President Vladimir Putin has increasingly put Russia’s economy on a war footing since his invasion of Ukraine. The central bank is also being enlisted for the fight under a decorated military officer installed as a deputy governor.
Sergey Belov’s role in charge of what are known as “field institutions” that effectively channel funding from the state budget to combat troops draws little attention. Unlike Governor Elvira Nabiullina and other top officials, he isn’t under international sanctions.
Belov, 52, became deputy governor of the Bank of Russia in May last year and oversees the field offices alongside the system of cash circulation. A graduate of the Defense Ministry’s economic academy, he previously ran the central bank’s division in Sevastopol, a city on the Ukrainian peninsula of Crimea that Putin annexed in 2014.
It’s without recent precedent for the official in charge of the central bank’s military functions also to hold civilian responsibilities, according to Nikolai Krotov, a historian of finance in Russia.
Run by the central bank on behalf of the Defense Ministry, the field institutions carry out banking transactions to ensure they bypass commercial lenders and avoid any exposure of state secrets. By law, they are a military branch subject to military regulations.
The Bank of Russia operates almost 90 such field offices that are assigned to work near frontline units. They meet banking needs from opening a current account or handling cash withdrawals to money transfers and even issuing their own payment cards.
Though large swathes of the economy have been enlisted to support the invasion, the Bank of Russia has sought to cast itself as a bastion of technocrats focused on fine-tuning monetary policy in a country under siege from unprecedented international sanctions.
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“The appointment of a specialist with a military background to be responsible for cash circulation seems to befit the spirit of the times,” said Oleg Vyugin, a former first deputy governor at the Bank of Russia. “Now is the time in Russia for those from the military and security milieu — they have certain opportunities for a successful career in many civilian sectors.”
Vital Cog
The central bank didn’t respond to a request to comment. When asked about the field institutions at a news conference in April, Nabiullina said only that they are functioning as intended.
The obscure department that was managed before Belov by the central bank’s chief accountant has become a vital cog of the war economy as the Kremlin tries to coax more Russians to volunteer to join the fight by offering financial incentives and benefits.
Belov’s reach has expanded with Russia’s occupation of parts of four regions of eastern and southern Ukraine after a government decree this year empowered the field institutions to handle budget resources for residents in the territories. In February, he attended a meeting held in the occupied city of Mariupol on providing financial services.
Russia’s lower house of parliament also passed a draft law in March to transfer responsibility for paying the wages and allowances of all armed forces personnel to the field institutions and lenders selected by the government, to ensure security of data about the military.
The central bank under Nabiullina has enjoyed an enviable degree of autonomy in Russia and once earned the title of the “most orthodox” in developing Europe. After she attempted to resign following Russia’s February 2022 attack on Ukraine, Putin nominated her for a new five-year term.
It was around the same time that the bank began to retrofit for the new reality. In March last year, it bought sleeping bags, tents and wood stoves for its field institutions.
Within weeks, Belov — who had led the field institutions department since 2021 — was promoted to the role of Nabiullina’s deputy, though without becoming a voting member of the board of directors that decides on policy.
His elevation was a sign of the importance attached to the position and also symbolic because of who he replaced — Mikhail Alekseev, a veteran banker and former chairman of the Russian subsidiary of Italy’s UniCredit SpA, who became subject to US sanctions in April last year.
Military Merit
Belov’s official biography is sparse.
A native of Tambov, southern Russia, he spent most of his career at the central bank, starting as a “senior cashier” at the field institutions. He was awarded the Order of Military Merit by presidential decree in 2009.
Belov’s time in Crimea following the annexation meant he was present when Russia introduced the ruble and built a new financial system, experiences likely to be useful as Russia strives to absorb the other occupied areas. Ukraine is poised to unleash a counteroffensive aiming to take back the territories.
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Demand for cash increased after Russia replaced Ukraine’s hryvnia with the ruble in those areas in January, Bank of Russia Deputy Chairman Alexey Zabotkin told reporters in a briefing Monday.
Sergey Dubinin, Russia’s central bank chief from 1995 to 1998, described the field offices as “an intermediary between allocated budgetary funds and the actual military divisions.” While they maintained close ties with the military, he said he couldn’t recall the bank having a deputy governor with a military background.
--With assistance from Gem Atkinson.