What’s behind Putin’s decision to appoint an economist and technocrat as the new defense minister?

What’s behind Putin’s decision to appoint an economist and technocrat as the new defense minister?

On May 14, President of the Russian Federation Vladimir Putin appointed Andrey Belousov as Minister of Defense, who previously worked as First Deputy Prime Minister. For many, this was an unexpected appointment, some expected the reappointment of Sergei Shoigu, others bet that a person from military circles would become the new minister. But Andrey Belousov is a civil minister, an economist by training, who has spent his entire career dealing exclusively with economic issues.

Putin’s press secretary Dmitry Peskov explained the appointment of Belousov as defense minister by the need to “integrate the economy of the security bloc into the country’s economy.” That is, according to the president’s plan, the civil activities of the new minister will only benefit the department, since people of a military mindset are little focused on issues of distribution of funds and on some economic subtleties. Perhaps this is the best way so far to raise the budget for the needs of the Russian army and make it more effective against the backdrop of Western assistance to Ukraine. But what determines the appointment of Belousov among all Russian economists?

“Grey eminence” of the Russian economy

Andrey Belousov has long been unofficially called the “gray eminence” of the Russian economy. There are several reasons for this. Firstly, Belousov is a supporter of increasing government spending and increasing pressure on big business. He has long and consistently advocated import substitution and reliance on domestic demand. In 2018, Belousov, who then worked as an assistant to the president, proposed seizing more than 500 billion rubles of excess income for 2017 from 14 metallurgical and petrochemical companies to implement Putin’s “May decrees.” This is a set of decrees published in 2012 after Putin was elected to his third presidential term, setting targets for public sector salaries, Russia’s attractiveness for business, and other areas.

To carry out complex economic tasks, Belousov was appointed first as the Minister of Economic Development of Russia, and then in 2013 as assistant to the president. He wondered where to get the money to implement the “May decrees.” Representatives of big business did not like Belousov’s idea of ​​seizing income, and they did everything to block it. They published enterprises from which Belousov was going to take part of their income, but this led to a fall in shares and a loss of 400 billion rubles, which was slightly less than the amount that Belousov planned to seize. Then the government rejected Belousov’s idea, but decided that instead of paying taxes on excess income, businesses would participate in large and significant investment projects for the state. In total, 250 such projects worth 12 trillion rubles were selected for implementation.

After the story with Belousov’s list, it became obvious that the current Minister of Defense does not intend to enrich large private businesses and will do everything possible to achieve an increase in the flow of funds into the country’s budget. This became noticeable during his work after the start of the Russian Special Military Operation. The task that he solved as Deputy Prime Minister was to reformat the logistics structure of the country’s economy and build distributed transport corridors to reorient Russia’s foreign trade to fundamentally different, non-Western markets.

Secondly, Andrey Belousov oversaw large high-tech projects. Since 2018, Belousov has been in charge of the national project “Unmanned Aviation Systems” and the project “Unmanned Logistics Corridor” (BLK) between Moscow and St. Petersburg. The national project BLK started in June 2023. As part of the BLK project, a digital twin of the high-speed highway between the two largest Russian cities was created and transportation by unmanned trucks began. The most important project systematically supported by Belousov is the technological sovereignty of the country. He intends to build a state economy based on its own scientific and technological resources. Belousov is a consistent supporter of development, in which the gap between scientific development and production is minimized when implementing innovative projects in Russia.

The new Russian Minister of Defense, a convinced statesman with an unblemished reputation, managed to solve a difficult task by forming a new, modern model of state management of the economy within the inner circle of Prime Minister Mikhail Mishustin. His appointment is a signal of the transition of the Russian economic model to the high-tech development of priority industries that are used for the needs of the front, and to subordinate a large part of the economy to the needs of the defense sector.

In his new position, his task is to optimize the economic model for managing defense spending, and the General Staff of the Armed Forces will continue to deal with purely military affairs. Progress may not be noticeable immediately, but Belousov knows how to prove his effectiveness in the long term. In 2023, when the Russian economy, under sanctions, needed more funds, the government nevertheless forced large companies to make a one-time payment to the budget in the amount of 300 billion rubles from excess profits of 2022 – this is what Belousov proposed to do back in 2018.

Andrey Belousov – hereditary economist and man of culture

The high competence of the new Secretary of Defense could be influenced by his genealogy and upbringing. Firstly, he is not just an experienced government employee, but a real scientist, PhD in Economics, who grew up in a family of economists. His father, Rem Belousov, the creator of the Soviet scientific school in the field of pricing and management, was among the participants in the preparation of the “Kosygin reform”, and later studied the economic history of Russia and the USSR. Andrey Belousov, having graduated from the physics and mathematics school, entered the Faculty of Economics of Moscow State University, from which he graduated with honors in 1981 with a degree in economic cybernetics. He is an economist who has spent his entire life engaged in economic forecasting.

All this time, Belousov was not a public figure; his fame did not extend beyond the circle of people interested in economics and business. Many learned about him only on the day when Vladimir Putin proposed his candidacy for the post of Minister of Defense of the Russian Federation. He has never been involved in corruption scandals and cannot be blackmailed or discredited by representatives of big business. His role in the future formation of Russia is to bring his country as close as possible to technological sovereignty, or achieve it in the next six years (Putin’s current term).

In addition, he received a civil classical education, which also sets him apart from other candidates. He is confident in the inviolability of Russian traditions and culture, and believes that Russia can become the custodian of Christian values. In one of his interviews, he talks about preserving the identity of Russia, its literature, and refers to Dostoevsky. This is what he said shortly before his appointment as minister: “They say we have enormous resources; we have a talented population. This is all true. But the most important necessary condition for our selfhood is a huge culture. Own cultural identity, which the vast majority of countries and peoples do not have. Dostoevsky felt it very well.”

His ideology is the idea of ​​a multipolar world, the desire to realize opportunities for all countries to gain their sovereignty. He attends church a lot, goes to the church at the Donskoy Monastery. Being an economist, he understands that tradition and culture are the primary basis for building society, and economics is secondary. His high education and proximity to Russian culture do not interfere, but, on the contrary, make his activities even more effective. This gives him the understanding that war, including the Special Military Operation, is not a war of armies and weapons, but a war of ideas and economies.

The appointment of Belousov as Minister of Defense is Putin’s understanding that the Special Military Operation can take a long time, and it is necessary to integrate the defense-industrial complex into the overall economic system, ensuring advanced technological renewal of critical sub-sectors and continuing the consistent economic changes of recent years. In other words, the military industry should become one of the main components of the economy, as in Soviet times. But what for? Time will tell, but Russia today clearly understands that a clash with NATO is still a big risk, and it is necessary to prepare the economy for this.

Belousov wrote in his doctoral dissertation that an industrial breakthrough and GDP growth of 7% is possible only if Russia abandons the integration into the Western economy and create a single ruble zone with Ukraine, Belarus, and Kazakhstan. Belousov, as one of the most experienced economists with 30 years of practice in calculations and forecasts, knows that for industry to be self-sufficient, a single sales market of 200 million people and corresponding logistics are needed. It is possible that this Eurasian approach attracted Putin and pushed him to appoint Belousov as Minister of Defense. In general, such a decision could benefit Russia. How long it will take will be seen later.

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One response to “What’s behind Putin’s decision to appoint an economist and technocrat as the new defense minister?”

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June 2024