Putin's Strategic Move: Appointing an Economy Expert for Ukraine War

Russian President Vladimir Putin's recent government shakeup is being seen as a move towards prioritizing competence over loyalty. He has replaced his close friend, who headed the country's defense ministry, with someone widely recognized as a skilled technocrat.

The Kremlin's announcement revealed that Andrey Belousov, a civilian economist and former first deputy prime minister, will now lead the Russian Ministry of Defense, taking over from Sergei Shoigu, who had held the position since 2012.

Alexandra Prokopenko, a former adviser at Russia’s Central Bank, believes that the recent changes are a result of the close connection between the war and Russia’s economy.

In a discussion on X, Prokopenko stated, “Putin prioritizes war; the key to winning a war of attrition lies in economics.” She pointed out that Belousov supports boosting demand through government funding, indicating that military expenses are likely to rise rather than decrease.

When looking at the war in Ukraine, it can be seen as a competition between the defense manufacturers of the West who provide ammunition and military equipment to Ukraine, and those of Russia.

Russia's President Vladimir Putin, center-right, with Sergei Shoigu, at Red Square for the Victory Day military parade in central Moscow on May 9, 2024.

Russia's President Vladimir Putin, center-right, with Sergei Shoigu, at Red Square for the Victory Day military parade in central Moscow on May 9, 2024.

Natalia Kolesnikova/AFP/Getty Images

US and NATO officials acknowledge that Russia is producing a significantly higher amount of artillery ammunition compared to the West. According to NATO intelligence estimates shared with CNN, Russia produces about three times more artillery shells per year than the US and Europe for Ukraine.

Having a skilled economic manager leading the defense ministry can benefit Putin, especially now that the US Congress has increased military aid to Ukraine. Russia is also making advancements along Ukraine's northeastern border, putting additional pressure on Kyiv as its allies hurry to provide more weaponry.

The appointment of Belousov could also signal a cleanup at the Ministry of Defense. In the past few weeks, there was a corruption scandal that resulted in the removal and arrest of a former deputy to Shoigu.

It's like a game of musical chairs.

Prokopenko, a keen observer of the Russian economy, praised Belousov's knowledge of military-industrial complex issues on X. She also compared him to the reformist Prime Minister Pyotr Stolypin, known for modernizing Russia's economy after a military defeat in 1905.

However, the situation is not straightforward. Putin has reassigned Shoigu to the role of secretary of Russia's Security Council, indicating that Shoigu still plays a role in the decision-making process.

Discussing Shoigu’s new appointment, Kremlin spokesperson Dmitry Peskov mentioned that the former defense minister will continue to focus on military production. Peskov emphasized the importance of effectively managing the wartime economy. He pointed out that defense spending is now almost 7% of Russian GDP, similar to the levels seen in the Soviet Union in the mid-1980s. During that time, military priorities and central planning limited growth in the consumer economy and hindered technological innovation.

Ukrainian firefighters work to extinguish flames at the site of a drone attack on industrial facilities in Kharkiv on May 4.

Ukrainian firefighters work to extinguish flames at the site of a drone attack on industrial facilities in Kharkiv on May 4.

Sergey Bobok/AFP/Getty Images

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The rest of the world wants the Ukraine war to go away. Putin has other ideas

"In a call with reporters on Sunday, Peskov emphasized the importance of being open to innovation on the battlefield, stating that the winner is the one who embraces new ideas. As a result, the decision was made for a civilian to head the Russian Ministry of Defense at this stage."

"However, the appointment of a civilian does not indicate a shift towards a less aggressive stance on the war in Ukraine. General Valery Gerasimov, who played a key role in planning the invasion of Ukraine, still holds his position as the chief of Russia's General Staff. The top leaders in power remain loyal to Putin's style of rule and his objective of dominating Ukraine."

However, the recent government shakeup suggests a possible power struggle among Russia's elite in the future.

As a result of Shoigu's new appointment, Nikolai Patrushev, the former Secretary of the Security Council, has been removed from his position. Peskov mentioned that Patrushev is "due to a transfer to another job."

Patrushev is part of a group called the siloviki, which includes powerful individuals who rose through the ranks of the Soviet security services. He previously led the Federal Security Service (FSB) and is considered to be a tough member of Putin's close circle.

Speculation often surrounds the Patrushev family name regarding who might succeed Putin once he passes away. With Putin starting his fifth term as president, many believe he will continue to hold power for the foreseeable future.

Putin currently does not have a clear successor in place. However, if something were to happen to him while in office, Prime Minister Mikhail Mishustin would temporarily take over his duties. Kremlin-watchers have been keeping a list of potential candidates who could succeed Putin, with Dmitry Patrushev, the son of a former security council chief, being one of them. Recently, the younger Patrushev was appointed as a deputy prime minister in a recent reshuffle.

Despite recent changes in leadership, it is evident that the Kremlin's main objectives remain the same. These include the ongoing war in Ukraine and maintaining a confrontational stance towards the West.

Political observer Tatiana Stanovaya, founder and CEO of the analytical group R.Politik, noted that Putin's main goal is to improve the state's ability to better support military needs. Despite this focus, most aspects of the current 'structure' will remain unchanged.

This means that while there may be a sense of increased activity within the Kremlin, the familiar faces in power are simply shifting around like a game of musical chairs.

Editor's P/S:

The recent shakeup in the Russian government, which saw Andrey Belousov replace Sergei Shoigu as Minister of Defense, is a significant move that signals a shift in Putin's priorities. Belousov's appointment, an experienced economist, suggests that Putin is prioritizing competence over loyalty in his government. This move may indicate a recognition of the economic challenges faced by Russia due to the ongoing war in Ukraine, and a need for a skilled manager to oversee the defense sector.

However, the appointment of Shoigu to the role of secretary of Russia's Security Council indicates that he still plays a key role in the decision-making process, particularly regarding military production. This suggests that while Putin is seeking to improve the efficiency of his government, he is not abandoning his close allies. The shakeup also highlights the importance of the military-industrial complex to Putin's regime, as it is a key factor in Russia's ability to sustain its war effort in Ukraine. The appointment of a civilian to lead the Ministry of Defense, while unusual, may reflect Putin's desire to balance the influence of the military within his government and to ensure that economic considerations are given proper weight in decision-making.