Top Russian Economist Ousted Following Public Warning Over Mounting Ukraine War Costs

Andrey Klepach, who attended a session of the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia on June 16, 2022, has been removed as the chief economist at Russia’s state development bank VEB, according to Russian media reports. His dismissal follows the public release of a speech in which he cautioned that Russia’s economy is suffering severe harm from the ongoing war on Ukraine.

Russian state news agency TASS reported on Sunday that Andrey Klepach no longer holds his position at the bank. In a statement cited by TASS, the bank noted that Andrey Klepach is no longer serving as chief economist at VEB.RF, adding that his successor will soon be appointed and a candidate has already been selected.

Andrey Klepach, appointed to the role in 2014, confirmed his dismissal to the Reuters news agency. Reports indicate he warned of the economic damage caused by the war during a financial forum in May, though his remarks only gained widespread attention the previous week.

During his address, Andrey Klepach stated that Russia is falling behind and losing both technological and economic competition globally, noting that the country is losing not only to China and the United States, but in some ways to Ukraine as well, due to Kyiv receiving financial support from the West.

He predicted that the economic difficulties stemming from the Ukraine war would eventually trigger a social crisis. Expressing doubt over winning a war of attrition, he remarked that there is an illusion that everything in Ukraine will collapse, emphasizing that it has not collapsed and will not collapse while Russia's costs continue to mount.

The speech was published on the website of the Nikitsky Club, a forum bringing together economists, academics, and government officials. It represents a rare public critique from a senior figure at a state institution regarding the financial burden of continuing the military campaign launched by Moscow in 2022.

Before joining VEB, Andrey Klepach accumulated extensive experience across various economic institutions and spent 10 years working at the Ministry of Economic Development.

In his May speech, Andrey Klepach also warned that Russia’s resilience against Western sanctions is facing severe tests driven by Ukraine's strategic targeting of Russian energy and logistics infrastructure. He highlighted escalating income inequality and a gross domestic product growth rate trailing behind both the US and Ukraine. While the Russian central bank indicated in June that the economy might record zero growth this year, President Vladimir Putin assured citizens that the economy remains stable despite external attempts to undermine it.

Reflecting on governance, Andrey Klepach criticized the quality of leadership in Russia, stating that it is constantly deteriorating and that decisions with extremely low justification yet long-term strategic consequences are continuously being made.