Mining & Mercenaries

Last weekend's stunning mostly unopposed march on Moscow conducted by former caterer and convict Yevgeny Prigozhin's paramilitary Wagner Group (Wagner) consisted mostly of convicts shocked the Kremlin leadership to the core.

Prior to the march, for many months Prigozhin hurled sharp and inciteful verbal comments against several of the Russian military leadership notably Defense Minister Sergei Shoigu. Despite the verbal barrage, it seemed inconceivable that Putin's attack dog would go to the next level and take direct action with well-armed, battle-hardened men estimated 4,500.

Since Wagner's inception in 2014, Putin, Prigozhin and their respective associates have collaborated closely in reaping incredible financial gains through forced physical and contractual extraction of valuable and fungible natural resources from the Democratic Republic of the Congo (DRC) (mining gold) and Syria (oil) under the pretense of providing protection services for Russian interests in those countries. However, the ultimate objective was to plunder those resources using unfavorable and exploitive contractual terms & conditions which were then exported to Russia with Wagner taking a "cut".

Historically these exploitive conditions by a European power represents a déjà vu to the DRC when it was controlled by King Leopold who ran the country, at the time called the Congo Free State, like a Russian gulag.

CHECKMATE ON PUTIN

The mystery stubbornly remains as to why Wagner halted their unopposed march on Moscow. I believe that the deal was far more than agreeing to give Prigozhin passage to Belarus and that all criminal charges were to be dropped against him and the participating Wagner mercenaries.

Coo-Coo Coup Idea

My theory is that Prigozhin never intended to march into the Kremlin and stage a coup. He's a businessman not a politician. Rather, just like the ruthless ex-convict businessman that he is, he aggressively undertook a high-risk intimidation tactic right out of a Mission Impossible or Die Hard script and threatened to bring the war to the steps of the Kremlin. In fact, he managed to humiliate Putin without firing a shot.

[Wagner halted 120 miles away from Moscow. By contrast in 1941 the Nazis fought against a tenacious Russian army and a reconnaissance battalion came within 19 miles of Moscow].

Paper Tiger Defense

Mainstream media reports indicate that Putin hastily initiated "Operation Fortress" to protect critical Russian miliary and governmental venues with the FSB and Rosgvardia (National Guard). However, I believe that the 4,500-man battle-hardened group composed mainly of convicts with nothing to lose, not professional soldiers, would have defeated a hastily formed defense initiated with little to no combat experience. Because Wagner faced little resistance enroute, they may have been tacitly supported by those Russian forces enroute.

Breaking Bad Russian Style

Prior to the march on Moscow, I believe that Prigozhin's relentless social media scathing verbal attacks, this probably comes down to a personal business dispute, not some patriotic rhetoric.

I believe that this dramatic act was triggered by a business deal gone bad in one way or another. Prigozhin's military and political ramblings may have been nothing more than misdirection to enable him to pull off the heist of the century.

Putin and Prigozhin collaborated closely for over 30 years and have become wealthier and more powerful than their wildest imagination. As Wagner was recently being folded into the regular Russian military command by decree, Prigozhin was probably going to have a diminished role or perhaps being sidelined altogether. For this reason, he may have been seeking some kind of "severance package" that either Putin refused or whose offer was insultingly low.

Putin may have forgotten that Prigozhin is an oligarch unlike the others with large bank accounts, yachts, private jets, prestigious real estate holdings and other typical, flashy billionaire assets. Prigozhin is a ruthless street fighting, ex-convict who has known Putin personally for over 30 years, an oligarch with an experienced, battle-hardened private army whose relationships with the Russian military and security services run deep. This makes him more warlord than champagne-swilling oligarch.

I believe that the Russian intelligence services considered the remote possibility that Prigozhin might take some kind of extreme action. However, revolutionaries who undertake armed insurrection require far more planning and preparation with larger forces giving the government more time to counteract. Because Prigozhin had no intention of staging a coup, he jumped started the march on Moscow far earlier than would be expected which stunned Putin.

Putin, knowing the military mismatch and the questioning loyalty of the defensive units, Putin accepted Prigozhin's demands including a huge transfer of monies to offshore accounts and an agreement that there would be no prosecution of mutiny for him and his men. Without a doubt some written (electronic) confirmation was secured for him to halt his advance.

Matching Narratives

Supporting the aforementioned agreements, Putin and Prigozhin had an eerily similar public relations marketing narrative that defied logic with respect to who they are: avoid spilling Russian blood. Notwithstanding, each had no qualms about spilling Russian blood in Ukraine. Putin executed and jailed opponents while Wagner, under Prigozhin's command, tortured and then executed deserters and traitors with a sledgehammer.

