Cleaning Up Shoigu’s Mess

Russia’s president has appointed his trusted economic adviser, the former first deputy prime minister Andrei Belousov, as the new minister of defense, surprising everyone. The outgoing minister, Sergei Shoigu, a Moscow government insider since Boris Yeltsin's time, held the position for twelve years. Born in 1955, Shoigu was a popular rescue and disaster response chief from 1991 to 2012, and a less popular defense minister from 2012 to 2024.

The common thread among the hundreds of interpretations of Putin’s decision is that Russia’s leader acted in the interests of his regime stability rather than strategic war plans. With the Russian army’s recent advances into Ukrainian territory, Putin felt secure enough to address the powerful and corrupt clan running his military machine.

An academic economist with extensive experience as a government official, Belousov has no known history of self-dealing. The most likely reason for his appointment is to untangle the networks of kickbacks and other schemes that Shoigu and his close associates have developed over the years. Putin has parachuted his trusted associate, Belousov, into the ministry to keep a closer eye on the military’s spending and personnel changes. If Belousov succeeds in limiting corruption, which is by no means a given, Ukraine will face a better-equipped and more motivated army.

Corruption as a Governance Tool

In Putin’s world, removing a close ally is highly unusual. For decades, Putin has ignored public complaints about his officials. Instead, he often moves unpopular figures between posts, waiting for the public outcry to subside to show that he does not make personnel decisions under public pressure.

Numerous investigative reports about Shoigu’s corruption have been published since at least the mid-2010s. He could not have afforded the lavish countryside villa in Chinese style that he built and apparently used for years. His daughters and other close relatives own expensive real estate far beyond their means. His deputy, Alexei Krivoruchko, former owner of Kalashnikov, Russia’s premier firearms manufacturer, combined the roles of corporate boss and deputy minister of defense for more than two years, according to a 2022 report by Alexei Navalny’s Anti-Corruption Foundation.

Timur Ivanov, Shoigu’s former deputy, was arrested a few weeks ago on charges of accepting a bribe of more than 1 billion rubles ($12.2 million). This sort of sum is peanuts for Ivanov, who, as Shoigu’s point man, used to oversee all construction, property management. and parts of procurement for Russia’s armed forces. Ivanov was documented by the Anti-Corruption Foundation to lead a supercharged lifestyle that included exclusive real estate in Moscow, lavish parties complete with Russia’s top pop artists, and hundreds of thousands of euros’ worth of rented yachts and villas. This continued for years, including the years of Russia’s full-scale war against Ukraine.

The Russian Defense Ministry has a longstanding reputation for corruption. Despite receiving numerous reports about this, Putin chose to ignore them. It is widely believed that Putin favors having corrupt associates because it gives him leverage over them. This is why most observers did not expect him to dismiss his inefficient and thieving but loyal ally.

Growing Military Spending

The official reasons for the shakeup are Russia’s growing military spending and the need for technological innovation. Russia’s security spending has reached 6.7 percent of GDP, and it is crucial to "fit the economy of the security bloc into the country’s economy," said presidential spokesman Dmitry Peskov. He added, “The second thing to note is that today on the battlefield, the one who wins is the one who can show more innovations and promptly implement them. That is why at this stage, the president has decided that the Defense Ministry should be headed by a civilian.”

A storm of interpretations ensued. Putin’s move appears designed to cause a stir within the Russian officialdom and in the broader chattering classes. Three unnamed Kremlin sources told Bloomberg that Putin had lost his faith in the defense ministry’s “ability to prosecute the war amid rampant corruption.” 

Some said Shoigu was a weak leader who achieved favor with the Russian president through window dressing and publicity stunts. He oversaw a veritable cult of his personality instilled in his native region of Tyva. By dismissing him, Putin has eliminated an inefficient leader in order to take over the military operations himself, suggested Mikhail Fishman, a popular anchor and commentator of the independent television channel Dozhd (TV Rain). 

Removing a Potential Rival 

Alternatively, some commentators suggested that Shoigu and his clan had become too influential and successful due to two major victories. Last year, Shoigu and Valery Gerasimov, the chief of staff of the Russian Army, faced a direct confrontation with Yevgeny Prigozhin, the late head of the private military group Wagner. At the time, Wagner troops were seen as a much more efficient and deadly force than the state-run military.

In the first half of 2023, rumors of the defense minister’s impending resignation circulated persistently. However, Shoigu and Gerasimov ultimately prevailed. After a failed mutiny aimed at dismissing Shoigu and Gerasimov, Prigozhin died in a plane crash widely believed to have been organized by the Kremlin.

“Paradoxically, the existence of a group that is politically strong enough to defeat a competing clan and show some progress on the battlefield is not a good thing but a bad thing for Putin as a personalist leader,” Kirill Rogov, director of the analytical project Re: Russia told TV Rain. “He might see it as a danger.” This is why, Rogov continued, Putin removed Shoigu from this powerful tandem and sent in his trusted associate, Belousov, to keep a closer eye on the military’s spending and personnel changes.

One interesting aspect of the power game playing out in Russia is the Kremlin’s relationship with China. China has emerged as Russia’s most important source for microelectronics and other dual-use matériel needed to produce military equipment. In 2023 about 90 percent of Russia’s microelectronics came from China, two senior Biden administration officials told the Associated Press. It is highly likely that Putin has been facing some pressure from his Chinese partners to deliver. This might be one of the sources of pressure, not the main one, driving Putin into cleaning up his governance issues. 

The opinions expressed in this article are those solely of the author and do not reflect the views of the Kennan Institute.