Russian state economist fired after stark warning about Moscow’s economic future

A prominent Russian state economist has been dismissed after issuing a blunt assessment that Moscow is losing an economic "war of attrition" with the West and faces growing risks of a social crisis. Andrei Klepach, chief economist at state development bank VEB.RF, was removed from his post following remarks in which he described Russia's declining position in global technological and economic competition. Klepach made his comments during a speech at the Nikitsky Club, a forum for economists, academics, and government officials, in May. He stated that Russia is losing ground not only against China and the United States but also against Ukraine, citing the latter's resilience due to sustained Western financial support. His remarks, which initially went unnoticed in Russian media, gained traction recently, prompting speculation about their impact on Kremlin dynamics. VEB.RF confirmed Klepach's removal from his role but did not provide specific reasons. Klepach himself acknowledged the dismissal, confirming that he is no longer serving as chief economist. In his speech, he warned that Russia's costs are increasing, and the country is failing to maintain its competitive edge. He predicted that the economic gap would widen, leading to potential social unrest. Klepach also highlighted the strain on Russia's economy from Ukrainian attacks on critical infrastructure, including energy and logistics systems. These strikes have disrupted supply chains and contributed to inflationary pressures. According to the Russian central bank, economic growth could stagnate or even decline to zero this year, underscoring the severity of the situation. Despite these challenges, Klepach admitted that Russia has shown resilience to Western sanctions. However, he cautioned that this resilience might not be sustainable indefinitely. He suggested that the cumulative effect of ongoing conflicts and economic strains could lead to unforeseen crises within the Russian population. European intelligence sources have offered a different perspective, noting that high oil prices have enabled Moscow to offset some of its budget deficits. This, they argue, provides the Kremlin with temporary relief, allowing it to avoid immediate financial pressure on President Vladimir Putin. The source emphasized that while this situation offers short-term stability, it does not resolve underlying economic issues. This analysis suggests that the current economic landscape allows Putin to maintain his grip on power for the foreseeable future. However, it also implies that the long-term sustainability of Russia's war efforts remains uncertain. As the conflict continues, the interplay between economic pressures and political stability will remain a key factor in shaping the trajectory of the war. The implications of Klepach's warnings extend beyond internal Kremlin politics. They raise questions about the effectiveness of Western sanctions and the broader strategy of economic warfare. Analysts suggest that the evolving economic conditions may influence the duration and intensity of the conflict, potentially affecting both sides' strategic calculations. As the situation develops, the focus will likely shift toward how these economic factors shape the future of the war and its geopolitical ramifications.