WAGNER | "WHO ARE THOSE GUYS?"

Established in 2014, the Wagner was legally a private military company that engaged in various military operations globally ostensibly to support and expand Russian government foreign policy and commercial interests. This classification allowed the Russian government plausible deniability with respect to the Wagner's actions including those in the partial invasion and occupation of eastern Ukraine. Initially neither the Russian government nor Prigozhin admitted the existence of such an organization.

The following chart entitled Wagner's Group Global Footprint is provided by the Soufan Center and presented by Statista, highlights the regions where Wagner is operating, often far beyond the Near Abroad.

A comprehensive overview of Wagner can be viewed through the following link entitled WSJ Documentary Shadow Men, Inside Russia's Secret War Company released on video two weeks ago prior to the march on Moscow. [Quite presciently, early in the video it was mentioned whether this force was a threat to Putin himself].

In the video documentary, Wagner is described as a "state backed military cartel" with at least 64 companies and many other front companies. According to John Kirby of the US National Security Council, in a public speech on 20 January 2023, stated that Wagner has 50,000 personnel in Ukraine, 10,000 of whom are contractors and 40,000 are convicts which gives new meaning to a state sponsored criminal organization.

Its genesis was through Prigozhin's catering company called "Concord Management & Consulting" which provided food services to the Russian military but whose invoice amounts reflected far more than just culinary services. For many years the Russian government has used Wagner to loot & pillage the resources-rich poor, politically unstable countries making their arrangements exceptionally lucrative.

Friend or Foe?

The following chart entitled Where Countries Stand on Russia provided by the London-based research and advisory concern, Economic Intelligence Unit (EIU) and presented by Statista, indicates each country's stance towards Russia as of March 2023.

As long as Putin remains in power, I believe there will be few changes in each country's political stance. I equate the recent showdown with Prigozhin as an internal matter.

AFTERMATH

Whether Putin was blackmailed or not, he is left with egg on his face and must contend with severe political damage control. Putin now faces a two-front war: internally and in Ukraine where its military operations exposed Russia's military as a cardboard cutout. Prigozhin's successful audacious operation has symbolically thrown chum on Putin that may embolden his enemies.

Putin's Praetorian Guard

Of huge concern to Putin is the newly established (2016) National Guard whose official name is the National Guard of the Russian Federation. It is separate from the Russian Armed Forces.

The purpose is a wide-range of broadly defined responsibilities include border control, combatting terrorists, and internal security. It is well-funded and supplied. It has been reported that it was used against anti-Kremlin protests. In other words, Putin has his own private army as an executive protection service interestingly established only 2 years after Wagner, perhaps as an insurance counterweight.

The National Guard is headed by Viktor Zolotov, Putin's former bodyguard since the 1990s who reports directly to him. If longtime Prigozhin from the same home city (St. Petersburg) as Putin can bring his convict crew to within 120 miles of Moscow, imagine what Zolotov could do while based in Moscow if his loyalty waivers.

The Global Economic Spillover

With respect to business, Russia will continue to rank high on the geopolitical risk index. The following sponsored report, Geopolitical Risk by Economy provided by the Hinrich Foundation and presented by Visual Capitalist indicates risk assessment by country. The Hindrich Foundation is an Asia-based philanthropic organization that advances sustainable global trade.

The concern is how or whether the recent incident triggers Putin's psychological "unwinding" such as increased paranoia and a smaller trusted circle.

One sector that would threaten global food security is the renewal of the grain deal permitting exports of Ukrainian agricultural products. The current grain deal is scheduled to expire in late July.

Furthermore, there's the issue whether Russia will be a near future reliable supplier of energy particularly to its biggest clients in China and India. Although Russian oil fields are physically unaffected, political turmoil could impact production and exports elsewhere. This includes Russia's participation as a non-OPEC member yet influential member of OPEC+ and compliance of production targets.

Conclusion & Takeaways

Russia's historical bottomless labyrinth of shifting alliances, sub-alliances and the physical brutality and ruthlessness exerted domestically and internationally make it extraordinarily difficult to predict how events will play out.

Putin's credibility as a strongman with widespread government agency backing is in question, a vulnerability he can ill afford. Just over the horizon are the elections scheduled for 17 March 2024. Should Putin remain as president up to that date, a victory under the new election laws would make the winner eligible for two 6-year terms.

With respect to Prigozhin's future, to paraphrase Ian Bremmer, a well-respected political scientist from the Eurasia Group, stated in an online interview, "Putin has killed and jailed enemies for far less. Prigozhin is a 'dead man walking'.

Putin often bypasses the adage, "Revenge is a dish best served cold" and prefers the fast-food method. No one escapes the State, whether democratic or authoritarian, particularly if they have been grievously wronged.

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