Economist Leaves State Bank After Warning Russia Cannot Win “War of Attrition

In Russia, a forecast that contradicts the official position can come at a high price.

Andrei Klepach, 67, has resigned from Vnesheconombank (VEB), one of Russia’s leading state-owned banks, where he served as chief economist. His departure followed public warnings about the severe consequences of an economic and technological confrontation with the West.

The matter became public after The Moscow Times reported on a statement Klepach had made in May.

A friend of the economist told the independent outlet The Bell that VEB chief executive Igor Shuvalov had dismissed Klepach “on orders from the authorities.” Another source also directly linked his resignation to comments he had made publicly.

Meanwhile, a VEB representative quoted by Vedomosti said only that Klepach had submitted his resignation, without providing further details about the reasons.

The remarks that sparked the debate were made during an event organized by the Moscow Exchange. At the meeting, Klepach questioned Russia’s ability to sustain a prolonged confrontation with Ukraine, which is backed by the West.

“We will not win the race in this war of attrition,” he said, stressing that Ukraine’s economy, despite the conflict, “is surviving.”

According to the economist, Moscow had fostered the illusion that the burden of the war would drive the Ukrainian economy toward collapse.

“It has not collapsed, and it will not collapse. Our costs are rising,” Klepach said.

Such an assessment was particularly striking coming from someone who had served for 12 years as chief economist at Russia’s leading state-owned bank. VEB has the status of a “state development corporation” and is responsible for financing the Kremlin’s strategic projects.

Klepach did not limit his comments to the financial sustainability of the conflict. According to him, Russia was also falling behind in the global technological and economic race, not only against the United States and China but, “in a certain sense,” against Ukraine as well.

These remarks take on particular significance as the Russian economy becomes increasingly dependent on government spending and the defense industry.

Alexandra Prokopenko, a senior fellow at the Carnegie Center, noted that Klepach has always been willing to defend his views.

She said the economist’s departure does not resolve the structural problems he had identified: growth barely above zero, an industry increasingly divided between sectors favored by the war and those facing difficulties, shrinking investment, and rising military spending.

Klepach is considered one of Russia’s best-known macroeconomists. Before joining VEB, he worked for around 10 years at the Ministry of Economic Development, where he also clashed with then-minister Alexei Ulyukayev.

His departure from the state-owned bank also serves as an indicator of the Russian authorities’ tolerance for economic analysis that raises doubts about the longevity of the war-driven model.

Other signs of difficulty are emerging from the banking system. Banks in Russia are closing physical branches at a faster pace because of the expansion of online services and the need to cut costs. The process is taking place amid high interest rates, inflation, labor shortages, and weakening demand for loans.

Data from the Central Bank of Russia, published by Izvestia, show that approximately 1,370 branches were closed from January through August. This is the highest figure recorded during the first eight months of the year in seven years.

The average pace is approximately 196 closures per month, almost twice as many as during the same period last year. If the trend continues, the number of closed branches could exceed 2,100 by the end of 2026, setting a new record.

Sberbank is leading the contraction of the physical network. It accounts for approximately 40% of all closures, with nearly 540 branches shut since the beginning of the year.

Much of this change is linked to digital transformation. Mobile applications and fast-payment systems are increasingly moving banking transactions away from physical counters while also reducing operating costs.

However, the shift toward technology is not the only factor. High interest rates and declining demand for loans are making some branches unprofitable, while banking institutions are also grappling with staffing costs and liquidity problems.

Not all banks, however, have chosen the same path. Alfa Bank aims to open 28 new branches by the end of the year, while VTB and Dom.rf Bank plan to expand their physical presence.

From different perspectives, the resignation of the economist who questioned the sustainability of the war and the “rationalization” of the bank branch network paint the same picture: an economy facing mounting pressure.

Branch closures alone do not necessarily prove the existence of a crisis, as the shift toward digital services is a global trend. In Russia’s case, however, the process is taking place in an environment characterized by high interest rates, labor market problems, and an increasing concentration of resources in the war economy.

Against this backdrop, Klepach’s comments carry both economic and political weight. His analysis raises not only the question of how much money Russia can use to prolong the conflict, but also how long it can sustain a contest that simultaneously affects industry, technology, investment, and finance.

Klepach’s departure just a few months after he publicly voiced these concerns may make his warning even more significant. He was not the voice of a dissident, but that of an economist within the system who described the costs of a war that is expected to become increasingly a test of economic resilience.