Russia fires state bank economist whose analysis undermined Putin’s war strategy — ISW

In May 2026, Klepach delivered an assessment of economic and geopolitical challenges at the Nikitsky Club of the Moscow Exchange. According to his analysis, Russia's wartime economy is stagnating under the combined pressure of exorbitant defense expenditures, tight monetary constraints, international sanctions, and Ukrainian strikes on key infrastructure.

VEB Chair Igor Shuvalov fired Klepach on Aug. 16 following media coverage of the presentation, acting on a "call from above," ISW noted.

According to the economist’s May 21 forecast, Russia can sustain a war of attrition without suffering an outright collapse, but risks severe social crises and falling further behind the United States, China, and Ukraine economically and technologically.

Specifically, Klepach cited Ukrainian strikes against Russian port, petroleum, chemical, and logistics infrastructure as a major macroeconomic impediment to economic expansion. He also pointed to high interest rates, which peaked at 21% in June 2025 and now hover around 14%.

"The Kremlin continues to pressure the Central Bank to lower the key interest rate to ensure economic stability and increase available capital for the Russian defense industry despite persistent fiscal inflationary pressures," the ISW report stated.

The Institute noted that in June 2024, Putin articulated his "theory of victory" as a protracted war of attrition. However, ISW highlighted that Russia faces growing difficulties sustaining such a strategy as casualty rates outpace mobilization intakes, war costs mount, and the Kremlin routinely exaggerates tactical battlefield successes.

"ISW assesses that the Russian military systematically misinforms Putin about the front line situation — partly due to a pervasive culture of lying in the Russian military that milbloggers call 'pretty reports.' Putin is likely better informed about Russia's economic problems than about the military situation, but is determined to maintain an appearance of economic stability despite clear evidence of economic trouble," the report said.

Analysts cited substantial evidence indicating that Klepach’s assessment reflects economic realities, directly challenging the viability of Putin’s strategy.

"The Russian economy is unlikely to quickly collapse without major additional shocks, but Russia's deteriorating economic position increases the domestic costs Putin must bear while demanding even greater sacrifices from the Russian people for his failing war," analysts concluded.

Klepach served as VEB's chief economist for 12 years. Prior to that, he headed the macroeconomic forecasting department at the Russian Ministry of Economic Development starting in 2004, serving as deputy minister between 2008 and 2014.