How will the appointment of the new Minister of Defense of the Russian Federation, Andriy Belousov, affect the war in Ukraine (part 1)

The appointment of Andrii Belousov as the new Minister of Defense of Russia overshadowed in the eyes of analysts of the world media, even the very fact of the new term of Putin’s re-election. Despite the fact that for a long time the Secretary of the Security Council of the Russian Federation, Mykola Patrushev, was called “Putin’s receiver”, and this was confirmed by many Ukrainian media, his actual dismissal was simply not noticed by anyone. But the appointment of Andrii Belousov instead of the seemingly “eternal” Shoigu caused a clear shock – we can say for sure that no one expected it.

The main topic of discussion was the question of what this appointment means for the further course of the Russian-Ukrainian war? What plans is Putin building in this war, based not on the information disseminated by the Russian mass media, but on an objective analysis of the situation?

The comment of the adviser to the head of the Office of the President, Mykhailo Podoliak, about the reason for the dismissal of Serhiy Shoigu from the position of Minister of Defense of Russia was passed over by the Ukrainian mass media:

“Belousov, who became the head of the Ministry of Defense, is given too many advances. However, he is an ordinary, banal assistant to Putin, nothing more. The main reason for personnel changes in the Russian government was Putin’s desire to protect himself from a possible conspiracy of generals.

Putin removed a potential conspiracy of generals behind which, for example, the same Shoigu together with Patrushev could stand. Putin removed “Politburo 2.0.” – he explained.

Podolyak also emphasized that the main blow was directed not so much against Sergei Shoigu as against Patrushev, who previously held the post of secretary of the Security Council of Russia. Putin actually became Patrushev’s shadow, not the other way around, and this is what prompted him to reshuffle the power structures.

“In my opinion, the main blow was against Nikolai Patrushev, not against Shoigu. It’s just that Shoigu was already so “zero” that he made such a substitution. But for Putin, the main thing was to remove Patrushev, who, in my opinion, was already dominating.” – noted adviser to the head of the Office of the President.

Patrushev was really perceived, first of all, by Ukrainian politicians and mass media as a potential “receiver”. And it was his relatively formal “resignation from power” that caused the greatest interest in Bankova. In the meantime, it should be noted that his son was appointed to the Russian government, which in Russian terms means that Patrushev is not in real disgrace. That is, the idea of ​​a “conspiracy of generals” does not correspond to reality. At one time, American screenwriters came up with many exciting scenarios, how former generals of the Soviet Army organize a military coup. But this is a linden tree – a Soviet (Russian) general will never be Pinochet – politically, these are typical bureaucrats, who, as they say, “must be feared”. The initiative, or rather its lack, is the main problem of the Russian army. And accordingly, initiative is the main strength of such characters as Prigozhin or Girkin.

Meanwhile, the appointment of Andrii Belousov, not the resignation of Patrushev Sr., is the main event of Putin’s new tenure. But in order to understand what is happening, one must first assess how the Russian economy survived these years of war. This analysis will be effective if we remember what economists wrote at the beginning of the war. Everyone here had extremely idealistic views. One by one, they began to claim that the Russian economy would not survive this war. It was claimed that the dollar would skyrocket, that military production in Russia was completely dead, and that as soon as the existing stockpile of weapons was used up, Putin would be forced to retreat.

It must be said that these considerations were not unfounded. Yes, on the one hand, Russia kept a terrible stockpile of weapons, but the very first experience of using weapons that are in conservation showed that the percentage of rejection among these weapons is very high. Elementary rotted wiring, weak hydraulics leaked, and even thousands of herds of T-54 and T-55, where, it would seem, nothing could break, could not leave the park without lengthy repairs. The logic of analysts who argued about the rapid collapse of Russia’s military industry was based on extremely insignificant successes in military production during the zero and tenth years. Everyone remembered these civilian planes, which were not world-class, but were simply garbage, despite the fact that terrible state investments were made in them. “Armata” – which was purely a laundry project – laundering public money. All these examples set a good-natured mood and convinced of the collapse of this “colossus on clay feet”.

