Russian state economist fired after predicting social crisis and defeat in ‘war of attrition’ with West

Andrey Klepach, chief economist at the Russian state development corporation VEB.RF, was fired over the weekend after journalists drew attention to a speech in which he warned of Russia’s technological and economic decline and predicted a looming social crisis, the independent outlet The Bell reported, citing two people who know the economist.

According to The Bell, Klepach was dismissed on Sunday, just one day after Russian media followed The Moscow Times in reporting on remarks he made in May. One source told The Bell that VEB chairman Igor Shuvalov fired the economist after receiving a call “from above”. A second source linked the decision to the May speech.

Klepach delivered the address, titled “Russia’s Economy and Geopolitical Challenges”, on 21 May at a meeting of the Moscow Exchange’s Nikitsky Club discussion forum. In it, he said Russia was losing the technological and economic race with China and the United States, and in some areas, even with Ukraine.

“We won’t prevail in this war of attrition. We have this illusion that everything over there will collapse. It hasn’t collapsed and it won’t. Meanwhile, our own costs keep growing,” Klepach said, though he acknowledged that Ukraine’s economy continues to function thanks to Western aid.

Klepach argued that Russia’s economy may be able to withstand the war and Western sanctions, but technological backwardness, falling investment, a declining healthcare system and widening inequality could trigger an unexpected social crisis. He drew a comparison to the periods preceding the February Revolution of 1917 and the collapse of the Soviet Union.

“I believe Russia won’t fall apart, but I’m almost certain we’re headed for a social crisis. Economically we won’t collapse, but our backwardness will keep deepening, with all the consequences that follow,” he said.

He also forecast that if the war, sanctions and a tight monetary and fiscal policy continue, Russia’s economy will be unable to grow faster than 2% to 2.5% a year. With a new wave of sanctions and the toll of Ukrainian strikes on Russia’s industrial and transport infrastructure, he predicted GDP growth in 2027 could fall to just 1% to 1.5%.

Klepach spent around 12 years as VEB’s chief economist. He headed the macroeconomic forecasting department at the Economic Development Ministry starting in 2004 and served as deputy minister from 2008 to 2014. After moving to VEB, he also served as the corporation’s deputy chairman before stepping down from its board in 2019, while remaining chief economist. VEB.RF, a state development corporation, has been led since 2018 by former First Deputy Prime Minister Igor Shuvalov.