Why did Putin replace a long-time defence minister with an economist?

The appointment of an economist as Russia’s new defence minister reflects President Vladimir Putin’s attempt to better manage the finances of a costly war with Ukraine, which is set to receive $61 billion in aid from the United States, analysts say.

Andrey Belousov, a career economist, has replaced Sergey Shoigu as the defence minister after a presidential decree issued on Sunday. Shoigu has been appointed as the Secretary of Russia’s Security Council.

The shake-up, which comes five days after Putin’s inauguration for a fifth term, shows that Moscow is focused more on its hybrid war approach in which the state’s economic policy and the overall military strategy against Ukraine and other enemies are tightly interconnected.

“Shoigu’s replacement with Belousov was a reflection of the long-term nature of Russia’s war in Ukraine, as well as the growing intersection between the military dynamics of the conflict with the economic impacts,” says Eugene Chausovsky, a defence expert and a senior analyst at New Lines Institute.

He says Western sanctions and a wide range of financial measures have forced Russia “to reorient” its economy away from the US and European Union.

Instead, Russia seeks to increase trade with China and other countries in the Global South, he adds.

As a result of these changing dynamics “Putin could be orienting the country’s war efforts towards the increasingly hybrid nature of the conflict” by picking up an economist as the defence minister, Chausovsky tells TRT World.

“From a strategic standpoint, Putin made the calculation that the Kremlin needs to factor these types of dynamics into the war planning and in Moscow’s broader defence policies, with Belousov’s previous experience and role as an economist playing into that calculation.”

Belousov, who previously served as the economic development minister and the first deputy prime minister, believes in state intervention and is “a fan of military Keynesianism.”

Kamran Gasanov, a political analyst at the Russian International Affairs Council (RIAC), a Moscow-based think tank, also says that Belousov has been brought in to fix the war finances.

“Belousov's appointment is connected with the desire to both change the current minister and make management more effective. Belousov established himself as a successful technocrat and economist. It is necessary to guarantee the logistics of the army and bring it to a higher technological level,” Gasanov tells TRT World.

Tatiana Stanovaya, a senior fellow at the Carnegie Russia Eurasia Center, expressed a similar view saying that “Putin's goal is to enhance arms production effectiveness and optimally meet military needs. In this context, Belousov is a logical choice.”

A matter of performance

Sergey Shoigu has remained in office since 2012 and is considered close to Putin. It was inevitable that his sudden transfer raised some speculation.

RIAC’s Gasanov says Shoigu’s removal from the defence ministry could be due to the setbacks the Russian military faced on the ground and financial scandals that have embroiled people around him.

“Firstly, the course of the special military operation, especially in the first year and a half, to put it mildly, did not suit Putin. And this is largely Shoigu’s responsibility,” he says.

Then there was the corruption scandal involving Timur Ivanov, the deputy defence minister, which exploded in late April and undermined Shoigu’s position, says Gasanov.

Soon after Ivanov’s arrest, some analysts had predicted that the axe was about to fall on Shoigu.

Today, Russian authorities arrested Lt. Gen. Yury Kuznetsov, the chief of the ministry’s main personnel directorate, a senior position. Like Ivanov, Kuznetsov was also accused of receiving large amounts of bribes.

Not really a demotion

However, the analysts TRT World spoke to do not see Shoigu’s transfer as any kind of demotion.

Analysts say his new role as Secretary of Russia’s Security Council will bring him closer to the decisions various government arms make on security-related matters. It’s akin to holding the top position at the US National Security Council.

“This appointment suggests that Shoigu will continue to be an important stakeholder when it comes to security affairs for Russia,” says New Lines Institute’s Chausovsky.

What’s more surprising is Nikolai Patrushev's transfer from the post of Secretary of Russia’s Security Council to another role, which involves overseeing the country’s shipbuilding efforts. Patrushev has been at the helm of the Security Council since 2008 and is considered a close aide of President Putin.

“No one knows what’s happening with Patrushev,” said Sergei Markov, a Kremlin-linked political analyst prior to his latest appointment.

Patrushev led the much-feared Federal Security Service (FSB) between 1999 and 2008, having taken the mantle from Putin.

“Putin does not abandon his own, and despite the shake-up, the team does not change radically,” says Gasanov.

So in a way, his appointment as the new defence minister “is not a disgrace for Shoigu” as he replaces one of the most powerful men in Moscow.