Russia's state-controlled development bank VEB dismissed its former chief economist, Andrei Klepach, after a report surfaced warning the country cannot win a war of attrition against Ukraine. The Kremlin insists the economy remains resilient, even as analysts flag mounting military spending, higher taxes and subsidized lending as strains beneath the surface.
Russia dismissed Andrei Klepach, the former chief economist of state-controlled development bank VEB, on Sunday after comments he made earlier this year surfaced in Russian-language media. Klepach, a former deputy economy minister, had warned in a report that Russia could not win a prolonged war of attrition with Ukraine and predicted a major social crisis.
Exiled independent outlet The Bell, citing unnamed sources familiar with the matter, linked the dismissal directly to Klepach's assessment. CNBC could not independently verify that report. According to CNBC: "In this war of attrition, we will not win the competition", Klepach said in a speech to fellow economists on May 21.
Officials insist the economy is resilient
Russian government officials told CNBC the economy is strong and healthy despite what they call unprecedented foreign pressure since the full-scale invasion of Ukraine began in 2022. The Russian embassy to the U.K. said Russia's fiscal position remains significantly stronger than that of many Western economies, pointing to foreign public debt of around $57 billion — considerably less, it said, than the U.S., U.K., Italy or France spend on debt servicing alone.
The move to dismiss Klepach appears to underscore the Kremlin's zero-tolerance approach to public criticism of its military campaign after nearly four-and-a-half years of war. Anders Aslund, a Swedish economist and former senior fellow at the Atlantic Council, said Klepach concluded Russia could not win a war of attrition and was likely headed for a social crisis "as in 1917". Nigel Gould-Davies, a senior fellow for Russia and Eurasia at the International Institute for Strategic Studies, described Klepach as very capable and smart.
Strains beneath the surface
Russia's wartime economy has come into sharper focus in recent weeks amid Ukraine's long-range drone attacks on oil refineries and delivery warehouses. Though the economy has defied expectations and is even growing slowly according to recent data, analysts say this masks problems such as the Kremlin's reliance on military spending, higher taxes and subsidized bank lending.
Source: CNBC
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