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Putin's latest political move shows Russia's wartime economy is here to stay

Huileng Tan   

Putin's latest political move shows Russia's wartime economy is here to stay
  • Russian President Vladimir Putin is replacing his defense minister with a civilian economist.
  • Andrei Belousov is set to lead Russia's military-industrial complex as Putin prepares for a protracted war.

Russian President Vladimir Putin replaced his defense minister with a civilian economist on Sunday. The move has surprised analysts and signaled to some observers that Putin has no intention of ending the war in Ukraine any time soon.

On Sunday, Putin — who was sworn in Tuesday for a fresh six-year term — proposed his new Cabinet.

The Russian leader proposed Andrei Belousov, a 65-year-old former deputy prime minister, as defense minister to replace his longtime ally Sergei Shoigu.

The personnel changes still need to be approved by Russia's parliament, but given Putin's grip on power, there are few doubts they'll be checked off.

The Kremlin's spokesman, Dmitry Peskov, said the Russian defense ministry's budget was nearing that of the Soviet Union in the mid-1980s.

"Today on the battlefield, the winner is the one who is more open to innovation," Peskov said of Belousov's appointment, according to the state news agency TASS.

"Therefore, it is natural that at the current stage, the president decided that the Russian Ministry of Defense should be headed by a civilian," Peskov added.

Putin is putting the war at the center of Russia's economy

Putin's cabinet reshuffle has come as the war in Ukraine drags well into its third year.

Russia continues to face sweeping Western sanctions that were designed to cripple its economy. But Russia's economy has appeared to remain resilient.

Reports from Russia suggest the country's economy is primarily driven by wartime activities that generate a demand for military goods and services, subsidies that steady the economy, and sharp policy-making from its top central banker, Elvira Nabiullina.

Just last month, Putin denied Russia's economy was moving to a wartime regime.

But his appointment of a civilian economist with no military experience as defense minister signals that Putin expects the military-industrial complex to be a key pillar of Russia's wartime economy amid the conflict in Ukraine.

Analysts at the Institute for the Study of War, a think tank, wrote on Sunday that it suggested the Russian leader might be preparing for a confrontation with NATO in the future

It also points to a long war in Ukraine.

"Belousov's appointment to the position of Russian Defense Minister is a significant development in Putin's efforts to set full economic conditions for a protracted war," the analysts added.

As defense minister, Belousov is set to be a 'financial administrator'

Belousov's appointment to defense minister is unlikely to impact military operations on the ground.

Mark Galeotti, the director of London's Mayak Intelligence consultancy, told Reuters that Valery Gerasimov, Russia's top general and chief of general staff, would remain in his position and continue playing a key role in directing the Ukraine war. Gerasimov reports directly to Putin.

"In that context, having an economist, someone who has been speaking about the need to basically subordinate much of the economy to the needs of the defense sector, makes a certain amount of sense," Galeotti told the news agency. "It is now essentially a financial administrator's job, and Belousov can do that."

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