly confirmed by the Kremlin or VEB, so it should be treated as a reported claim rather than an established fact.
Why is his dismissal significant?
The case is significant because Klepach was not an opposition politician or an outsider. He was a senior economist working within a major state institution and had held important government positions.
His comments therefore provide a rare example of a senior figure inside Russia's economic establishment publicly acknowledging the costs and risks created by the war.
His removal also comes at a time when Russia is facing increasing economic pressure. According to reporting cited by The Guardian, Russia's federal budget deficit reached about 5.87 trillion roubles ($81bn) in the first four months of 2026, already exceeding the government's target of 3.79 trillion roubles for the entire year.
At the same time, Moscow has continued to prioritise military spending rather than significantly reducing the cost of the war. The result is a difficult balancing act: maintaining military operations while trying to prevent inflation, investment problems and pressure on the broader economy from becoming more serious.
Does this mean Russia's economy is about to collapse?
No. Klepach himself reportedly did not predict an imminent collapse of the Russian economy. His argument was more nuanced: Russia could continue functioning, but prolonged wartime spending and sanctions could cause it to fall further behind economically and technologically and eventually contribute to a serious social crisis.
That distinction is important. Russia has demonstrated considerable economic resilience since the full-scale invasion of Ukraine in 2022, but resilience does not mean the war has no economic cost.
The bigger picture
Klepach's dismissal comes amid growing signs of tension between the Kremlin's optimistic portrayal of the Russian economy and warnings from some economists that the costs of the war are becoming increasingly difficult to sustain.
His case is therefore about more than one economist losing his job. It highlights a broader question facing President Vladimir Putin: how long can Russia maintain extremely high military spending and absorb sanctions, Ukrainian attacks and economic pressure without seriously damaging its long-term economic prospects?
For now, the Kremlin has shown no clear indication that it intends to substantially reduce wartime spending. Klepach's warning suggests that some economists within Russia's own establishment believe the longer the war continues, the greater those economic and social costs could become.