In more than two years of war in Ukraine, Russian President Vladimir V. Putin has discovered that the technocrats he summoned to run Russia’s economy are actually his most reliable foot soldiers.
Russian leaders have now named one of them, Andrei R. Belousov, with no military experience, as the next defense minister.
Mr. Belousov, 65, a fan of Rembrandt and fond of quoting Fyodor Dostoevsky and Carl Jung, has for years set himself apart from other technocrats, among whom of many people provide excellent economic guidance, although they Met in private Putin’s provocative geopolitical moves pose a danger to Russia’s economic future.
Yet Mr. Belousov is a true believer.
His rise shows How Putin comprehensively adjusts the direction of Russia’s economy and hinted that the Kremlin might become more deeply involved in mobilizing industry for the war. Putin appointed his new defense minister, who has visited China with him in recent days, as a much-needed coordinator for Russia’s rapidly changing military-industrial complex, which will be crucial to the success of the war.
“His job is to open the Defense Ministry to innovation,” Putin told reporters on Friday during a visit to Harbin, China.
Belousov’s decades-long vision of state intervention as the main driver of economic development, rather than private business investment, makes him especially relevant today.
“There are many other technocrats who are quite efficient. Compared with these people, he is different.” said Andrei Yakovlev, an economist at Harvard University’s Davis Center for Russian and Eurasian Studies. Yakovlev said his ideological views “are in a sense close to Putin’s – about confrontation with the West and the need to take many measures to defend Russia.”
He also brings a clear personal loyalty to Mr Putin, having advised the president for years and is expected to ease tensions between the Defense Ministry and the national arms industry at a time when success on the battlefield depends on industrial strength. He has a squeaky clean professional image, has been largely untouched by scandal, and is openly professed by the Russian Orthodox Church – a key component of Putin’s promotion of family values.
Sergei M. Guriev, Russian economist and provost of Notre Dame de Paris Sciences PoA Paris research university said Belousov’s appointment reflected the financial pressure Putin would face if Russia continues its massive defense spending.
“Putin understands that he really doesn’t have a lot of money,” Guryev said. “There are signs that Putin is talking about tax increases as early as 2024. Belousov’s appointment sends a signal that he wants spending to reduce corruption and increase efficiency.”
Mr. Belousov is the son of a famous economist and grew up in a family of intellectuals. His mother is a chemist. His father advised the Soviet government in the 1960s on high-profile attempts to reform the communist economy.
A graduate of Russia’s prestigious Moscow State University, Mr. Belousov spent much of the 1990s and 2000s conducting research and economic forecasting, first at the Institute of the Russian Academy of Sciences and later at an economic think tank he founded Work.
At that time, contemporaries such as Elvira Nabiullina, Governor of the Central Bank of Russia, and Herman Gref, Governor of the Sberbank of Russia, fully accepted the Western-style market economy and devoted themselves to To transform Russia into a modern European economy driven by competition, investment and innovation. private enterprise.
Mr. Belousov is different. He understood modern economics and did not want to return to the Soviet system. But he urged the government to play an active role in the economy, envisioning a state-led capitalism.
“His whole philosophy is basically that whatever good happens, it’s driven by the state,” said Konstantin Sonin, an economist at the University of Chicago. “The state is the source of innovation, the state is the driver of business. force, ultimately leading to economic development. In this view, business is a necessary evil, but not a force for good.”
Mr. Belousov has also earned a reputation as an excellent forecaster. A prescient manuscript he published in 2005 warned that the likelihood of a financial crisis would increase in 2008-2009, in part because of “cyclical waves of defaults” on risky financial instruments.
He joined the government in 2006 as Deputy Minister of Economy. He later served as economic chief during Putin’s tenure as prime minister and as Russia’s economic development minister when Putin returned to the Kremlin as president in 2012 after a four-year hiatus. Belousov served in the ministry for a year before joining the Kremlin as top economic adviser.
Belousov’s influential position has put him at odds with other Russian economists who advocate limiting state intervention in private markets so that businesses can drive economic growth. He wanted state money in the National Welfare Fund to be used for infrastructure and other government development projects; his opponents argued that the funds should be saved for financial emergencies.
Despite clashes with senior corporate leaders, he has worked to improve the country’s business environment, leading a state-backed agency that improved Russia’s ranking in the World Bank’s ease of doing business rankings from 120th in 2011 to 2019. 28th in the year.
Belousov’s proposal caused a stir in 2018 when he proposed raising some 500 billion rubles (about $7.5 billion at the time) for the government through an unexpected “windfall” tax on metals and chemical companies, which he called Always making excess profits. .
The proposal triggered a sell-off in stocks in those industries and ultimately failed. But last year, as the Russian government looked for ways to raise money to finance the war, the idea of a windfall tax resurfaced. This time, it was passed.
In early 2020, Mr. Belousov was appointed deputy prime minister to help manage Russia’s Covid-19 response and served as acting prime minister when Mikhail V. Mishustin contracted the virus. .
At that time, the Russian publication “Metla” published an article article It highlights how a small engineering and digital consultancy run by Mr Belousov’s son Pavel won government contracts with the state arms company, the space agency and the trade ministry. It also said his son drove a Mercedes SUV worth about $79,000.
By then, Mr. Belousov was embroiled in another uproar. US investor Michael Calvey arrestedHe was charged with corruption over a business dispute with a friend of Belousov’s. Calvi has denied the accusations.
In an interview with Russia’s Forbes, Belosov denied helping his friend obtain Putin’s permission for authorities to pressure the U.S. businessman, saying if he had raised such a thing with the Russian leader, he would have “Being carried out.” First. ” Mr. Calvi Sentenced to five and a half years probation Later it decreased.
Since the Kremlin began its full-scale invasion of Ukraine in February 2022, Belousov has been at the forefront of formulating the country’s “megaprojects” as the country seeks to spur major leaps in innovation and industrial development.
He promoted one such project for Russia’s domestic drone industry. The other is aimed at the field of microelectronics. He told Kommersant that Russia’s “new normal,” coupled with restrictions and geopolitical pressure, would last at least a decade.
“We need our own high-tech product lines: aviation, shipbuilding, electronics, machine tools, diesel engines, turbines, etc.,” he said in the report. interview. “If there’s a need for this product, then we have to be able to make it.”
Many experts question whether such an approach would work in Russia, where corruption is rife and the rule of law is weak. Guryev said the Russian government has failed to promote innovation despite repeated attempts over the years, noting that state investments are often stolen by corrupt officials.
Mr. Belousov has been in government for many years and has so far had little success in creating dynamic new companies, he said, noting that much of the world’s innovation happens in private companies in places like Silicon Valley.
Nonetheless, Belousov’s ideas appear to have fascinated Putin. The Russian leader is looking for a way to make his new war economy the basis for Russia’s future growth while trying to avoid the excessive military spending that many Russians believe led to the collapse of the Soviet Union.
“Belousov’s mission is to ensure that the military gets everything they need and more, but without strangling the economy,” said Alexander Kolya, a nonresident senior fellow at the Center for European Policy Analysis, a Washington-based nonprofit. Del said. “The necessities of war can justify anything.”
Oleg Matznev Contributed reporting.
