Ukraine War16 August, 20263 min read
VEB.RF Fires Chief Economist Andrei Klepach After He Warns Russia Is Losing Economic Competition With West
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Andrei Klepach was reportedly fired after warning Russia is losing economic and technological competition. Warned Russia is defeated economically in its war with the West.
Klepach fired after warnings
Andrei Klepach, the chief economist at Russian state development corporation VEB.RF, was reportedly fired on Aug. 16, a day after Russian media widely circulated his warnings that Russia was losing its economic and technological competition with the West.
The Kyiv Independent said The Bell reported Klepach’s dismissal on Aug. 16, citing two people familiar with the matter, and that VEB.RF head Igor Shuvalov dismissed Klepach following an order "from above."
The Kyiv Independent also said the report came two days after The Moscow Times published excerpts from Klepach’s May remarks, which were subsequently picked up by other Russian media.
Klepach, speaking at an event organized by the Moscow Exchange’s Nikitsky Club, reportedly said, "We are falling behind. We are losing both the technological and economic competition in the world."
In the same remarks, Klepach warned, "We will not win this competition in a war of attrition," as he predicted Russia would eventually face a social crisis.
Defeat framed as attrition
Ukrainian National News (UNN) said VEB Chief Economist Andrey Klepach forecast Russia’s defeat in the economic "war of attrition" with the West, linking it to Western support for Ukraine. UNN quoted Klepach saying, "We are losing it not only to China and the United States—we are losing it in some respects to Ukraine," and described his prediction of a social crisis in the Russian Federation due to rising costs and a declining economy. UNN also reported that Klepach said Russia would not be able to win the competition in the "war of attrition" while the Western world supports Ukraine, and that costs from sanctions and the Western blockade were rising.
In the same account, UNN said Klepach recalled that after the military boom of 2023–2024, the Russian economy shifted into decline this year, with investment falling sharply and civilian industries sliding into recession. UNN further reported that Klepach blamed the extremely tight policy of the Central Bank of the Russian Federation for at least half of the economic downturn and concluded, "Economically, we will not collapse, but our lag will continue to grow, with all the consequences".
Economic strain and escalation risk
CNBC reported that after four-and-a-half years of full-scale war with Ukraine, Russia has become a two-tier economy, with Alex Kolyandr of Eurasia Group saying, "If you are lucky and you're employed by a tank production company, then everything's good." CNBC said Kolyandr warned that worsening economic conditions could incentivize President Vladimir Putin to escalate, adding, "If I were Putin, God forbid, I would probably decide that it is in my interest to escalate now." CNBC tied the focus on Russia’s wartime economy to Ukraine’s long-range drone attacks on oil refineries and delivery warehouses, and said analysts see growth masking problems including the Kremlin’s reliance on military spending and higher taxes.
“If you are lucky and you're employed by a tank production company, then everything's good.”
CNBC also reported that Russia’s gross domestic product grew 1.3% year-on-year in the second quarter and expanded 0.6% through the first half of the year, citing official data published this week. Charles Lichfield of the Atlantic Council’s GeoEconomics Center told CNBC that the deficit and inflation are the best metrics, saying, "They are on course to double the deficit they had in 2025 and that was already double what they had in 2024," while Elina Ribakova said Russia would need "much more dire" conditions to end the war.