In additional than two years of warfare in opposition to Ukraine, President Vladimir V. Putin of Russia has discovered that the technocrats he assembled to handle the Russian financial system have turned out to be his most dependable foot troopers.
The Russian chief has now tapped considered one of them, Andrei R. Belousov, who has no army expertise, to turn into his subsequent protection minister.
Mr. Belousov, 65, a fan of Rembrandt who’s keen on quoting Fyodor Dostoyevsky and Carl Jung, has for years stood aside from the opposite technocrats, a lot of whom have supplied glorious financial steerage, whilst they privately have seen Mr. Putin’s provocative geopolitical strikes as hazardous for Russia’s financial future.
Mr. Belousov, nonetheless, has been a real believer.
His rise exhibits how Mr. Putin is totally redirecting Russia’s financial system towards the warfare effort and means that the Kremlin could develop much more deeply concerned in mobilizing trade for the battle. Mr. Putin solid his new protection chief, who joined him on a visit to China in latest days, as a much-needed coordinator for a quickly altering Russian army industrial advanced that’s essential to success within the warfare.
“His job is to open the Protection Ministry to innovation,” Mr. Putin instructed journalists on Friday, whereas visiting the Chinese language metropolis of Harbin.
The philosophy that Mr. Belousov has promoted for many years casts state intervention as the primary driver of financial improvement, versus non-public enterprise funding, an outlook that makes him significantly related to the second.
“There are a variety of different fairly environment friendly technocrats. He’s completely different in comparison with these folks,” mentioned Andrei Yakovlev, an economist at Harvard College’s Davis Middle for Russian and Eurasian Research. His ideological view, Mr. Yakovlev mentioned, is “in some sense near Putin’s view — about this confrontation with the West, and the need to do many issues to defend Russia.”
He additionally brings a transparent private loyalty to Mr. Putin, having suggested the president for years, and is predicted to ease tensions between the Protection Ministry and the state arms trade at a time when battlefield success relies on industrial would possibly. And he has the clear picture of an skilled, largely untainted by scandal, and has overtly embraced the Russian Orthodox faith — a serious a part of Mr. Putin’s marketing campaign for household values.
Sergei M. Guriev, a Russian economist and the provost at Sciences Po, a analysis college in Paris, steered that Mr. Belousov’s appointment mirrored the monetary pressures that Mr. Putin will face if Russia continues to make large-scale protection outlays.
“Putin understands that he actually doesn’t have some huge cash,” Mr. Guriev mentioned. “One of many indications is that Putin already in 2024 has began speaking about rising taxes. Appointing Belousov sends a sign that he’ll need spending to be much less corrupt and extra environment friendly.”
The son of a outstanding economist, Mr. Belousov grew up in an mental household. His mom was a chemist. His father suggested the Soviet authorities in a high-profile try to reform the Communist financial system within the Nineteen Sixties.
Mr. Belousov graduated from Russia’s prestigious Moscow State College and spent a lot of the Nineteen Nineties and 2000s conducting analysis and making financial forecasts, first at a Russian Academy of Sciences analysis institute and later at an financial suppose tank he based.
On the time, his contemporaries, just like the Russian central financial institution chief, Elvira Nabiullina, and the Sberbank boss, Herman Gref, totally embraced Western-style market economics, working to rework Russia into a contemporary European financial system pushed by competitors, funding and innovation amongst non-public companies.
Mr. Belousov was completely different. He understood fashionable economics and didn’t wish to return to the Soviet system. However he pressed for an aggressive authorities function within the financial system, envisioning a type of state-directed capitalism.
“His entire philosophy principally was no matter is going on that’s good, that is pushed by the state,” mentioned Konstantin Sonin, an economist on the College of Chicago. “The state is the supply of innovation, the state is what drives enterprise and ultimately results in the event of the financial system. Enterprise on this view is a obligatory evil however not one thing that may be a power for good.”
Mr. Belousov additionally earned a popularity as a very good forecaster. A prescient manuscript he launched in 2005 warned of an elevated chance of a monetary disaster in 2008-2009, partly from “a cyclical wave of defaults” in high-risk monetary devices.
