A Blog by Jonathan Low


May 13, 2024

Why Defense Minister Shuffle Means Putin Wants Competence, Less Corruption

Putin appears to be belatedly acknowledging a need for more competence and less corruption in the military. Russian failures in Ukraine have been profound - and chronic. So replacing his crony Shoigu with an economist suggests Kremlin officials understand they desperately need someone who can make the economy more effectively supportive of the war effort, especially as NATO and the US show every indication of increasing their support for Ukraine.

That the shuffle took place now, when Russia is in a relatively strong position versus Ukraine, reveals Kremlin belief that any transition issues can be resolved with little disruption. But an unspoken part of this drama may be that China's Xi, who has recently begun purging his own military of corrupt officers may have warned Putin that China's further support may be contingent on Russia demonstrating it is getting its economic and military house in order. JL

Anna Chernova and Nathan Hodge report in CNN:

Putin has replaced his defense minister and long-time ally Shoigu with an economist. The shakeup appears to be the triumph of competence over loyalty. Andrey Belousov is a competent technocrat (versed in) the growing interrelationship between the war and Russia’s economy. Belousov is in favor of stimulating demand, which means military spending will increase. (And) last month, one of Shoigu’s protégés was arrested and charged with corruption, (further) exposing the weaknesses of Moscow’s corruption-riddled military. “Putin’s primary objective is to enhance the state’s capacity to support military needs more effectively, while the existing ‘structure’ stays intact.” Russian President Vladimir Putin has replaced his defense minister and a long-time close ally Sergei Shoigu with an economist, a major reshuffle of military leadership more than two years after Moscow’s grinding war against Ukraine has sent defense spending soaring.


Andrey Belousov, a civilian who served as former first deputy prime minister and specializes in economics, was appointed to the top defense post, Kremlin spokesperson Dmitry Peskov said on Sunday.


Russian President Vladimir Putin’s weekend government shakeup appears to be the triumph of competence over loyalty: The Kremlin leader has replaced his camping-and-fishing buddy head of the country’s defense ministry with someone widely seen as a competent technocrat. That, at least, seems to be the immediate takeway after the Kremlin announced that Andrey Belousov, a civilian economist and former first deputy prime minister, would take over the top slot at the Russian Ministry of Defense from Sergei Shoigu, who had served in the post since 2012.


Alexandra Prokopenko, a former adviser at Russia’s Central Bank, put the shakeup down to the growing interrelationship between the war and Russia’s economy.


“Putin’s priority is war; war of attrition is won by economics,” Prokopenko wrote in a thread on X. “Belousov is in favor of stimulating demand from the budget, which means that military spending will at least not decrease but rather increase.”Such a move makes sense when one views the war in Ukraine as a contest between the defense manufacturers of the West, which supplies Ukraine with ammunition and military hardware, and those of Russia.


Peskov tried to downplay the move, but the reshuffle comes amid speculation about infighting at the highest echelons of power. Just last month, one of Shoigu’s long-time protégés at the defense ministry was arrested and charged with corruption. Shoigu was “relieved” of his position by presidential decree, Peskov said, but he will remain an influential part of Putin’s administration as secretary of Russia’s Security Council, replacing Nikolai Patrushev, a former head of the Federal Security Service (FSB), who would “transfer to another job.”


Shoigu will also become the deputy in Russia’s Military-Industrial Commission, Peskov said, as Putin embarks on a fifth term as president.The timing of Shoigu’s exit is notable, coming off the back of several significant advances by Russian troops in eastern Ukraine.


Shoigu had helmed the country’s defense ministry for 12 years and led the full-scale invasion of Ukraine in 2022. Russian troops initially caught Kyiv by surprise but were soon beaten back, exposing the weaknesses of Moscow’s corruption-riddled military and its willingness to send waves of poorly trained and equipped soldiers into what Ukraine and Russian troops have both dubbed a “meat grinder.”


His critics have frequently described Shoigu as remote and out-of-touch with the realities of the conflict. His most forceful critic was the late Wagner chief Yevgeny Prigozhin who accused the Defense Ministry of starving his fighters of resources and bureaucratic incompetence before launching an unsuccessful mutiny last year and dying weeks later in a plane crash.


Despite the criticism, Shoigu has remained a popular politician in Russia. Having spent two decades as the minister of emergency situations, he cultivated an image of a helpful official who brings help when it’s needed.He is also a rare outsider in Putin’s original inner circle, which consists mostly of the president’s allies from his St. Petersburg political beginnings and his former KGB colleagues. Shoigu was born and grew up in the remote Siberian republic of Tuva and got into politics through his association with the former president Boris Yeltsin.


Rising military spending and need for ‘innovation’


Belousov’s appointment suggests Russia’s strategy will continue to focus on outgunning Ukraine.Belousov was selected by Putin because of a need for “innovation,” Peskov said in a press call, during which he highlighted the ministry’s rising budget, saying it was approaching levels last seen during the Cold War.


“Today on the battlefield, the winner is the one who is more open to innovation,” Peskov said. “Therefore, it is natural that at the current stage, the president decided that the Russian Ministry of Defense should be headed by a civilian.”


In a reference to the war in Ukraine, Peskov said that due to “well-known geopolitical circumstances, we are gradually approaching the situation of the mid-80s when the share of expenses for the security bloc in the economy was 7.4%. It’s not critical, but it’s extremely important,” Peskov said.The budget currently amounts to 6.7% of GDP, he said.


