The chief economist of a Russian state development bank has been fired after reportedly drawing comparisons between Russia’s present day economy with the 1917 revolution.
Andrei Klepach, one of Russia's most prominent macroeconomists who worked for VEB and is a former Russian deputy minister of economic development, made the remarks to a financial forum in May. They were reported by Russian media only last week
He warned that the country was falling behind the West and China and suffering mounting economic damage from the war in Ukraine, two sources familiar with the matter told Reuters.
“In my view, the economy will hold up, but a social crisis could arise - and at a time when no one particularly expects it. Yet, let me remind you, no one expected the [1917] February revolution either,” he said in reference to how Russia’s last tsar Nicholas II was overthrown, according to The Times.
"We are falling behind. We are losing both the technological and economic competition in the world. And we are losing it not only to China and the United States, in some ways we are losing it to Ukraine too," he said, adding that this was due to Kyiv receiving financial support from the West.
"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 said, predicting a social crisis.
The speech is published on the website of the Nikitsky Club - a forum of economists, academics and government officials.
The moment marked a rare public critique by a senior figure at a state institution of the costs of continuing the war that Moscow launched in 2022. Klepach has held several roles at economic institutions and worked at the economy ministry for 10 years before joining VEB.
VEB, which finances state projects, confirmed in a written response that Klepach was no longer its chief economist, but did not say why. Klepach, who was appointed to the role in 2014, also confirmed his dismissal to Reuters.
While Klepach highlighted Russia’s resilience to Western sanctions in the May speech, he warned pressures were mounting due to Ukrainian strikes on energy and logistics infrastructure. He pointed to rising income inequality and a slower GDP growth rate than in the US and Ukraine.
In July, the Russian central bank suggested the economy might not grow at all this year. Over the summer, repeated Ukrainian attacks on Russian oil refineries and warehouses of top online retailer Wildberries have created supply shocks, raising inflation risks and public unease.
President Vladimir Putin has said the economy is stable despite what he called external attempts to undermine it.
"Economically we will not collapse, but our lag will continue to grow, with all the resulting consequences," Klepach said in his speech, predicting a social crisis could arise "precisely when nobody is particularly expecting it."
Klepach also criticised what he called Russia's over-dependence on China and said uncoordinated monetary, budgetary, and industrial policy had contributed to this year's economic slowdown.
"The quality of governance is almost constantly deteriorating," he said. "Decisions are being made all the time that have an extremely low level of justification but long-term strategic consequences."