He joined the federal government in 2006 as a deputy financial system minister. He later served as financial chief to Mr. Putin when he was prime minister and have become Russia’s financial improvement minister when the Russian chief returned to the Kremlin as president in 2012, following a four-year hiatus. Mr. Belousov ran the ministry for a 12 months earlier than becoming a member of the Kremlin as its prime financial adviser.
From his influential perch, Mr. Belousov tussled with different Russian economists, who argued for restrained state interference in non-public markets so companies may drive development. He wished state cash from the nationwide welfare fund to be spent on infrastructure and different authorities improvement tasks; his opponents argued the funds ought to be saved for monetary emergencies.
Regardless of crossing swords with prime company leaders, he labored to higher the nation’s enterprise setting, spearheading a state-backed company that improved Russia’s place within the World Financial institution rankings for ease of doing enterprise to No. 28 in 2019 from No. 120 in 2011.
Mr. Belousov’s precipitated a furor in 2018, when he proposed elevating about 500 billion rubles (or about $7.5 billion on the time) for the federal government from a shock “windfall” tax on metals and chemical companies, which he mentioned had been reaping extraordinary earnings.
The proposal ignited a sell-off of shares in these sectors and in the end failed. However because the Russian authorities regarded for methods to shore up cash to fund the warfare effort final 12 months, the concept of a windfall earnings tax re-emerged. This time, it went by means of.
In early 2020, Mr. Belousov was named deputy prime minister, serving to run Russia’s Covid-19 response and standing in as prime minister when Mikhail V. Mishustin got here down with the virus.
On the time, the Russian publication Metla printed an article highlighting how a small engineering and digital consulting agency run by Mr. Belousov’s son, Pavel, had gained authorities contracts with the state arms firm, house company and Commerce Ministry. It additionally mentioned his son was driving round in a Mercedes S.U.V. costing roughly $79,000.
By then, Mr. Belousov was embroiled in one other uproar over the arrest of an American investor, Michael Calvey, who was charged with embezzlement amid a enterprise dispute with a good friend of Mr. Belousov. Mr. Calvey denied the costs.
In an interview with Russian Forbes, Mr. Beluosov denied serving to his good friend safe Mr. Putin’s blessing to have the authorities strain the American businessman, saying that if he had introduced such a matter to the Russian chief, he would have been “carried out toes first.” Mr. Calvey acquired a five-and-a-half-year suspended sentence that was later lowered.
For the reason that Kremlin’s full-scale invasion of Ukraine started in February 2022, Mr. Belousov has positioned himself on the forefront of formulating nationwide “megaprojects,” the place the state is searching for to spur innovation and massive leaps in industrial improvement.
He has promoted one such challenge for Russia’s home drone trade. One other is geared toward microelectronics. He instructed Kommersant that the “new regular” in Russia, with restrictions and geopolitical pressures, would final at the least a decade.
“We’d like our personal strains of high-tech merchandise: aviation, shipbuilding, electronics, machine instruments, diesel engines, generators, and so on.,” he mentioned within the interview. “If this product is required, then we should be capable to make it.”
Many consultants query whether or not such an method can work in Russia, the place corruption is rife and the rule of regulation weak. Regardless of many makes an attempt over a few years, the Russian state has did not drive innovation, Mr. Guriev mentioned, noting that state funding is commonly pilfered by corrupt officers.
He mentioned that Mr. Belousov had been within the authorities for a few years and, thus far, had had little success creating dynamic new corporations, noting that many of the world’s innovation was occurring in non-public corporations in locations like Silicon Valley.
Nonetheless, Mr. Belousov’s concepts seem to have turn into intoxicating for Mr. Putin. The Russian chief is on the lookout for a approach to make his new warfare financial system a basis for Russia’s future improvement, whereas attempting to keep away from the extreme army spending many Russians imagine led to the Soviet Union’s collapse.
“Belousov’s job can be to guarantee that the army will get all the things they want and extra, however with out killing the financial system,” mentioned Alexander Kolyandr, a nonresident senior fellow on the Middle for European Coverage Evaluation, a nonprofit based mostly in Washington. “The wants of the warfare could justify something.”
Oleg Matsnev contributed reporting.
