Andrey Belousov, Russia’s new defence minister, has three great passions — art, the state and President Vladimir Putin. The academic economist and technocrat believes in wielding the authority of the state to achieve policy goals and is steeped in the traditions of the Soviet Union.
Ukrainian Finance Minister Serhiy Marchenko will be part of the meeting of Group of Seven (G7) finance chiefs and central bankers congregating in Stresa next week, according to the host nation, Italy.
The Kremlin opened up the fiscal taps after President Vladimir Putin’s re-election in March, putting the budget back into deep deficit despite a surge in oil revenues.
New Russian defence minister is devoted to Putin and state power
Andrey Belousov, Russia’s new defence minister, has three great passions — art, the state and President Vladimir Putin.
The academic economist and technocrat believes in wielding the authority of the state to achieve policy goals and is steeped in the traditions of the Soviet Union. His father Rem’s name is an acronym of Revolution, Engels and Marx.
Belousov (65) was taken aback when Putin tapped him to become defence minister in place of the long-serving Sergei Shoigu, according to two people with knowledge of the matter, asking not to be identified discussing internal policy. Still, he agreed without hesitation because he views Putin not simply as a president but as a global figure who’s changing the course of world history, one of the people said.
Nothing in his background has prepared Belousov for the challenge he now faces in waging war on Ukraine. A devotee of fine art who includes Rembrandt among his favourite painters, Belousov spends any spare time he has visiting galleries and museums.
Despite warm personal relations with Shoigu, who’s being moved to a new role as secretary of Russia’s Security Council, Putin had finally lost patience with the Defence Ministry’s ability to prosecute the war amid rampant corruption, according to three people with knowledge of the matter.
Read more: Russian Defence Minister Shoigu weakened by arrest of key ally
Last year’s mutiny by Wagner mercenaries that targeted Shoigu for failures on the battlefield may also have influenced the decision to install new leadership. Wagner leader Yevgeny Prigozhin died in unclear circumstances in a plane crash in August last year, exactly two months after leading the aborted revolt.
Putin chose Belousov personally, as the war has to be waged with a cool head, according to a person close to the Kremlin, who asked not to be identified discussing personnel issues.
“Belousov is appointed to improve the situation that Shoigu couldn’t fix,” by ensuring the army has everything it needs on the battlefield, said Ruslan Pukhov, head of the Moscow-based Centre for Analysis of Strategies and Technologies think tank. “However, Belousov is better known for drafting policy than hands-on leadership or executing strategy.”
Raised in an elite family in Moscow — his father was a prominent economist who advised Soviet authorities on ways to improve the planned economy in the 1960s — Belousov attended one of the capital’s best mathematics and physics schools. After graduating in economics from Moscow State University, he carried out research at a scientific institute in the 1980s as the Soviet system gradually collapsed.
He began to advise the government informally in 1999, often working for free, just as Putin was emerging to lead Russia as prime minister. “I always had a clear idea: you need to do what strengthens the state,” he said during early interviews.
His state career began officially in 2006, when the then Economy Minister, Herman Gref, invited him to work as his deputy. He later joined as head of the economics and finance department in the prime minister’s office when Putin became premier for four years from 2008 to comply with presidential term limits.
When Putin returned as head of state in 2012, Belousov was named economy minister then switched to the Kremlin as the president’s economic aide 13 months later. He spent the next seven years as Putin’s adviser, becoming renowned for policies intended to bolster the state’s role in the economy, ostensibly to support business development. Many business leaders resented his proposals, however, as state meddling and Belousov repeatedly clashed with them.
Belousov became first deputy premier responsible for overseeing finance and budget policy when Mikhail Mishustin was named prime minister in 2020. He gained a reputation for squeezing business by seeking to grab a greater proportion of profits to fund Putin’s development plans set out in the “May decrees”. When the February 2022 invasion of Ukraine began, Belousov proposed a one-time levy on large businesses to help fund the war.
Overseeing a 300 billion rouble ($3.3-billion) project to produce drones, a weapon that plays a crucial role on the battlefield in Ukraine, is one of Belousov’s few experiences with the military.
Considered a political loner without ties to any particular group of officials around Putin, Belousov is regarded as a figure untainted by corruption scandals.
Belousov’s lack of military experience means the top army commanders led by Chief of the General Staff Valery Gerasimov will have greater freedom to conduct the war, according to Nikolay Petrov, a visiting fellow at the Berlin-based SWP think tank. It also means that Putin “can count on reducing corruption and better functioning of provisions for the army and the military-civilian sphere”, he said.
