What are Putin’s considerations for nominating an economist as Russia’s new Defense Minister?

Putin’s move has both political and military security considerations, as well as considerations of the grand strategic game under the Russia-Ukraine conflict.

After being officially sworn in as the new President of Russia, the embryonic form of Putin’s new government for the next six years has emerged.

According to Xinhua News Agency, on May 12th local time, Russian President Putin nominated candidates for the leadership of the new government’s main departments to the Federal Council (Upper House of Parliament).

Among them, Putin nominated Andrei Belousov as the Russian Defense Minister, and former Defense Minister Shoigu was appointed as the Secretary of the Russian Federal Security Council. Previously, Shoigu had served as the Minister of Defense of Russia for 12 years.

In addition, Russian Foreign Minister Lavrov, Director of the Foreign Intelligence Agency Nareshkin, Minister of Emergency Situations Kulenkov, Minister of Internal Affairs Kolokolytsev, Minister of Justice Chuitschenko, Director of the Federal Security Agency Bortnikov, and Commander in Chief of the National Guard Zolotov have all been nominated to remain in office.

On May 7th, Putin was sworn in as the 8th President of Russia. On the 10th, Putin officially appointed Mishusky as the new Prime Minister of the government.

In the view of Zhang Hong, a researcher at the Russian Institute of Eastern Europe and Central Asia at the Chinese Academy of Social Sciences, the personnel adjustment of the Russian Defense Minister this time is both expected and somewhat unexpected, after all, half a month ago, the Deputy Minister of Defense Ivanov was just arrested on suspicion of “bribery”.

('Russian Defense Minister Belousov (source: Russian government website)',)(‘Russian Defense Minister Belousov (source: Russian government website)’,)

New Defense Minister Economist background

In Zhang Hong’s view, Putin’s move has both political and military security considerations, as well as considerations of the grand strategic game under the Russia-Ukraine conflict.

He told First Financial that,

In addition, Zhang Hong also said that the adjustment may also be a dissatisfaction with Shoigu’s performance in the current Russia-Ukraine conflict

According to public information, the newly appointed Defense Minister Belousov is 65 years old and holds a PhD in economics. From 2006 to 2008, served as the Deputy Minister of Economic Development and Trade; From 2008 to 2012, served as the Secretary for Finance and Economics; From 2012 to 2013, served as the Minister of Economic Development; From 2013 to 2020, served as Assistant to the President; In January 2020, he was appointed as the First Deputy Prime Minister of Russia.

Regarding the reason for choosing an economist to serve as Russia’s Defense Minister, Kremlin spokesperson Peskov told the media that this arrangement is reasonable because Russia is approaching the situation in the mid-1980s, when military and strong sector expenditures accounted for 7.4% of the country’s total expenditure. “Ensuring that defense spending aligns with the overall interests of the country is crucial, which is why Putin now wants a civilian with an economic background to serve as the Minister of Defense. Whoever is more open to innovation can win on the battlefield,” Peskov said.

According to data from the Russian Bureau of Statistics, the Russian government’s expenditure in 2023 reached 32.2 trillion rubles (approximately 350 billion US dollars), of which defense expenditure was 6.4 trillion rubles, accounting for about 20%, an increase of about 80% from the military budget for 2022 before the conflict occurred. In the 2024 budget, the national defense budget has further expanded to 10.8 trillion rubles, an increase of over 70%. This has led to about 30% of the Russian national budget continuing to be spent on military expenses, and the proportion of GDP to GDP has reached the highest level of 6% since the dissolution of the Soviet Union.

The Stockholm Institute for International Peace Studies (SIPRI), a think tank that tracks global military spending for years, released its latest annual report at the end of April, stating that Russia’s military spending in 2023 reached $109 billion, a year-on-year increase of 24%, accounting for approximately 4.5% of global military spending. The report states that despite a decrease in oil and gas revenue, Russian military spending has still boosted the economy, and its economic performance has exceeded expectations from all parties.

Zhang Hong told First Financial that the appointment of Belousov as Minister of Defense reflects Putin’s expectation of coordinating Russia’s economic resources and strengthening defense industry production. “He needs to find someone with more experience in managing the defense and military industry to achieve this goal. Although Shoigu has extensive political experience, he is not an economist and does not have extensive experience in management.”

Russia’s appointment of an economist as its defense minister is considered “bad news” for Ukraine by Ukrainian economist Alexei Kuch. He stated on social media that Belousov has played a role in “creating a growth model for the Russian economy, deepening structural transformation, and adapting to sanctions.” His appointment signifies that “everything is moving towards the growth of the Russian military industrial complex and the growth of Russian military industrial production.” “And our (Ukraine) ministerial position is someone who implements policies that are opposite to Belousov’s.”

What impact will it have on the Russia-Ukraine conflict?

The appointment of a civilian as the Minister of Defense of Russia is not without precedent. Since 1992, two of Russia’s six Defense Ministers have been from civilian backgrounds, namely Ivanov from 2001 to 2007 and Sergei Sergei from 2007 to 2012. Among them, Ivanov was the first Russian Minister of Defense to have a civil service background.

At the age of 68, Shoigu served in the Russian Ministry of Emergency Situations for 8 years before becoming the Defense Minister, and briefly served as the Governor of Moscow. On November 6, 2012, Shoigu took over as Minister of Defense from Sergei Putin, who had been dismissed due to a corruption scandal.

Since 2012, Shoigu has carried out a series of significant reforms in Russia’s defense forces. For example, the establishment of the Russian Defense Command Center will merge multiple military industrial complexes within Russia into a unified system. Meanwhile, according to Russian media, over the past 12 years, 23 trillion rubles have been used for the rearmament of the military, which has led to the highest modernization weapon equipment rate in the world, reaching 70%. At the beginning of the 21st century, this number was less than 15%.

According to Peskov’s latest statement, after being appointed as the Secretary of the Russian Federal Security Council, Shoigu will continue to work in the areas he is familiar with. Shao Yigu will be responsible for the work of the Military Technical Cooperation Bureau, serving as the Secretary of the Security Committee and also serving as the Vice Chairman of the Military Industry Joint Venture Committee. He also stated that Russian Chief of General Staff Grasimov will continue his work and the current personnel configuration in the military will remain unchanged.

Zhang Hong believes that “the current employment of a deputy prime minister with rich experience in economic management as the defense minister shows that Russia will increase its investment in the defense industry in the future and speed up its investment in military defense security.” At the same time, in Zhang Hong’s view, in the context of the Russia-Ukraine conflict, the position of the Russian Chief of General Staff, Vladimir Grasimov, has not changed, which helps to centralize the decrees of the military front. Allowing Shoigu to retreat behind the scenes is also beneficial for the unity of command within the Russian military.

Zhang Hong told First Financial that,