Peskov highlighted Belousov’s previous leadership experience and economic background.“This is not just a civilian, but a person who very successfully headed the Ministry of Economic Development of Russia, for a long time he was aide to the president on economic issues, and was also the first deputy chairman of the government in the previous cabinet of ministers,” Peskov said.


Much has been made of Belousov’s civilian status, even though Shoigu himself has limited hands-on experience with the military. He holds a rank of a general as a result of his official roles and has never served in active service.Peskov added that the new appointment did not signal a shift in Russia’s current military system.


“As for the military component, this appointment will in no way change the current coordinate systems. The military component has always been the prerogative of the Chief of the General Staff [Valery Gerasimov], and he will continue his activities. No changes are currently envisaged in this regard,” he said.


In his new role, Shoigu will oversee Russia’s military industrial complex, “He is deeply immersed in this work, he knows very well the pace of production of military-industrial products at specific enterprises and often visits these enterprises,” he said.


The news follows the arrest last month of one of Shoigu’s close allies, deputy defense minister Timur Ivanov, who was charged with taking a bribe in what was the country’s highest-profile corruption scandal since Putin launched his full invasion of Ukraine more than two years ago.Ivanov has been accused of accepting a bribe of 1 million rubles (at least $10,800), according to Russian state media TASS.


Former US Secretary of Defense Mark Esper told CNN in an interview Sunday that Putin’s reshuffle is an “important” and “interesting move.”


“The bigger argument coming out of Moscow right now is that Russia is moving toward a war economy,” he said. “They’re on a war footing.”Esper said that “one of the disappointing things about Shoigu’s tenure is we thought the Russian army, at least during my time at the Pentagon, we thought they were professionalizing, that they were modernizing all their equipment, their doctrine, how they train and fight, and we really haven’t seen that on the battlefield.”


US and NATO officials already concede that Russia is massively outproducing the West when it comes to production of artillery ammunition: NATO intelligence estimates of Russian defense production shared with CNN indicate that Russia produces roughly three times more artillery shells per year than the US and Europe for Ukraine.


Having a competent economic manager at the top of the defense ministry can be an asset for Putin, especially when the US Congress has finally turned on the taps of more military aid to Ukraine and as Russia presses forward with a new advance along Ukraine’s northeastern border. Whether that advance represents a new front for Russia or an effort to divert Ukrainian forces remains unclear, but it puts more pressure on Kyiv as its allies rush to deliver more weaponry.


The appointment of Belousov could also represent house-cleaning at the Ministry of Defense. In recent weeks, the ministry has been hit by a corruption scandal that led to the sacking and arrest of a former deputy to Shoigu.


A game of musical chairs


Prokopenko, who is one of the most perceptive observers of the Russian economy, described Belousov as “well-versed in military-industrial complex matters” in her thread on X, adding that he “embodies Stolypin-esque statesmanship,” a reference to the reformist Prime Minister Pyotr Stolypin, who led an effort to overhaul and modernize Russia’s inefficient economy after its humiliating military defeat by Japan in 1905.But the reality may be more complex. Putin has shifted Shoigu sideways to a post as the secretary of Russia’s Security Council, meaning that Shoigu is not completely out of the picture.


Discussing Shoigu’s new appointment, Kremlin spokesperson Dmitry Peskov said the former defense minister would remain immersed in matters of military production. But competent management of the wartime economy is now key: Peskov noted that defense spending is approaching 7% of Russian GDP, close to the level seen in the Soviet Union in the mid-1980s, when military priorities and central planning strangled the consumer economy and stifled technological innovation.


“Today on the battlefield, the winner is the one who is more open to innovation,” Peskov said in a call with reporters Sunday. “And therefore, it is natural that at the current stage, the president decided that the Russian Ministry of Defense should be headed by a civilian.”


The appointment of a civilian to the defense ministry, then, does not signal a less hawkish approach to the war in Ukraine. General Valery Gerasimov, the chief of Russia’s General Staff and one of the architects of the full-scale invasion of Ukraine, remains in place. The top echelons of power remain committed to Putin’s brand of personalistic rule — and Putin’s goal of subjugating Ukraine.


Nevertheless, the newest government shakeup does hint at a potential future power struggle among Russia’s elite.With Shoigu’s new appointment, Nikolai Patrushev, the previous Secretary of the Security Council, was relieved of his position and is “due to a transfer to another job,” according to Peskov.Patrushev represents a class known as the siloviki — the men of power who graduated from the ranks of the Soviet security services. A former head of the Federal Security Service, or FSB, Patrushev has been one of the more hardline members of Putin’s inner circle.


And the Patrushev family name has often come up in speculation about who may be next in line to the throne after Putin dies — because, as the Russian president begins a fifth term of office, smart money has him staying on as president-for-life.Putin has no clear successor (if he dies or is incapacitated while in office, his duties will be assumed temporarily by Prime Minister Mikhail Mishustin), but Kremlin-watchers keep a running list of potential aspirants for a successor. Dmitry Patrushev, the son of the former security council chief, is sometimes described as one of the “princelings” who are waiting; the younger Patrushev was just made a deputy prime minister in the latest reshuffle.


Despite the changes at the top, there is no sense that the overall goals of the Kremlin — pursuing the war on Ukraine and continuing a confrontation with the West — have changed.“Putin’s primary objective is to enhance the state’s capacity to support military needs more effectively, while most elements of the existing ‘structure’ will stay intact,” wrote political observer Tatiana Stanovaya, the founder and CEO of the analytical group R.Politik, on X.So the music may be spinning faster inside the Kremlin, but the same loyal contenders are playing musical chairs.


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