How will the appointment of the new Minister of Defense of the Russian Federation Andriy Belousov affect the war in Ukraine (part 2)

The world, Russian and Ukrainian mass media are full of speculations and assumptions about the policy of the new defense minister. We started writing about this in previous article. At the same time, surprisingly, no one remembers how Shoigu himself came to the position of Minister of Defense. Meanwhile, it was a very significant event for Putin’s empire. Shoigu replaced Serdyukov. In 2007, the arrival of the former chief tax inspector of Russia, Anatoly Serdyukov, to the position of Minister of Defense was seen precisely as an attempt to audit the Ministry of Defense and its expenses. However, as a result, Serdyukov carried out a fundamental reform of the Russian army, replaced 70 percent of the higher generals and managed to become one of the main enemies of the Russian patriots. There is no doubt that Anatoly Serdyukov and his reforms played a major role in the results of Russia’s successful aggression against Georgia. Around Serdyukov then, a crazy war of apparatus unfolded, which ended in his total defeat, and the former head of the Ministry of Emergency Situations, Serhiy Shoigu, took the post of Minister of Defense. However, even today, the Russian army operates under the conditions of the same Serdyukov reform, and the role of this reform is still little analyzed by military experts.

It is characteristic that the Russian opposition mass media, discussing the appointment of Andrii Belousov, primarily emphasize the audit of the Ministry of Defense. It is about the fact that together with Shoigu, the entire “Shoigu clan”, its entire vertical of power, should leave the army. However, there is still no information as to how it will actually be. The fact is that Shoigu is a typical post-Soviet official, his department management strategy is based on a feeding system: the executive vertical is based not on the salary of subordinates, but on their access to financial flows. If the subordinate fulfills his duties as required by the superior, he later gets the right to manage new financial flows. This system is very effective for management, but extremely expensive for the budget. Moreover, it is not necessary that Shoigu personally collected tribute from his subordinates, but this system inevitably gives rise to what is commonly called corruption. But corruption in this system is not an accident, not a violation, but the main operating mechanism of power.

It must be said that before Serdyukov, the Russian Ministry of Defense was also extremely corrupt, and it was in the fight against corruption that he carried out his reform. However, the difference between the Ministry of Defense before Serdyukov and the Ministry of Defense of Russia under Shoigu is that before Serdyukov there was corruption chaos – each chief pulled in his own direction, while under Shoigu there was a corruption vertical that preserved the management system and eliminated the chaos of power. This is due to a sharp narrowing of corruption to the highest level and a merciless fight against it at the middle and lower levels.

It must be said that before the start of the full-scale aggression against Ukraine in February 2022, army officers of the middle and lower ranks were “pariahs of the Russian elite”. If the security forces of all departments, even starting from the lower floors of the government, were engaged in crushing business, using their official position, then in the army, the roof system could be used only by the chiefs of the highest echelon. This continues to this day, when the task of lower and middle-ranking commanders is simply to carry out the decisions of their superiors. Here, a system of governance, fragmentation and corruption works to destroy initiative from below, and Shoigu’s rule greatly strengthened these elements of military management.

In his time, Serdyukov fought against the chaotic corruption of his predecessors by attracting civilian specialists to the Ministry of Defense. As a result, the lion’s share of management was entrusted to them, and not to the generals. This allowed him to radically reduce corruption losses on management: the confrontation between military officials and civilians gave him the opportunity to stand above the conflict and manage it clearly. However, it should be borne in mind that Anatoliy Serdyukov, unlike Andrii Belousov, was a real and successful official. He came to the position of Minister of Defense from the post of chief tax officer – and this is one of the most powerful bureaucratic (hierarchical) structures in Russia. He had extensive experience in managing such structures, and although he did not have any scientific works in the field of economics, he was a real public official-practitioner.

The situation with Andrii Belousov is completely different. As a 1st-rank official, he was ever in charge of large hierarchical structures, but usually played the role of economic advisor. Judging by the data of the Russian press, he does not have any real apparatus, any “team”, that is why one of the first questions that opposition journalists began to ask – who will implement his program of actions? Are they military personnel from Shoigu’s apparatus, which is the least likely. Will it be the military, who had no real authority in Shoigu, or will they be elevated by the new minister? Or maybe, like Serdyukov, it will be civilian specialists?

All experts emphasize that the Chief of the General Staff retained his position and status during the appointment of Belousov. Formally, he is the First Deputy Minister of Defense, and many believe that Putin divided the powers between them in advance: the head of the General Staff deals with the army, and Belousov deals with the military economy. However, can they be divided like this? Serdyukov’s example shows that starting with the economy, he moved on to the reform of all the armed forces. To what extent Andriy Belousov is ready not to go beyond the limits of only the military economy? This will become clear when he begins to create his management apparatus.

All discussions of Andrii Belousov’s candidacy in the media agree that he is an ideological statesman, noting:

“Fan of military Keynesianism”. The new Minister of Defense Belousov will pump the military industry and the economy with money.”

