Russia’s state development bank dismissed its chief economist after he told a room full of officials and academics that the country was falling behind in the global economic competition, and losing ground not just to China and the United States, but to Ukraine itself. Andrei Klepach, a veteran government economist who spent a decade at Russia’s Economy Ministry before joining VEB.RF in 2014, was removed from his post after a May speech that went largely unnoticed until Russian media picked it up in recent days.
Two sources familiar with the matter told Reuters that Klepach’s public remarks triggered his dismissal. VEB.RF confirmed he was no longer chief economist but offered no reason for his departure. Klepach himself confirmed the firing.
The episode offers a rare window into internal anxiety within Russia’s economic establishment, and into the Kremlin’s willingness to silence anyone who punctures the official narrative, even a longtime insider.
Klepach delivered the remarks at the Nikitsky Club, a forum of economists, academics, and government officials. His language was blunt by any standard. By Russian standards, where dissent from wartime orthodoxy can carry criminal penalties, it was extraordinary.
“We are falling behind. We are losing both the technological and economic competition in the world.”
He went further, warning that Moscow’s position relative to Kyiv was deteriorating:
“And we are losing it not only to China and the United States, in some ways we are losing it to Ukraine too.”
Klepach rejected the Kremlin’s implicit assumption that Ukraine would eventually buckle under sustained pressure. His assessment was the opposite.
“We will not win the competition in this war of attrition. We have the illusion that everything there [in Ukraine] will collapse. It has not collapsed and will not collapse. Our costs are mounting.”
He stopped short of predicting a Russian economic collapse, but warned that the country’s lag behind its rivals would keep growing, “with all the resulting consequences.” He also raised the prospect of a social crisis.
For months, the speech drew no attention. Then Russian media noticed. Within days, Klepach was gone.
Klepach was not some fringe dissident. He was a career government economist embedded in a state institution. His assessment aligned with data from Russia’s own central bank, which said in July that the country’s economic growth could fall as low as zero this year.
The firing fits a broader pattern. In the same week, Russia’s Supreme Court barred the Yabloko party, one of the country’s few remaining liberal opposition parties, from participating in next month’s parliamentary election. Yabloko’s deputy chairman, Lev Shlosberg, was sentenced to 11 years and one month in a penal colony on charges of “discrediting Russia’s armed forces and spreading false information.”
Shlosberg, one of Russia’s last prominent liberal opposition figures, described the war as a catastrophe for Russia during his trial in Pskov. He maintained his innocence, called the case political, and repeated his call for a ceasefire. The sentencing was reported by Mediazona, an independent Russian outlet.
The message from Moscow is consistent: speak plainly about the war’s costs, and the state will remove you, whether you are a party leader or a bank economist.
That pattern of repression has implications well beyond Russia’s borders. In Washington, Congress has spent more than a year advancing Russia sanctions legislation, and the internal cracks Klepach described are precisely what those sanctions are designed to widen.
Klepach’s dismissal landed on the same day that EU foreign policy chief Kaja Kallas told Germany’s Die Welt that she plans to propose what she called the “most far-reaching sanctions listings since the start of the war.” The EU’s diplomatic service is expected to present a list targeting approximately 1,600 additional Russian individuals and entities to EU governments in early September, with adoption aimed for October.
The proposed measures would focus on Russia’s military-industrial complex and include asset freezes, travel bans, and transaction bans. Kallas stated that existing EU sanctions have already deprived Russia’s war machine of more than $1.16 trillion.
Whether that figure represents cumulative impact or an annual measure remains unclear from available reporting. But the scale of the proposed expansion, 1,600 names and entities in a single package, suggests Brussels sees an opening to intensify economic pressure on Moscow at a moment when even Russia’s own economists are admitting the strain.
Here is the complication that Western policymakers cannot afford to ignore. A European intelligence source told Fox News Digital that Russia’s deeper economic problems should not be confused with immediate financial pressure on Putin.
“It doesn’t solve the fundamental economic problems in Russia, but from a budgetary point of view, Putin is OK actually. He’s not under pressure.”
The source assessed that higher oil prices had helped Moscow cover more of its budget deficit. That cushion, the source argued, could delay expectations that economic deterioration would force Putin to end the war, potentially allowing Moscow to continue fighting “another spring” or “another season.”
This is the gap that should concern American taxpayers and policymakers alike. Sanctions may be inflicting long-term structural damage on Russia’s economy. Klepach’s own words confirm that assessment. But if oil revenue keeps plugging the short-term budget hole, Putin faces no immediate reckoning. The war grinds on. The costs, in lives, in treasure, in global instability, keep climbing.
The debate over how much support to send Ukraine has divided even members of the same party. Seven House Republicans broke with Speaker Johnson earlier to advance a Ukraine aid package, a split that reflected genuine disagreement about whether continued spending advances or undermines American interests.
While economists and diplomats traded assessments, the fighting itself showed no sign of slowing. Russian strikes targeted port infrastructure in Ukraine’s Izmail district in the Odesa region overnight. A separate strike damaged a civilian Togo-flagged vessel and injured four people.
ArcelorMittal reported that a Russian missile strike on its steel plant in Kryvyi Rih over the weekend killed two employees and injured three employees and contractors. The attack damaged major energy and blast-furnace facilities and partially halted production.
Ukraine struck back. A drone attack on Russia’s southern Astrakhan region killed a woman and hit an industrial facility. A June 18 Ukrainian drone attack had previously struck the Kapotnya oil refinery and other targets inside Moscow itself.
The civilian toll continues to mount on both sides. Escalating drone exchanges across multiple fronts have become a grim feature of a conflict now well into its fourth year, with no ceasefire in sight.
Russian opposition figure Maxim Katz told Fox News Digital that fuel shortages are exposing Putin’s vulnerability, even if Moscow can still supply its military. The political significance of those shortages, visible in photos from Moscow itself, is that ordinary Russians are beginning to feel the costs that Klepach tried to describe in clinical, economic terms.
What makes Klepach’s case significant is not just what he said, but who he was. This was not a dissident blogger or an exiled journalist. He was the chief economist of a state development bank, a man who had served inside Russia’s economic bureaucracy for decades. He spoke at a forum attended by government officials. He used careful, measured language. He did not call for regime change or denounce the war in moral terms. He simply described the math.
And for that, he was fired.
The Kremlin’s response tells you more than any Western intelligence briefing could. If the economic picture were as rosy as Moscow’s public messaging suggests, Klepach’s speech would have been ignored as the musings of a cautious technocrat. Instead, it was treated as a threat.
The political crackdown running alongside the economic anxiety only reinforces the picture. Barring Yabloko from elections. Sentencing Shlosberg to more than a decade in a penal colony. Firing an economist for stating facts that Russia’s own central bank data supports. These are not the actions of a government confident in its position. They are the actions of a government that knows its position is fragile and has decided that silence is the only acceptable response.
The question for American policymakers, and for the American public footing a significant share of the bill, is whether Western strategy is calibrated to exploit that fragility or merely to sustain a stalemate. Warnings from senior political figures about the costs of inaction have taken on new urgency as the conflict drags forward with no clear end state.
When a regime fires its own economist for telling the truth, it has already answered the question it refuses to ask out loud. The answer is: we’re losing.
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