The first news that struck economists was that the liberal part of the Russian government had managed to hold onto Russian finances. Of course, the fact that revenues from oil and gas continued to flow into the Russian treasury played a role here. Not only that, President Biden, unlike President Trump, for his “environmental programs” dealt a devastating blow to the US oil and gas business on the eve of the war. And despite the loud statements of Western politicians, the stream of income from energy exports only grew during the war years. Of course, from the point of view of efficiency, the Russian oil and gas business has lost some of its attractiveness – it has become much more expensive. Deceiving the sanctions imposed against the Russian Federation is worth a lot of money. However, Putin went easy on the growth of expenses, including political expenses – the main thing is that he had enough cash left. At the same time, his liberal entourage managed to do the most important thing – began to manage these flows with a view to mandatory corruption.

In order to understand what the meaning of the game of managers is here, let’s turn to the experience of the famous Ukrainian company – ChMP – Black Sea Shipping. While in the USSR, corruption in ChMP did not descend below the level of deputy management, the company worked relatively successfully. Of course, its efficiency was low, but the salaries of the main part of the staff were also relatively low. However, when the independence of Ukraine came, and in fact the level of corruption decreased – now small bosses could “launder” property – the company was simply “undressed” at the middle management level. As a single commercial structure, the company could not work – ownership issues were never resolved, but the number of those who could “deribanit” was very large. And the campaign died, the ships were sold for nothing and so on. This could happen in Russia as well. But it didn’t happen.

It is characteristic that Girkin, who was still at large at the beginning of the war, demanded that the authorities bring an iron order to the economy. If this were done, the situation would become even worse, because a pure mobilization economy, as in the USSR during the Second World War, in today’s Russia and Ukraine, by the way, is impossible. The skill level of Putin’s liberal managers is that they manage the economy in a situation of controlled chaos. Of course, this is impossible without a lot of money, primarily for oil and gas, but the role of this leadership should not be underestimated. It was the liberal branch of government that managed to maintain the dollar exchange rate, prices, and consumption level, and at the same time start the production of weapons. It should be noted that after some time, after the start of the war, military products began to be produced in Russia. What actually did not exist on a serial scale before the war.

There is a significant difference between the Russian and Ukrainian military-industrial complex – the legacy of the USSR. The Russian military-industrial complex did not disappear completely, as happened in Ukraine, with very rare exceptions. By the zero years, Russian industry, limping on both legs, began to recover. Thus, the efficiency of this industry was many times lower than the Soviet one, the technical level and literacy of the personnel – very much inferior to the USSR. However, these enterprises could use Western technologies and components, which was a big problem in the USSR. It was these enterprises that became the basis for the resumption of production of military products on a mass scale.

One of the most important aspects of this new Russian military industrialization should be understood here: it is deeply unprofitable! Everything it does is more expensive than the Soviet one and of lower quality. Despite the fact that Putin and his government pay a lot of money for these military products, the managers and owners of enterprises are not going to spend it on personnel – the cost of paying labor remains extremely low. All this can exist only thanks to the surplus budget profits from the sale of oil and gas. Western arms manufacturers will think a hundred times before they begin to increase the production of military products – what to do with them when the war is over? Putin is not concerned about this problem. Even with the fact that wages in Western companies are much higher than in Russia, it can be said for sure that Russian military products are not cheaper for Putin today than Western ones, but of much worse quality. But again, excess profits on oil and gas help to solve this problem. However, it is clear that this does not make Ukraine any easier.

Putin has set himself a perhaps more ambitious goal: not just to establish military production, but to make it more efficient. Andrii Belousov was appointed for this purpose. That is, Putin probably decided to do what was never done in Ukraine. And it seems that it was not by chance that Mykhailo Podolyak reacted this way to the appointment of the new Minister of Defense.

Andrii Belousov is almost called an entrepreneur, but this is not so. Someone might have thought that Putin decided to find a person in the military economy like Prigozhin: proactive and agile. But it seems that the experience of working with Prigozhin proved to Putin that being too proactive is dangerous for him. Andriy Belousov is an ideal option in this sense. He is not just a minister, he is an ideologue of the new economy. And about what her features are, read in the next publication.

Leonid Shtekel