However, as opposition Russian journalists rightly point out, the most important question is who he will use to create his apparatus of “military Keynesianism”? In one of the reviews related to the analysis of Andriy Belousov’s coming to power in the Ministry of Defense, it is said that he is a big fan of the Chinese system of economic management. However, the example is unsuccessful. It seems that the best model for Andrii Belousov will be not the Chinese, but the Iranian version of work.

In the mass media, the words of the economist, professor of the University of Chicago Kostiantyn Sonin, who knew Belousov personally, are quoted:

“A rare breed of competent and state-oriented economists of the older generation…”

The following characteristics of it are also found in the mass media:

“As an official of the economic bloc, Belousov consistently advocated import substitution and reliance on domestic demand…”.

“He is a fully trusted person of Putin, who can be entrusted with a total audit of military spending.”

However, all these comments ignore the most important feature of Belousov’s activities today: sanctions and the state of the military economy. Nowadays, the interview that Belousov gave to a Russian media outlet when he became the first deputy head of the Russian government is often mentioned. At that time, he publicly (despite the fact that he is not a strictly public person) named three groups of measures that would allow for acceleration of economic growth. The first measure, he said, is to reduce the CPR rate to about 5%. The second way is to improve the investment climate by reducing the pressure on business and launching the regulatory guillotine. Belousov called the third method actions related to the availability of new technologies for business and staffing.

“With the training of engineers a few years ago, we managed, if not to solve the problem, then at least to get on a sustainable path. We are just beginning work with labor professions. For this, the entire sphere of professional education must be modernized, centers will be created in the government that will systematically deal with this work”, – noted Belousov.

Undoubtedly, these are the actions he will use as Minister of Defense, although, most likely, the bankers will not allow him to lower the Central Bank rate so much. However, this is where very big problems arise. The post-Soviet space is characterized by the most acute shortage of both engineers and skilled workers, although, it would seem, during the USSR there was a surplus of both. However, today there is a terrible shortage of them, and the level of training of engineers is beyond criticism. This problem has a systemic nature: the main money in the post-Soviet space is in the management, and he is not going to share it with the production staff. It is characteristic that the Russian mass media reported that at modern plants in Russia for the production of UAVs, workers are recruited almost out of thin air. In fact, forced labor is used. This is not an accident, but a system: there, the official is always convinced that he can buy any technology in the West, and he does not need qualified specialists, whose opinion must be respected. In fact, at best, professionals create businesses that require executors to do what they are told. However, under sanctions, this system works very poorly.

Another problem is components. You can sing the praises of import substitution, but in reality, Russian companies, the state leadership, and the Ministry of Defense depend on private suppliers who buy components in the West through gasket companies. This, firstly, means a sharp increase in the price of these components, and, secondly, a limited range of private suppliers – not only smart people are needed, but also those who know about these issues. The operations of the GRU for the purchase of Western military technologies described by Suvorov in the book “Aquarium” are practically impossible today due to the decrease in the level of technical training of the GRU spies. In Soviet times, they were constantly consulted by relevant research institutes working for defense, but without these consultations, GRU agents are powerless.

In fact, the list of those who know how to smartly buy in the West, and at the same time understand what exactly he is buying, is not so large. That is why Andrii Belousov, if he wants to radically increase the supply of weapons, will face the problem of creating a procurement system. That is why the sanctions regime inevitably pushes Belousov to create in Russia something similar to the Iranian IRGC – the Islamic Revolutionary Guard Corps. The Kyrgyz Republic has its own enterprises in Iran, has its own financial system, has its own procurement, like the GRU of Soviet times.

Judging by the available information, the organization of the industrial base of the KIPR is built on the principle of project groups, each of which is headed by a trusted engineer who has received the blessing of the Ayatollah. At the head of every military project: creation of missiles, UAVs, ships, nuclear weapons are such trusted engineers and scientists. These people have dictatorial powers, personal blessing from the power of the Ayatollah and work directly according to their directions. This system is designed to mimic business schemes, but remain under the overall control of the IRGC. However, this method of work requires, firstly, a system of trust in personnel, and secondly, a system of strict security services.

Why is it so necessary? Each of those responsible for the directions has the widest opportunities for corrupt actions. He should have the right to directly dispose of large sums and make very important decisions independently. Without it, it is impossible to solve production tasks. Any attempt to bureaucratize the decision-making process: about procurement, about technical and technological decisions will inevitably drown this system. It can exist only on the trust of these chosen engineers and scientists.

Today’s chaos in the Russian military industry is not happening by chance. Each of the enterprises actually controls the procurement systems of components through private intermediaries. Especially when it comes not to Chinese components, but to parts from Western countries. And this will be the main problem for Andrii Belousov. In addition, if he wants to improve the quality of products, the most important problem for him will be the redistribution of authority and money between management and the production group. To date, judging by the media, none of the military state-owned enterprises has been able to solve this problem. By the way, the picture is the same in Ukraine.

However, that’s not all. Read about how different options of Belousov’s policy will respond in Ukraine on the battlefields in the following article.

Leonid Shtekel