Ukraine finance chief to participate in Stresa G7, says Italy
Ukrainian Finance Minister Serhiy Marchenko will be part of the meeting of Group of Seven (G7) finance chiefs and central bankers congregating in Stresa next week, according to the host nation, Italy.
“We will have the pleasure of welcoming Minister Marchenko who will participate in the session focused on support to Ukraine and we will share our views on Russia sanctions,” Italian Finance Minister Giancarlo Giorgetti told his Eurozone peers on Monday in Brussels.
The G7 gathering is scheduled on the shores of Lago Maggiore from 23-25 May.
Other topics scheduled for discussion include the global economy, fragmentation issues in the financial sector, international taxation, the green agenda and artificial intelligence, Giorgetti said, according to a statement from his ministry.
Russia’s post-election spending sends budget into deep deficit
The Kremlin opened up the fiscal taps after President Vladimir Putin’s reelection in March, putting the budget back into deep deficit despite a surge in oil revenues.
The shortfall was 1.5 trillion roubles ($16-billion) in the year to date through April, more than doubling from the previous month, the Finance Ministry said on Monday. While it didn’t break out the monthly totals, Bloomberg calculations show the budget swung into a deficit of 877 billion roubles in April after a surplus in March.
Spending is shifting into high gear as the war against Ukraine absorbs ever more funding.
Expenditure in April was up by a quarter compared with the same period last year, according to Bloomberg calculations, and reached the highest monthly level this year. Russia spent 128 billion roubles per day in April — versus 102 billion roubles in March — a sharp increase that the Finance Ministry attributes to large advance payments.
The largesse offset April’s surge in oil revenue which more than doubled from a year earlier. Despite international sanctions intended to limit the flow of money to fuel the war in Ukraine, Russia has managed to bypass or at least blunt the restrictions.
Russia has run a budget deficit since the end of 2022, a reflection of the steep costs of Putin’s invasion of Ukraine in February of that year.
The government is pumping resources into industries crucial for the war effort, ensuring double-digit growth in sectors that churn out goods used by the military. Russia targets the budget deficit at 0.9% of gross domestic product this year.
Russia stretches Ukraine defences in assault towards Kharkiv
Ukraine was deploying more troops to stabilise its northeastern frontline after Russia launched a large-scale offensive against the Kharkiv region for the first time since 2022.
Russian forces have had “tactical success” after piercing Ukraine’s defence and driving in the direction of Vovchansk, Ukraine’s General Staff said in a Monday morning update. Ukrainian forces controlled the town, which was being shelled for a fourth day, but there was fighting on the outskirts, the head of Vovchansk’s military administration Tamaz Gambarashvili told Suspilne. The situation was extremely difficult, President Volodymyr Zelensky said on Sunday evening.
“The enemy has deployed a significant force of up to five battalions to attack the town and is not counting its own losses,” Ukraine’s top military command said on Facebook. Five battalions equate to as many as 2,000 soldiers, according to the Defence Ministry press office.
Russia’s effort to push the contact line deeper into the Kharkiv region follows weeks of intensified air strikes on Ukraine’s second-biggest city, an industrial hub. Russia was driven back in 2022 after an attempt to capture the city, which was briefly Ukraine’s capital during Soviet times.
The assault is likely to stretch Ukraine’s already outgunned and outmanned forces as it may push Kyiv to redeploy some of its troops from the long front line in the east. Ukraine is trying to hold its ground as it awaits the arrival of US military aid.
Success in driving Ukraine back in Kharkiv would take the Russian city of Belgorod and military strongholds and supply hubs in the surrounding area out of Ukrainian artillery range.
Russian forces had probably seized Hatyshche and Tykhe, small settlements near Vovchansk, and advanced 2.5km, the Institute for the Study of War said on Sunday. Geolocated footage confirmed that Russian forces made advances near Lyptsi, north of the city of Kharkiv.
Authorities have evacuated 5,700 people from areas under Russian attack and planned to evacuate at least 1,600 more, Kharkiv regional Governor Oleh Synyehubov said on television. The population of Vovchansk had dropped from as many as 2,500 before this latest Russian offensive to about 200-300.
“There is an increase in the length of the frontline as the enemy is trying to stretch it, attacking in small groups in new directions,” he said. DM