The Russian Reshuffle
Lily Donahue | 28 June 2024
Summary
Andrei Belousov, civilian economist, has replaced Sergei Shoigu as defence minister.
A Putin loyalist, Belousov’s appointment is meant to streamline the war budget and reduce corruption. It signals further emphasis on transforming the economy into a fully war-based economy.
Vladimir Putin has reshuffled his war cabinet amidst rumours of on-the-ground NATO troops and subsequent peacocking of nuclear threats. Andrei Belousov, a civilian economist, has replaced military officer Sergei Shoigu, as defence minister; Shoigu has been moved to head the Russian Security Council. (It is unclear whether this move constitutes a promotion for Shoigu, or whether he has lost favour.)
Belousov is widely believed to have been promoted to streamline the budget and reduce unnecessary military spending. The budget, at near seven per cent of GDP, is hovering around Cold War levels. It is possible, however, that his promotion serves as a reminder of how deeply ingrained the war is in the Russian economy. As the Russian economy is nearly fully dependent on the war, Belousov—considered a legitimately competent economist—will be responsible for knitting together the war and economy.
More detailed than Shoigu and more data-oriented, Belousov is likely a better candidate for smoothing underlying financial problems—including those related to sanctions, such as the decreasing trickle of imports into the country. (Belousov has, however, publicly claimed sanctions are “insignificant.”) Unsurprisingly loyal to Putin, Belousov has a history of backing war-based initiatives: he supported the Crimean annexation when most of Putin’s economists did not.
An old hand with a belief in extensive government influence in the economy, Belousov has been a staunch supporter of government financial regulation and further government investment. Such policies tend to further isolationist practices.
Совет Федерации / Wikipedia
Forecast
Short-term
Belousov’s appointment signals Putin has little interest in scaling down the war and is indeed reaffirming the economy’s subservience to serving the war effort.
Though Belousov is tapped to reduce corruption, this is unlikely to be accomplished, as corruption is too intertwined with the war economy.
Should Belousov be successful in arranging the budget, pressure on Ukraine’s war economy will grow.
