Decoupling Russia: Kremlin Reshuffle Reveals Focus on Self-Reliance

On 15 July President Vladimir Putin reshuffled several key members of his government in an important rotation that reveals several significant trends in Russia’s defence-industrial complex, designed to shore up its economy against international sanctions.

Dmitry Rogozin, head of the Federal Space Agency (Roscosmos), was relieved of his post and replaced by Yuri Borisov, a former deputy prime minister. Denis Manturov, minister for trade and industry, maintains his position and has been given the additional title of deputy prime minister – overseeing the weapons industry – as well as head of the Board of Trustees at Roscosmos. A theme running through the reshuffle is the importance of import substitution, to replace Western imports with Russian products, and the implications this has for Russia’s economy and defence capabilities.

The Final Frontier

Rogozin’s dismissal appeared to be a long time coming – his social media posts of late had become ever more erratic, including engaging in Twitter spats with US astronauts. There were other incidents during his tenure that blighted Roscosmos’s reputation: for example, in 2021 Russia claimed that a software malfunction led its Nauka module to unexpectedly fire thrusters when it docked at the International Space Station (ISS), causing the station to tilt alarmingly.

Russia’s invasion of Ukraine has also severed many international relationships with Russia, including in important areas such as the Council of Europe, the Arctic Council, and now space. One of Borisov’s first acts as head of Roscosmos has been to withdraw Russia from the ISS, a process that will begin in 2024.

The ISS is one of the last remaining areas of cooperation between Russia and the West, an opportunity to engage and collaborate with Russian researchers. Rogozin had been a vocal critic of international sanctions, as the 2014 measures – introduced over Russia’s annexation of Crimea – restricted Russia’s access to components and the technology required for its satellite and aviation programme, which Roscosmos oversees. Russia’s satellites are under sanctions because of their dual use, as they can be used for civilian communications as well as intelligence-gathering purposes. For Russia, space remains highly politicised and securitised – Russian astronauts recently posed in space with the separatist flags of Russian-occupied Donetsk and Luhansk in Ukraine.

Borisov is a military man and is purported to be a capable manager. As a deputy prime minister since 2018, he oversaw the military-industrial complex including space and aviation, and has a background in military electronics. His strong security background, alongside the importance to the Kremlin of Russia’s satellite programme, suggests a more interventionist but also likely autarkic approach to space in the coming years.

Self-Reliance

Since the introduction of Western sanctions in 2014, there has been a major push from the Kremlin to reduce reliance on Western-made imports, and to manufacture goods in either Russia or friendly countries such as Belarus. Denis Manturov’s promotion to a role responsible for the weapons industry is part of this, and cuts across Borisov’s remit of import substitution.

As minister of trade since 2012, Manturov has prioritised import substitution as a way of Russia circumventing international sanctions. Amid the Ukraine war, there appears to be a growing move to promote serious and trustworthy technocrats with a proven track record of delivering. Unlike Rogozin, neither Borisov nor Manturov have been embroiled in scandals or been personally outspoken on politics, and have been in their posts for many years. Manturov’s promotion suggests he has performed well – he is a long-serving minister, and one of the few from former Prime Minister Dmitry Medvedev’s government who retained his post under Prime Minister Mikhail Mishustin. In fact, Mishustin has been frank that Manturov’s new position was created to streamline processes and make quick decisions given the restrictive sanctions introduced amid Russia’s invasion of Ukraine.

Since he moved into his new post, Manturov has been busy, and has wasted no time travelling around Russia to visit its most important industrial hubs, inspecting the scope for domestic reliance. One of his first moves was to visit the republic of Buryatia, to discuss industry performance under the sanctions. Buryatia is an important industrial hub, particularly for mechanical engineering and aviation construction. He is also attending a large industrial investment forum in the Urals in September that looks specifically at import substitution. At the same time, Minister of Defence Sergei Shoigu in August travelled to Nizhny Tagil near the Ural Mountains, to inspect the defence enterprises there. Nizhny Tagil is an important metallurgical centre, which regularly hosts Russia’s Arms Expo to showcase Russia’s military equipment. All of these trips are not for show, but are designed to identify the potential for domestic production in Russia’s regions, highlighting the links between Russia’s national security and its political economy.

Around the same time and with little public fanfare, the powerful Russian Union of Industrialists and Entrepreneurs (RSPP) – an important lobbying group – announced that it would establish a new Coordination Council on import substitution and technological independence. The co-chair of the RSPP’s council has been announced as Katerina Tikhonova, whom Russian media have identified in the past as Putin’s daughter. The RSPP is a highly influential group that has successfully pushed the Kremlin into policymaking decisions that benefit the industries it represents, such as the oil, gas and heavy goods industries. The RSPP has now been specifically tasked with reducing Russia’s reliance on foreign imports, and Tikhonova’s projects are reportedly personally overseen by Putin. This emphasises the clear personal importance of the import substitution regime to Putin, and the appointment of Tikhonova suggests a likely higher degree of oversight over the RSPP’s activities from the Kremlin.

These moves, alongside Manturov and Borisov’s very focused remits, are all examples of Russia’s push for self-reliance, and of attempts to decouple Russia from global processes and supply chains – actions that will be challenging to undo. Space, defence and the heavy industries are all sectors that are considered fundamental to Russia’s economic and therefore national security, and it is not surprising that the Kremlin is adjusting its personnel to oversee it accordingly.

The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.

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