Andrei Klepach, chief economist at VEB, said that Russia was heading towards a ‘social crisis’ that could resemble the run-up to the 1917 Revolution.

VEB is a state-owned development corporation/bank owned by the Kremlin. Klepach has now been sacked after warning that Russia is heading towards a ‘social crisis’ because of the war in Ukraine. He drew parallels with the 1917 Revolution that overthrew the last Tsar, The Times writes.

Klepach, who had been VEB’s chief economist since 2014, also described the problems facing the Russian economy as ‘unprecedented’ since the Second World War, and predicted that Moscow would be unable to keep pace with Western countries in an economic ‘war of attrition’.

The remarks were made as early as May at a discussion club at the Moscow Exchange, but only attracted attention now following a report by The Moscow Times, an independent news website in exile that has been declared illegal by the Kremlin.

It took 48 hours from The Moscow Times publishing the story for Klepach to be sacked. He was quoted as saying:

‘In my opinion, the economy will hold up, but a social crisis may arise – and at a time when no one really expects it. But let me remind you that no one expected the February Revolution [in 1917] either.’

He also compared the situation with the final years of the Soviet Union before its collapse in 1991.

‘We are falling behind. We are losing both the technological and the economic competition in the world. And, as I have already said, we are not only losing to China and the United States – in some respects, we are losing to Ukraine.’

Klepach also pointed to a deterioration in healthcare and growing inequality, as well as Russia’s demographic crisis. This demographic crisis is, of course, being exacerbated by the fact that many young men are at the front, and an unknown number of them have lost their lives.

The same problems are, of course, affecting Ukraine. In addition to low birth rates and large numbers of young men at the front, many people of military (and productive) age have also fled the country. But Ukraine is for the time being being kept artificially alive thanks to massive financial support from, among others, the EU and Norway.

Klepach’s dismissal was ordered by Igor Shuvalov, chairman of VEB, following an ‘order from above’, according to The Bell, an independent Russian website that the Kremlin designates a ‘foreign agent’.

An ‘order from above’ for VEB means an order from the Kremlin.

Putin and his team have consistently maintained that the Russian economy is doing well, and they do, after all, have most of the raw materials the nation needs, in addition to massive quantities of oil and gas. But it is obvious that the losses in exports are substantial. Whether it is true that the breaking point is now approaching is difficult to know, but The Times points to several indications.

Last month, the Russian Ministry of Economic Development downgraded its forecast for GDP growth to between zero and 1.0 per cent for 2026. This would be the country’s lowest economic growth since the attack on Ukraine more than four years ago. Some suggest that Putin’s only solution is escalation.

Alexander Kolyandr, director for Europe at the consultancy Eurasia Group, put it plainly in an interview with CNBC.

‘If I were Putin – God forbid – I would probably come to the conclusion that it is in my interest to escalate the conflict now and try to end the war on my own terms, rather than wait until the money runs out at some point in the future.’

In June, it caused a stir when Elvira Nabiullina, governor of the Central Bank of Russia, disappeared from public view for about a month. Nabiullina has received much of the credit for mitigating the impact of Western sanctions, but is alleged to have told Putin that she would resign if he escalated the war.

Meanwhile, the war continues unabated. Yesterday, the Moscow region was attacked by hundreds of drones, and although most were shot down, the damage was extensive. At the same time, ten people were killed in a Russian missile strike on a village in the Kharkiv region.

As for the Ukrainian drone attacks, these are being carried out in part with British-made drones. This has prompted a reaction from the Kremlin. Moscow accuses the British of being complicit in Ukrainian attacks on targets inside Russia, and warns Britain that this could have consequences.

European countries are playing with fire on behalf of Ukraine, which has once again been hit by a corruption scandal within the political leadership in Kyiv.

Norway ranks among the very top countries in terms of providing Ukraine with the most support per capita and relative to GDP.