Top Russian economist ousted after warning of growing costs of Ukraine war

Andrei Klepach, chief economist at Russia's state development bank VEB.RF, was fired after publicly stating that Russia is losing an economic "war of attrition" with the West and could face a social crisis. Klepach warned that Russia is falling behind technologically and economically, with mounting costs from the war in Ukraine and increasing pressure from Ukrainian attacks on infrastructure. While Russia has shown resilience to sanctions, a European intelligence source suggests higher oil prices are currently allowing Moscow to manage its budget deficit, potentially prolonging its ability to sustain the war effort despite long-term economic challenges. This comes as the European Union plans to expand sanctions targeting Russia's military-industrial complex.

Andrei Klepach, chief economist at Russia's state-controlled VEB bank, has been fired following a speech where he criticized the wartime economy. Klepach reportedly stated that Russia was falling behind China, the US, and even Ukraine economically, and warned that Russia would not win a prolonged economic war with Ukraine, predicting a social crisis. His remarks, which contradicted official government claims, were first reported by Russian media in May. VEB has not provided a reason for his dismissal, but sources suggest it was due to his critical assessments and possibly ordered by the Kremlin. Russia's economy is facing significant strain from wartime spending and sanctions, with a substantial budget deficit already recorded this year.