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Putin Appoints Civilian Economist as Defense Minister, Surprising Move

Russian President Vladimir Putin tapped a civilian economist as his surprise new defense minister on Sunday to gird Russia for economic war by trying to utilize the defense budget better and harness greater innovation to win in Ukraine.

More than two years into the conflict, which has cost both sides heavy casualties, Putin proposed that Andrei Belousov, a 65-year-old former deputy prime minister specializing in economics, replace his long-term ally, Sergei Shoigu, 68, as defense minister.

Putin wants Shoigu, in charge of defense since 2012 and a long-standing friend and ally, to become the secretary of Russia’s powerful Security Council, replacing incumbent Nikolai Patrushev, and to also have responsibilities for the military-industrial complex, the Kremlin said.

Patrushev will get a new, as yet unannounced, job.

The changes, certain to be approved by parliamentarians, are the most significant Putin has made to the military command since sending tens of thousands of troops into Ukraine in February 2022 in what he called a special military operation.

Kremlin spokesman Dmitry Peskov said the change made sense because Russia was approaching a situation like the Soviet Union in the mid-1980s when the military and law enforcement authorities accounted for 7.4% of the gross domestic product (GDP).

That, said Peskov, meant it was vital to ensure such spending aligned with and was better integrated into the country’s overall economy. This was why Putin wanted a civilian economist in the defense ministry job.

“The one who is more open to innovations is the one who will be victorious on the battlefield,” Peskov said.

Belousov, a former economy minister known to be very close to Putin, shares the Russian leader’s vision of rebuilding a strong state and has also worked with Putin’s top technocrats who want greater innovation and are open to new ideas.

Belousov has played an important role in overseeing Russia’s drone program.

The shake-up, which caught the elite off-guard, indicates Putin is doubling down on the Ukraine war and wants to harness more of Russia’s economy for the war after the West sought, but failed so far, to sink the economy with sanctions.

Economic Strategy Amidst Conflict

Despite facing unprecedented sanctions, Russia’s economists have thus far managed to maintain economic stability and foster growth, even as the shortcomings of the Russian military were exposed in the aftermath of the invasion.

Alexander Baunov, a former Russian diplomat now serving as a senior fellow at the Carnegie Russia Eurasia Center, speculated on Putin’s move to potentially appoint a key economist to lead the Defence Ministry, suggesting it might indicate a strategy to leverage the strength of the defense industry and international markets to secure victory in the conflict. Baunov emphasized that success might hinge on sustained economic pressure rather than swift military maneuvers.

Putin’s unexpected decision maintains a delicate equilibrium within the intricate web of personal allegiances that define the current political landscape. By reshuffling positions, Putin ensures continuity while also salvaging the reputation of Sergei Shoigu, who faced criticism for military setbacks in 2022.

Mark Galeotti, director of Mayak Intelligence consultancy in London, highlighted the significance of the new appointments, framing the role of an economist in overseeing defense spending as a means to optimize resource allocation during wartime.

The restructuring also reflects a broader effort by Putin to enhance oversight over defense expenditures, following allegations of corruption involving a deputy defense minister. Despite these changes, key figures such as the heads of the Federal Security Service (FSB), the Foreign Intelligence Service (SVR), and the veteran foreign minister Sergei Lavrov will retain their positions, ensuring continuity in key areas of governance.

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