Russian economist dismissed after warning of economic lag and social crisis

Andrey Klepach, the chief economist at Russia's state development corporation VEB.RF, has reportedly been dismissed from his post. The dismissal, which allegedly occurred on August 16, followed media reports of his pessimistic assessments regarding the Russian economy and its competitive standing against the West.

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We are falling behind. We are losing both the technological and economic competition in the world.

Klepach had recently gained attention for his candid remarks, stating that Russia is falling behind the West in technological and economic competition. He also issued a warning about the possibility of a serious social crisis in the future. The independent Russian media outlet The Bell reported on his dismissal, citing two sources familiar with the matter. These sources indicated that the decision was linked to comments Klepach made in May.

According to The Kyiv Independent, Klepach was allegedly removed by VEB.RF head Igor Shuvalov, following an order from "above." Another source confirmed that the dismissal was directly related to Klepach's earlier statements. During an event organized by the Nikitsky Club of the Moscow Exchange, Klepach elaborated on Russia's growing lag, stating, "We are falling behind. We are losing both the technological and economic competition in the world."

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Ukraine's economy is, of course, partially destroyed and there is a demographic catastrophe. But, despite everything, the Ukrainian economy is surviving.

He controversially claimed that Russia is not only lagging behind major economies like the U.S. and China but also Ukraine. While acknowledging the severe impact of the war on Ukraine's economy, Klepach noted its resilience, saying, "Ukraine's economy is, of course, partially destroyed and there is a demographic catastrophe. But, despite everything, the Ukrainian economy is surviving." He attributed this partly to significant international financial aid but also highlighted Russia's own escalating costs.

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We will not win this competition by a war of attrition.

Klepach cautioned against expecting Western economies to collapse under pressure, stating, "We will not win this competition by a war of attrition." He expressed concern that while Russia might not disintegrate, it is almost certain to face a social crisis. He predicted that the Russian economy would continue to fall behind the rest of the world, with all the associated consequences, despite possibly avoiding a complete collapse.

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I think Russia will not collapse, but I am almost certain that we will reach a social crisis.