Putin Shifts Focus In The Kremlin: Chooses Economy Expert To Handle Ukraine Situation

 

 

Russian President Vladimir Putin’s weekend government shakeup appears to be the triumph of competence over loyalty: The Kremlin leader has replaced his camping-and-fishing buddy head of the country’s defense ministry with someone widely seen as a competent technocrat.

That, at least, seems to be the immediate takeway after the Kremlin announced that Andrey Belousov, a civilian economist and former first deputy prime minister, would take over the top slot at the Russian Ministry of Defense from Sergei Shoigu, who had served in the post since 2012.

Alexandra Prokopenko, a former adviser at Russia’s Central Bank, put the shakeup down to the growing interrelationship between the war and Russia’s economy.

“Putin’s priority is war; war of attrition is won by economics,” Prokopenko wrote in a thread on X. “Belousov is in favor of stimulating demand from the budget, which means that military spending will at least not decrease but rather increase.”

Such a move makes sense when one views the war in Ukraine as a contest between the defense manufacturers of the West, which supplies Ukraine with ammunition and military hardware, and those of Russia.

US and NATO officials already concede that Russia is massively outproducing the West when it comes to production of artillery ammunition: NATO intelligence estimates of Russian defense production shared with CNN indicate that Russia produces roughly three times more artillery shells per year than the US and Europe for Ukraine.

Having a competent economic manager at the top of the defense ministry can be an asset for Putin, especially when the US Congress has finally turned on the taps of more military aid to Ukraine and as Russia presses forward with a new advance along Ukraine’s northeastern border. Whether that advance represents a new front for Russia or an effort to divert Ukrainian forces remains unclear, but it puts more pressure on Kyiv as its allies rush to deliver more weaponry.

The appointment of Belousov could also represent house-cleaning at the Ministry of Defense. In recent weeks, the ministry has been hit by a corruption scandal that led to the sacking and arrest of a former deputy to Shoigu.

A game of musical chairs

Prokopenko, who is one of the most perceptive observers of the Russian economy, described Belousov as “well-versed in military-industrial complex matters” in her thread on X, adding that he “embodies Stolypin-esque statesmanship,” a reference to the reformist Prime Minister Pyotr Stolypin, who led an effort to overhaul and modernize Russia’s inefficient economy after its humiliating military defeat by Japan in 1905.

But the reality may be more complex. Putin has shifted Shoigu sideways to a post as the secretary of Russia’s Security Council, meaning that Shoigu is not completely out of the picture.

Discussing Shoigu’s new appointment, Kremlin spokesperson Dmitry Peskov said the former defense minister would remain immersed in matters of military production. But competent management of the wartime economy is now key: Peskov noted that defense spending is approaching 7% of Russian GDP, close to the level seen in the Soviet Union in the mid-1980s, when military priorities and central planning strangled the consumer economy and stifled technological innovation.

Today on the battlefield, the winner is the one who is more open to innovation,” Peskov said in a call with reporters Sunday. “And therefore, it is natural that at the current stage, the president decided that the Russian Ministry of Defense should be headed by a civilian.”

The appointment of a civilian to the defense ministry, then, does not signal a less hawkish approach to the war in Ukraine. General Valery Gerasimov, the chief of Russia’s General Staff and one of the architects of the full-scale invasion of Ukraine, remains in place. The top echelons of power remain committed to Putin’s brand of personalistic rule — and Putin’s goal of subjugating Ukraine.

Nevertheless, the newest government shakeup does hint at a potential future power struggle among Russia’s elite.

With Shoigu’s new appointment, Nikolai Patrushev, the previous Secretary of the Security Council, was relieved of his position and is “due to a transfer to another job,” according to Peskov.