President Vladimir Putin’s appointment of the civilian economist Andrei Belousov as Russia’s defence minister in the third year of the full-scale invasion of Ukraine is bad news for Kyiv and its allies. Replacing the unpopular Sergei Shoigu with Belousov marks a clear shift in Putin’s strategy: he views the war as a battle of economic attrition.
There is hardly anyone better suited for the job than Belousov. A Soviet-trained economist, he cut his teeth in academia before joining the government just months before Putin became prime minister in 1999. Since then, he has climbed through the ranks to become Putin’s economic advisor and, from 2020, the First Deputy Prime Minister, overseeing the country’s finances and economy.
By giving Belousov the defence ministry, Putin is telling the world that he is ready for a long, costly war
A well-mannered, well-read, suave, non-corrupt aficionado of classical music typically wearing a blue suit (the uniform of Putin’s bureaucrats), Belousov can’t be more different to the bombastic, bemedalled and uniform-clad Shoigu. Shoigu was the defence minister who oversaw the botched Russian invasion of Ukraine in 2022. His reputation is marred by corruption in his inner circle, clumsy attempts at self-promotion and general incompetence.
Belousov has no record of corruption and no political or business connections with the country’s mighty industrialists. He is respected for his professional ability within government and notably has Putin’s ear. Most importantly, he is competent. He famously predicted the 2008-2009 financial crisis and a slowdown of the Russian economy in 2011-2013 in 2005.
But Putin’s entourage is full of competent economists and technocrats – at the end of the day, they were the ones who saved the country from a sanctions-induced collapse in 2022 following the beginning of the invasion. What makes Belousov different is his strong belief in the leading role of the state and government spending in the economy. He has rarely advocated for free markets or private investments, even when they were popular in the Kremlin. For him, the state is the alfa and omega of the national economy, the main spender, distributor and manager. He has frequently run into open disputes with industrialists and businessmen over his ideas to impose windfall taxes on exporters or capping food prices.
But Belousov is not the wooden-headed dogmatic Soviet apparatchik he may appear to be. Rather he is statist with a whiff of Keynesianism and a taste for modern technologies. He sees little value in globalisation, and for Russia, surrounded by competitors and outright enemies, the global economy is a zero-sum game.
As state capitalism in Russia becomes more about the state and less about capitalism by the day, and the economy runs on the fumes of rising military spending, Belousov seems like an ideal candidate to take on the role of defence minister.
His job will be to streamline the 7 per cent of GDP the government spends on the war. He will likely leave the actual war gaming to the generals, instead making sure that Russia’s military-industrial complex meets all the army’s needs without bankrupting the country. War spending will probably increase, mobilising the economy and society as a whole. By giving Belousov the defence ministry, Putin is telling the world that he is ready for a long and costly war.
To appoint a complete civilian to effectively oversee the war effort of a national economy this far into a war has precedent. It’s exactly what Adolf Hitler did in February 1942 when he appointed Albert Speer as Reich minister of armaments and war production. Historians say that Speer’s shrewdness and wide use of slave labour boosted the Nazis’ arms production and prolonged the war. Speer served 20 years in prison after the German defeat.
Just like Speer before him, Belousov’s task is to ensure there is no defeat, neither military nor economic. Both he, and Putin, will be hoping they can achieve that – for both their sakes.
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