A prominent Russian state economist has been fired after publicly stating that Moscow is losing an economic "war of attrition" with the West and could face a social crisis. Andrei Klepach, chief economist at the state development bank VEB.RF, was dismissed following remarks in May where he asserted that Russia is falling behind technologically and economically and is suffering mounting costs from the war in Ukraine.
VEB.RF confirmed Klepach's departure but did not provide a reason. Klepach, who had held the position since 2014, confirmed his dismissal. "We are falling behind. We are losing both the technological and economic competition in the world," Klepach said in a speech to the Nikitsky Club, a forum attended by economists, academics, and government officials. He noted that Russia was losing ground not only to China and the United States but also, in some ways, to Ukraine, attributing Ukraine's resilience to Western financial support.
"We will not win the competition in this war of attrition," Klepach stated. "We have the illusion that everything there [in Ukraine] will collapse. It has not collapsed and will not collapse. Our costs are mounting."
While Klepach acknowledged Russia's resilience to Western sanctions, he warned that Ukrainian attacks on energy and logistics infrastructure were increasing economic pressure. Russia's central bank indicated in July that economic growth could fall to zero this year, and repeated Ukrainian strikes on Russian refineries have disrupted supplies and contributed to inflation risks. Klepach predicted that Russia's economic lag would continue to grow, potentially leading to a social crisis "precisely when nobody is particularly expecting it."
However, a European intelligence source suggested that Russia's deeper economic problems do not equate to immediate financial pressure on President Vladimir Putin. The source indicated that higher oil prices have helped Moscow cover its budget deficit, potentially allowing the Kremlin more time before economic constraints force difficult decisions regarding the war. This assessment suggests that while Russia may be losing economic ground long-term, it may still possess sufficient near-term revenue to sustain its war effort.
This development occurs as the European Union prepares to escalate its economic pressure on Moscow. EU foreign policy chief Kaja Kallas plans to propose what she described as the "most far-reaching sanctions listings since the start of the war." According to Kallas, existing EU sanctions have already deprived Russia's war machine of over $1.16 trillion. EU diplomatic sources indicated that the bloc's diplomatic service is expected to propose sanctions against approximately 1,600 additional Russian individuals and entities, with a strong focus on the country's military-industrial complex. These measures, expected to include asset freezes and travel bans, are slated for presentation to EU governments in early September and potential adoption in October.
Inside Russia, authorities have also taken action against a prominent liberal opposition figure. Lev Shlosberg, deputy chairman of the Yabloko party, 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 maintained his innocence and called the case political, reiterating his call for a ceasefire. The sentencing followed a decision by Russia's Supreme Court to bar Yabloko from participating in an upcoming parliamentary election.
Meanwhile, attacks continued over the weekend and into Monday. Ukrainian authorities reported Russian strikes targeting port infrastructure in Ukraine's Izmail district, Odesa region, overnight. A separate strike damaged a civilian vessel and injured four people. In Russia's Astrakhan region, a Ukrainian drone attack reportedly killed one woman and struck an industrial facility, according to the regional governor.
Separately, ArcelorMittal reported that a Russian missile strike on its Kryvyi Rih steel plant over the weekend killed two employees and injured three others, damaging key energy and blast-furnace facilities and partially halting production.