Senior Russian banker fired after scathing speech on wartime economy

A senior Russian economist has been dismissed from his post following a controversial public critique of the nation's economic situation during the ongoing conflict with Ukraine. Andrei Klepach, chief economist at the state-controlled development bank VEB, was removed from his position shortly after delivering a sharp assessment of Russia’s economic challenges in May. Klepach, who held his role at VEB since 2014, expressed concerns over the long-term sustainability of Russia’s wartime economy. In remarks initially reported by the Moscow Times, he stated that Russia was lagging behind both China and the United States in economic performance and even falling behind Ukraine in certain areas. He warned that the economic strain caused by the war could eventually trigger a social crisis, which might emerge unexpectedly. Klepach also challenged the prevailing narrative that Ukraine’s economy was nearing collapse, arguing instead that a protracted conflict would not result in a Russian victory. He emphasized that Russia’s rising costs were making the war increasingly unsustainable. These statements marked a rare instance of a high-ranking Russian economist openly questioning the government’s economic strategy. They directly contradicted President Vladimir Putin’s assertions that Russia was managing the economic fallout from the war effectively and that Ukraine’s economic decline was inevitable. Klepach’s comments underscored the growing internal tensions within Russia’s leadership, as some officials appear hesitant to publicly dissent from the administration’s stance. VEB did not provide an explanation for Klepach’s termination, though an acquaintance shared with the business publication Vedomosti that his departure was tied to his “personal, harsh assessments of the country’s economic and political development.” This suggests that his criticisms were viewed as incompatible with the official position of the state-run institution. According to the independent Russian outlet the Bell, Klepach’s firing was ordered by the Kremlin itself, linking it directly to his May speech. This incident reflects the increasing pressure on top officials to maintain alignment with the Kremlin’s messaging, especially as Putin continues to surround himself with individuals who avoid challenging his policies. Alexandra Prokopenko, a former advisor to the Russian central bank and a researcher at the Carnegie Russia Eurasia Center, noted that Klepach was a highly regarded economist known for his willingness to speak candidly. She argued that his dismissal does not necessarily slow down the economic challenges he has highlighted, as his analyses are grounded in real-world conditions rather than political expediency. Russia’s economy is currently grappling with its most severe difficulties since the start of the full-scale invasion of Ukraine in 2022. The country faces immense financial strains due to sustained military expenditures, Western sanctions, and Ukraine’s capacity to disrupt Russia’s energy sector. In the first four months of 2026 alone, Russia’s budget deficit reached 5.87 trillion roubles ($81 billion), surpassing the government’s annual target of 3.79 trillion roubles. Some of Putin’s closest advisors have reportedly warned him that the current level of spending is becoming unsustainable. Recent attacks by Ukrainian forces on warehouses owned by Wildberries, Russia’s largest online marketplace, have further exacerbated the economic strain. These strikes have destroyed millions of dollars' worth of inventory, casting doubt on the company’s financial health and impacting thousands of small vendors reliant on the platform. Despite these challenges, Putin has shown no signs of reducing military operations or curbing expenses. Instead, the Kremlin has pursued measures such as imposing higher taxes on small businesses and pressuring wealthy individuals to contribute more to the war effort. The recent rise in global oil prices, driven by the U.S.-led conflict in Iran, has temporarily improved Russia’s financial position. However, the broader economic outlook remains grim, with many analysts predicting continued instability unless significant policy changes occur.