By Paul Sonne and Anton Troianovski

BERLIN — President Vladimir Putin of Russia replaced his minister of defence on Sunday (12) with an economist, shaking up his national security team for the first time since his invasion of Ukraine and signalling his determination to put Russia’s war effort on an economically sustainable footing.

Putin kept the minister, Sergei Shoigu, in his inner circle, tapping him to run the country’s Security Council — a position giving Shoigu close access to the president but little direct authority. Shoigu will replace Nikolai Patrushev, a former KGB colleague of Putin, whom the Kremlin said would be moved to position to be announced in the coming days.

Andrei Belousov, an economist who had served as first deputy prime minister since 2020 and long been seen as one of Putin’s most trusted economic advisers, was nominated to become the new defence chief.

The Kremlin said Russia’s ballooning defence budget warranted putting an economist in charge, and that Belousov would help make the Russian military “more open to innovation”.

The Cabinet shifts represented a rare overhaul for Putin, who tends to avoid rash changes, and they could mark a turning point in Russia’s more than two-year war in Ukraine.

He removed from the military’s helm a man whom Russian pro-war commentators and Western analysts alike held partly responsible for Moscow’s many failures at the outset of the invasion. And by installing an economist, he tacitly acknowledged the importance of industrial might to any military victory.

Shoigu’s potential dismissal was an object of speculation from the war’s first days when Russian forces appeared unprepared for the determination of Ukraine’s resistance.

Last summer, mercenary chief Yevgeny Prigozhin staged a mutiny to try to remove Shoigu, the defence minister for more than a decade. But Putin, who analysts say values loyalty, stuck with Shoigu.

Now, with the Russian military having gained the battlefield initiative, Putin is signalling a greater willingness to make changes and to show that Russia has the discipline and economic capacity to wage a long war. A possible shift in Shoigu’s stature was telegraphed last month when Russian authorities arrested one of his top deputies on corruption charges.

But the Kremlin said Sunday that another frequent target of critics of Russia’s war effort — Gen. Valery Gerasimov, chief of the Russian general staff and the highest-ranking Russian military officer — would remain in his post.

It is unclear how much authority over the war Shoigu will retain. While his new job parallels that of the US president’s national security adviser, analysts say that in Putin’s Russia, the role has limited influence because it does not directly control the military or a security agency.

Shoigu was “too big to fall,” Alexander Baunov, a senior fellow at the Carnegie Russia Eurasia Centre, wrote. But in his new role, he added, Shoigu would be “without real command powers and without a cash box.”

Belousov, 65, who was a Kremlin economic adviser before being named first deputy prime minister in 2020, comes from the so-called economic bloc of the government, which won plaudits within the Kremlin for its agile response to Western sanctions and success in stabilizing the country’s economy.

The security bloc of the government, by contrast, was subject to recriminations after the Russian military pursued a faulty strategy in the early months of the war and faltered on the battlefield.

Russian commentators expressed surprise over the appointment of an economist to oversee Russia’s military. Kremlin spokesperson Dmitry Peskov told reporters that Putin made the decision as Russia was once again approaching Soviet-era levels of military expenditure due to “geopolitical circumstances”.

“This is extremely important and it requires special attention,” Peskov said.

He added that Putin wanted his defence ministry to be under civilian leadership because of the need to modernize the military — an implicit message that Shoigu was not up to the task. (Shoigu held the rank of general because of his previous role as emergencies minister.)

“Today on the battlefield, the victor is the one who is more open to innovation, more open to the most rapid implementation,” Peskov said. “So it’s natural that at the current stage, the president decided that the defence ministry be headed by a civilian.”

Still, despite his knowledge of economics, Belousov has relatively little executive experience. He served as the country’s minister of economic development for a little over a year, from 2012-13.

The change comes less than a week after Putin was inaugurated to his fifth term as Russia’s president, a ritual that was widely expected to set the stage for a Cabinet shuffle of some kind. The entire Cabinet was dissolved as part of the government transition. Many but not all of his ministers were re-nominated to their posts.

Shoigu was the longest-serving minister in the history of the independent Russian Federation and a fixture of Russian politics since the collapse of the Soviet Union.

Originally from the Tuva Republic in southern Siberia, he developed a national profile as a man of action by serving as Russia’s emergencies minister for more than two decades, from 1991 to 2012. He could regularly be found on television responding to the country’s natural disasters, in contrast to other ministers portrayed as paper pushers.

Shoigu’s tenure as Russia’s defence minister, beginning in 2012, was marked by Putin’s military intervention in Ukraine in 2014 and in Syria in 2015. Then in 2022, Shoigu became a lightning rod for criticism as the Russian military faltered in the early months of the war.

For months last year, Prigozhin railed against him in videos posted online, assailing him for incompetence in a fight for influence that ultimately ended with the mercenary leader trying to oust him in a failed uprising last summer. Prigozhin later died in a plane crash that US officials believed was likely to have been a Kremlin-approved assassination.

The leadership changes on Sunday also may signal a change in stature for Patrushev, a hard-liner with a KGB background who has long been seen as a member of Putin’s inner circle.

It is unclear what new position he will be offered.

With war costs rising, Putin’s government has embarked on an effort to raise more revenue, including with a planned overhaul of the country’s tax system.

Nearly a third of the federal budget has been allocated to national defence this year, a huge increase from previous years. The intense government spending on the military has turbocharged the economy but raised the risk of overheating, as a crimped labour force drives up wages and inflation.

One of Shoigu’s top deputies, Timur Ivanov, was arrested by Russian authorities in April and accused of bribery. Ivanov had long been in charge of military construction projects.

His arrest, the removal of Shoigu and the installation of a trusted technocrat to head the defence ministry may also be a signal that the Kremlin, after turning a blind eye to the corruption that has blossomed alongside military spending, will now mount a campaign to rein in graft in the sector.

“Belousov’s first task will be fighting corruption,” Sergei Markov, a pro-Kremlin political analyst, wrote on the Telegram messaging app, referring to the newly appointed defence minister. For Belousov, he added, “the post of defence minister during a hybrid war against the entire West is the most important challenge of his life.”

-New York Times