[Choi Junyoung's World+] Putin Appoints Economist as Defense Minister Amid Ongoing War

Shoigu, Putin's Close Ally for 12 Years, Dismissed
Move to Check Military and Elite Power
Belousov Appointed with No Military Background
Former Economic Minister and First Deputy Prime Minister
Trusted for Integrity and Distance from Corruption
Expected to Ensure Efficient Defense Spending

Choi Jun-young, Senior Advisor at Yulchon LLC (Global Legal Affairs and Policy)

The Russia-Ukraine war, which began on February 24, 2022, has now surpassed 800 days and continues unabated. The Russian military offensive, which started around the winter of 2023, is ongoing and has placed the Ukrainian forces in a difficult position. Recently, Russia has launched a large-scale offensive near Kharkiv, Ukraine's second-largest city located in the northeast region, achieving significant results. The area around Kharkiv was considered a fortified region by Ukraine, but it was revealed that many parts had weaker defenses than expected due to poor construction, causing shock.

To counter the large-scale offensive by the Russian forces concentrating their troops, Ukraine also needs to mobilize and effectively deploy large numbers of troops, but domestic political circumstances have hindered clear progress. Although the Ukraine Support Act passed by the U.S. Congress allows for over $20 billion in aid, it is expected to take more than two months for the weapons and other support provided by the U.S. to actually arrive at the front lines, so Russia's offensive is expected to continue for the time being.

As Russia continues its offensive, recent changes in the Ministry of Defense have drawn attention to the background. President Putin, beginning his fifth term, appointed Sergey Shoigu, who served as Minister of Defense for 12 years since 2012, as Chairman of the Security Council, effectively removing him from the Defense Minister position. Shoigu, known to have maintained a close relationship with Putin for a long time, was credited with leading reforms and strengthening the Russian military but faced much criticism after the 2022 war with Ukraine for inadequate war preparedness and failure to manage relations with armed groups like the Wagner Group.

Shoigu's dismissal was foreshadowed by the arrest of Deputy Defense Minister Timur Ivanov in April on corruption charges. Ivanov was accused of embezzling funds by exerting influence over the reconstruction projects in occupied Mariupol while living a lavish lifestyle. Following the deputy minister's fall, the Defense Minister was replaced. While there are various factors, the prevailing view is that President Putin has begun a serious check on the growing influence of the military and certain elite groups due to the war. Supporting this view is the appointment of Andrey Belousov, an economist with no military experience, as the new Defense Minister.

Andrey Belousov, the newly appointed Russian Minister of Defense.

New Defense Minister Belousov graduated from Moscow State University and was mainly active in the Russian Academy of Sciences research institutes and his own economic think tank during the 1990s and 2000s. He is notably known for warning about the high likelihood of a global financial crisis around 2005 and 2008. Since 2006, he has served as Minister of Economic Development, economic advisor, and First Deputy Prime Minister, enjoying strong trust from President Putin. Belousov's most distinctive and advantageous trait is his distance from corruption. In Russia, where corruption is widespread among the power elite, he is considered a very unique figure. He fundamentally emphasizes economic growth through a strong role of the state, consistently advocating for increased state investment in core infrastructure and maintaining low interest rates through accommodative fiscal and credit policies to stimulate the economy. While supporting free enterprise activities, he believes the state should firmly reclaim profits exceeding a certain level to be used for public purposes, which has led to clashes with Elvira Nabiullina, Governor of the Central Bank of Russia.

President Putin appointed an economic expert as Defense Minister during the war because he judged that effective execution and control of the rapidly increasing defense budget were necessary. Russia's defense budget in 2024 was $117.2 billion, accounting for about 6.6% of GDP. Considering that 2-3% of GDP is generally regarded as an appropriate level, concerns about the defense budget becoming excessively large even in wartime are quite valid. Putin likely firmly recognized the need for proper control and efficient execution, recalling that the Soviet Union's increase in defense spending to over 4% of GDP during the 1980s arms race with the U.S. was a cause of its collapse.

Moreover, he views the large-scale spending not merely as quantitative expansion of existing weapons but as a way to maintain development and vitality across the entire economy beyond the defense industry by expanding advanced technologies and manufacturing capabilities. Belousov has emphasized in past interviews the need for state-led investment and nurturing of companies to produce advanced products such as aircraft, shipbuilding, electronics, machine tools, diesel engines, and turbines, aligning with Putin's vision.

Belousov's appointment implies that the Russia-Ukraine war may continue for a long time beyond 2024. Russia, judging that Western countries including the U.S. intend to weaken its national power through support for Ukraine, has no choice but to prepare for a prolonged conflict. Preparing for a long war requires building an effective mobilization system and restructuring various industries, which is not an easy task for Russia, which has relied on resource sales. To this end, Russia is first strengthening cooperation with China to secure urgently needed parts and manufacturing equipment and aims to enhance technological capabilities in the medium to long term. Putin's visit to China and Belousov's appointment can be seen as consistent policies.

Whether Russia's intentions will be fully realized remains to be seen, but the direction itself can be considered correct. If Russia achieves its goals, it could secure enhanced industrial production capacity and mobilization ability, posing a greater threat to the U.S. and Western countries. For the U.S., beyond continued arms support to Ukraine, it will need to establish a larger-scale security strategy and share roles with allies, but with the presidential election approaching, initiating such changes is not easy, which is a concern for the U.S.

Choi Jun-young, Specialist at Yulchon LLC (Global Law & Policy)