Russian President Vladimir Putin fired his long-standing friend Sergei Shoigu as head of the Defence Minister and replaced him with economist Andrei Belousov as part of a government reshuffle following his inauguration last week.

Speculation about Shoigu’s imminent departure has been swirling for several weeks after his deputy Timur Ivanov was recently arrested for massive and conspicuous corruption.

Shoigu, who has served in government since 1991, is not popular with the military so the change is seen as Putin shoring up his control over the military and the appointment of Belousov will place more emphasis on running Russia’s increasingly militarised economy.

Belousov is close to Putin but a rival of the technocratic Prime Minister Mikhail Mishustin, who kept his job in the new government. He also has no experience of running a ministry, nor does he have any military experience.

He has largely played an advisory role to Putin for most of his career. In 2000, Belousov became an adviser to the Russian prime minister and then in 2006 the deputy minister economy ministry. From 2008 to 2012, he was director of the department for economics and finance in the years when Putin was prime minister. Belousov was Russia's economy minister in 2012-2013, an aide to Putin in 2013-2020, and first deputy prime minister in 2020-2024. Belousov is very religious and favours Keynesianism economics of state-backed stimulus to promote growth.

In the previous government he was appointed First Deputy Prime Minister to supervise national projects, finance, foreign trade and counteraction to sanctions. He will also be responsible for the institutes of development, such as VEB.RF.

Belousov was the author of investments planned for the 12 national projects that have come back to prominence recently, and Mishustin was hired to implement them. Belousov was also behind the decision to hike VAT by 20% at the start of 2019. Belousov graduated from Moscow State University’s Faculty of Economics in 1981 with distinction and like Putin is a practitioner of martial arts, sambo and karate. He was exempted from the national service all Russian men have to perform.

Belousov is best known for proposing a super tax on the oligarchs in 2018 to pay for Putin’s May Decrees spending that increased wages in the regions among other things.

Bring Belousov in as the Defence Ministry suggests that the war spending on militarising the economy will now be dovetailed with the increased spending on the National Projects 2.0 that Putin recently announced.

As bne IntelliNews has reported, the National Projects and the military spending has become a boon for the Russian economy after the basic strategy of Putinomics changed and the Kremlin has started spending freely. Russia’s poorest regions have been the biggest winners as the military Keynesianism has boosted incomes in the far-flung regions that have largely been ignored for most of the last three decades.

“It’s very important to put the security economy in line with the economy of the country so that it meets the dynamics of the current moment,” presidential spokesman Dmitry Peskov said.

Shoigu assumed leadership of the defence ministry in 2012 after his tenure as the emergency services minister. Shoigu was previously one Russia’s most popular ministers after the illegal annexation of Crimea in 2014, which he was credited with orchestrating, but has been criticised for his poor handling of the military campaign in Ukraine. Under intense pressure after the invasion of Ukraine in 2022, Shoigu disappeared from view for two weeks, rumoured to have suffered from a massive heart attack.

Putin moved Shoigu sideways, appointing him to the powerful post of secretary of Russia's security council, Putin's spokesman Dmitry Peskov said. Shoigu replaces another long-time Putin ally, former FSB boss Nikolai Patrushev, who has been the council's secretary since 2008.

Patrushev’s eldest son, who has been Agricultural Minister, was rumoured to be a possible replacement for Shoigu at the Defence Ministry, but instead has been promoted to deputy prime minister, the most powerful of the “golden youth” of the children of oligarchs and ministers in power.

Shoigu has faced criticism from Russia's military for mishandling the war effort in Ukraine. Specifically, when Wagner leader Yevgeny Prigozhin mutinied earlier this year, he called for Shoigu and Valery Gerasimov to be removed from office. Shoigu was in the process of taking the control of Wagner under the direct control of the Defence Ministry at the time, a process that has now been completed.

Gerasimov continues to head the army and lead the war effort in Ukraine, but it is not clear if he will retain his job as Russia’s top general. Peskov said that a decision has not been made “yet.” It is also not clear what job, if any, Patrushev senior will be given.

Some analysts believe that Belousov is a temporary appointment and that either he will be replaced, or at least more serious military figures will be appointed around him to placate any criticism from the military bloc. Belousov is known as a supporter of boosting military spending and increasingly mobilising Russia's economy for the war effort.

Belousov's job is "to integrate the military-industrial complex into the country's economy," Peskov said in comments on May 12, adding a civilian was appointed to head the defence minister as " the ministry should be open to innovation and progressive ideas." Veteran Russian Foreign Minister Sergey Lavrov has also kept his job so far, although it is known that he has wanted to retire for some time.

Cabinet: 

Andrey Belousov - Minister of Defence

Sergei Lavrov - Minister of Foreign Affairs

Konstantin Chuychenko - head of the Ministry of Justice

Vladimir Kolokoltsev - head of the Ministry of Internal Affairs

Alexander Kurenkov - head of the Ministry of Emergency Situations

Alexander Bortnikov - Director of the FSB

Sergei Naryshkin - head of the SVR

Viktor Zolotov - head of the Russian National Guard

Dmitry Kochnev - head of the Federal Protective Service (including presidents security service)