On Sunday, Russian Federation President Vladimir Putin replaced his Defense Minister, long-time personal ally Sergei Shoigu, with a civilian economist in what represents a major change in war strategy. The Russian administration is reportedly gearing up to play an economic battle against Ukraine, strategizing its budget in order to gain a militaristic advantage.

Putin proposed to replace Shoigu, 68, with Andrei Belousov, a 65-year-old former deputy minister with expertise in economics. Having been in the role since 2012, Shoigu is going to take his experience to the Security Council where he will serve as secretary. He will also be in control of defense production, according to the Kremlin.

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Shoigu will be replacing incumbent Nikolai Patrushev, whose new job has not yet been announced. Reuters considers this to be the most significant change to Russian operations since he started the invasion by sending thousands of troops to Ukraine in February 2022.

Dmitry Peskov, a Kremlin spokesman, said the changes were made because Russia is headed toward a situation mirroring where the Soviet Union was in the mid-1980s, with military and law forces taking up 7.4 percent of GDP. The defense sector has to be shorn in order to ensure the economy continues to run smoothly. “The one who is more open to innovations is the one who will be victorious on the battlefield,” Peskov said.

Analysts also consider the shake up to be proof that Putin is doubling down on his commitment to continue fighting the war in Ukraine. While the Russian elite were caught off guard by the move, Russia has been successfully fighting the West’s attempts to shrink its economy with sanctions. According to reports, this is next step in the Kremlin’s struggle to preserve its fighting power—through financial means.

Shane Devine is a writer covering politics and business for VT and a regular guest on The Unusual Suspects. Follow Shane’s work here.

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