(SeaPRwire) – By: Julian Holbrooke
A man who makes peace with the Kremlin’s strategic illusions does not get fired from VEB.RF. Andrei Klepach did, in mid-August, after telling a Moscow audience what every serious macro-economist already suspected. He said Russia is falling behind technologically. He said the war of attrition is being lost. He said a social crisis could arrive when nobody expects it. That last line is what got him out the door.
The timeline matters. Klepach spoke in May to the Nikitsky Club, a forum where economists, academics, and government officials gather. Reuters learned of the dismissal on August 17, citing two sources familiar with the matter. VEB.RF confirmed he was no longer chief economist but offered no reason. Klepach himself confirmed the firing. The gap between the speech and the revelation suggests internal monitoring, delayed retaliation, and a system that tolerates honest diagnosis only so long as the diagnosis stays quiet.
The substance of Klepach’s warnings deserves scrutiny beyond the personnel drama. He acknowledged that Russia had proven resilient to sanctions. He noted that Ukrainian attacks on energy and logistics infrastructure were adding fresh pressure. He cited the Central Bank’s July projection that economic growth could fall to zero this year. He said repeated strikes on Russian refineries caused supply disruptions and inflation risks. He said the lag with China and the United States would continue to grow, and that Ukraine’s resilience owed something to sustained Western financial backing. These are not alarmist claims. They are baseline observations from someone who spent a decade at the Economy Ministry before joining VEB.RF in 2014.
What separates Klepach from most Russian institutional economists is the closing sentence of his speech. “Economically we will not collapse,” he said, “but our lag will continue to grow, with all the resulting consequences.” That is a diagnosis of structural erosion, not sudden implosion. It is also a diagnosis the Kremlin cannot afford to circulate.
The European Union is preparing its next major sanctions package precisely around the targets Klepach flagged. EU foreign policy chief Kaja Kallas told Germany’s Die Welt that she plans to propose the most far-reaching sanctions listings since the war began. She cited a figure of $1.16 trillion in cumulative losses inflicted on Russia’s war machine by existing EU sanctions, a number reported by Reuters on August 17. EU diplomatic sources told Reuters the bloc’s diplomatic service expects to propose sanctions against approximately 1,600 additional Russian individuals and entities, focused on the military-industrial complex. The planned measures include asset freezes, travel bans, and transaction bans. Officials plan to present the list to EU governments in early September and target adoption in October.
Meanwhile, an European intelligence source told Digital that higher oil prices have helped Moscow cover more of its budget deficit and may buy the Kremlin additional time before economic constraints force hard choices over the war. “From a budgetary point of view, Putin is OK actually,” the source said. “He’s not under pressure.” That assessment does not contradict Klepach. It reframes it. The war of attrition is being lost economically, but the current revenue window means the political consequences will lag. Moscow can fight another season before the budget ceiling bites.
The political architecture around this economic reality is hardening in parallel. Lev Shlosberg, deputy chairman of the Yabloko party, was sentenced on Monday to 11 years and one month in a penal colony, according to Mediazona. He faced charges of discrediting Russia’s armed forces and spreading false information about them. Shlosberg maintained his innocence, called the case political, and repeated his call for a ceasefire. The sentencing arrived a week after Russia’s Supreme Court barred Yabloko from participating in next month’s parliamentary election. The pattern is clear: economic warning gets purged, political opposition gets imprisoned, and electoral competition gets cancelled.
The kinetic picture continues to reinforce the economic one. Russian strikes targeted port infrastructure in Ukraine’s Izmail district in the Odesa region overnight over the weekend. A separate strike damaged a civilian Togo-flagged vessel and injured four people. A Ukrainian drone attack killed a woman and struck an industrial facility in Russia’s Astrakhan region. ArcelorMittal reported that a Russian missile strike on its Kryvyi Rih steel plant killed two employees, injured three employees and contractors, and damaged major energy and blast-furnace facilities, partially halting production. These are not marginal incidents. They are attacks on the very infrastructure that underwrites both sides’ economic survival.
The central question for Washington and its European allies is whether years of economic pressure are now constraining Moscow’s ability to sustain the war, or whether Russia can continue absorbing costs while replenishing resources. Klepach’s dismissal and the EU’s upcoming sanctions proposal point in opposite directions about timing. The economist says the structural gap is widening. The intelligence source says the budgetary pressure is deferred. Both can be true simultaneously.
The geopolitical pendulum is shifting toward a prolonged attrition model in which economic erosion does not immediately translate into political capitulation. The Kremlin’s immediate calculus rewards silence. The West’s immediate calculus rewards escalation of financial pressure. The risk is that neither side accounts for the lag between structural decline and political consequence, and that the window Klepach warned about closes without either side adjusting strategy in time.
Author bio: Julian Holbrooke is an overseas international relations analyst who frequently contributes to major European daily newspapers.