Russia’s 1998 Default Architect Predicts Economic Collapse

(MOSCOW) – Russia’s former finance minister who presided over the 1998 default has warned the Kremlin that shifting to a full war economy will destroy the country’s financial system and lead to the collapse of the Russian Federation.

Mikhail Zadornov, who worked closely with Boris Yeltsin during the 1998 economic crisis, has joined a growing chorus of Russia’s most experienced economists openly criticising the Russian dictator Vladimir Putin’s economic policies.

Growing dissent among economic elite

Zadornov is the latest in a line of prominent figures voicing alarm. Elvira Nabiullina, head of the Russian central bank, has repeatedly warned Putin that Russia cannot afford the war. She avoided public appearances for more than a month earlier this year.

German Gref, chief executive of Russia’s largest bank Sberbank, has stated that the biggest dream of every Russian bank chief executive is for the war to end.

Andrei Klepach, a highly successful economist frequently quoted in Russian state media and formerly employed at Vnesheconombank, was dismissed the day after openly criticising the state of Russia’s economy, despite a successful 12 year career.

Advisers to former Soviet leader Mikhail Gorbachev have also issued similar warnings, stating that Russia’s economic situation now resembles the Soviet economy just before the collapse of the USSR.

Economic warning signs multiply

The former minister’s warning comes as ordinary Russians continue withdrawing cash from banks in large volumes, fearing the Kremlin may nationalise their savings to fund the war effort.

Russian deputies have repeatedly proposed nationalising citizens’ money and assets. Meanwhile, Russian companies are carrying bad loans that will never be repaid because businesses cannot sustain the costs of war.

The war economy shift began having serious consequences in 2025, according to analysts. Putin’s oligarch allies were the first to express concern once the conflict began affecting Russian territory directly.

Putin’s fears and manipulation

The Economist recently published an analysis suggesting Putin fears ending the war because he believes it could lead to his execution. Ukrainian analysts argue this is a manipulation tactic designed to convince Russians that Putin remains their best option.

“It is not the first time that Russian dictators want to persuade you they are the best that Russia can have,” the reporting noted. “The task is to demilitarise, defeat the regime and watch it collapse.”

Western economists note that Putin is increasingly resorting to threats and blackmail against various countries in an attempt to restore Russian influence, a sign of panic as economic pressures mount.