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Putin replaces Russia's defense minister with civilian economist in unexpected move

Russian President Vladimir Putin tapped a civilian economist as his surprise new defense minister on Sunday in an attempt to gird Russia for economic war by trying to better utilize the defense budget and harness greater innovation to win in Ukraine.

More than two years into the conflict, which has cost both sides heavy casualties, Putin proposed Andrei Belousov, a 65-year-old former deputy prime minister who specializes in economics, to replace his long-term ally, Sergei Shoigu, 68, as defense minister.

Putin wants Shoigu, in charge of defense since 2012 and a long-standing friend and ally, to become the secretary of Russia's powerful Security Council, replacing incumbent Nikolai Patrushev, and to also have responsibilities for the military-industrial complex, the Kremlin said.

Patrushev will get a new, as yet unannounced, job.

The changes, certain to be approved by parliamentarians, are the most significant Putin has made to the military command since sending tens of thousands of troops into Ukraine in February 2022 in what he called a special military operation.

Kremlin spokesman Dmitry Peskov said the change made sense because Russia was approaching a situation like the Soviet Union in the mid-1980s, when the military and law enforcement authorities accounted for 7.4% of gross domestic product (GDP).

That, said Peskov, meant it was vital to ensure such spending aligned with and was better integrated into the country's overall economy, which was why Putin now wanted a civilian economist in the defense ministry job.

"The one who is more open to innovations is the one who will be victorious on the battlefield," Peskov said.

Belousov, a former economy minister known to be very close to Putin, shares the Russian leader's vision

Read more on cnbc.com