Mining &Mercenaries

Last weekend’s stunningmostly unopposed march on Moscow conducted by former caterer and convict YevgenyPrigozhin’s paramilitary Wagner Group (Wagner) consisted mostly of convictsshocked the Kremlin leadership to the core.

Prior to the march, formany months Prigozhin hurled sharp and inciteful verbal comments againstseveral of the Russian military leadership notably Defense Minister SergeiShoigu. Despite the verbal barrage, it seemed inconceivable that Putin’s attackdog would go to the next level and take direct action with well-armed, battle-hardenedmen estimated 4,500.

Since Wagner’sinception in 2014, Putin, Prigozhin and their respective associates have collaboratedclosely in reaping incredible financial gains through forced physical andcontractual extraction of valuable and fungible natural resources from the DemocraticRepublic of the Congo (DRC) (mining gold) and Syria (oil) under the pretense ofproviding protection services for Russian interests in those countries.However, the ultimate objective was to plunder those resources using unfavorableand exploitive contractual terms & conditions which were then exported toRussia with Wagner taking a “cut”.

Historically these exploitiveconditions by a European power represents a déjà vu to the DRC when it wascontrolled by King Leopold who ran the country, at the time called the Congo FreeState, like a Russian gulag.

CHECKMATE ON PUTIN

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

Coo-Coo Coup Idea

My theory is that Prigozhinnever intended to march into the Kremlin and stage a coup. He’s a businessmannot a politician. Rather, just like the ruthless ex-convict businessman that heis, he aggressively undertook a high-risk intimidation tactic right out of a MissionImpossible or Die Hard script and threatened to bring the war to the steps ofthe Kremlin. In fact, he managed to humiliate Putin without firing a shot.

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

Paper Tiger Defense

Mainstream mediareports indicate that Putin hastily initiated “Operation Fortress” to protectcritical Russian miliary and governmental venues with the FSB and RosgvardiaNational Guard). However, I believe that the 4,500-man battle-hardened groupcomposed mainly of convicts with nothing to lose, not professional soldiers,would have defeated a hastily formed defense initiated with little to no combatexperience. Because Wagner faced little resistance enroute, they may have been tacitlysupported by those Russian forces enroute.

Breaking Bad RussianStyle

Prior to the march onMoscow, I believe that Prigozhin’s relentless social media scathing verbalattacks, this probably comes down to a personal business dispute, not somepatriotic rhetoric.

I believe that thisdramatic act was triggered by a business deal gone bad in one way or another. Prigozhin’smilitary and political ramblings may have been nothing more than misdirectionto enable him to pull off the heist of the century.

Putin and Prigozhin collaboratedclosely for over 30 years and have become wealthier and more powerful thantheir wildest imagination. As Wagner was recently being folded into the regularRussian military command by decree, Prigozhin was probably going to have a diminishedrole or perhaps being sidelined altogether. For this reason, he may have beenseeking some kind of “severance package” that either Putin refused or whoseoffer was insultingly low.

Putin may haveforgotten that Prigozhin is an oligarch unlike the others with large bankaccounts, yachts, private jets, prestigious real estate holdings and other typical,flashy billionaire assets. Prigozhin is a ruthless street fighting, ex-convictwho has known Putin personally for over 30 years, an oligarch with anexperienced, battle-hardened private army whose relationships with the Russianmilitary and security services run deep. This makes him more warlord than champagne-swillingoligarch.

I believe that theRussian intelligence services considered the remote possibility that Prigozhinmight take some kind of extreme action. However, revolutionaries who undertake armedinsurrection require far more planning and preparation with larger forcesgiving the government more time to counteract. Because Prigozhin had nointention of staging a coup, he jumped started the march on Moscow far earlierthan would be expected which stunned Putin.

Putin, knowing the militarymismatch and the questioning loyalty of the defensive units, Putin accepted Prigozhin’sdemands including a huge transfer of monies to offshore accounts and anagreement that there would be no prosecution of mutiny for him and his men.Without a doubt some written (electronic) confirmation was secured for him tohalt his advance.

Matching Narratives

Supporting the aforementionedagreements, Putin and Prigozhin had an eerily similar public relationsmarketing narrative that defied logic with respect to who they are: avoidspilling Russian blood. Notwithstanding, each had no qualms about spillingRussian blood in Ukraine. Putin executed and jailed opponents while Wagner, underPrigozhin’s command, tortured and then executed deserters and traitors with asledgehammer.

WAGNER | “WHO ARE THOSEGUYS?”

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

The following chartentitled Wagner’s Group GlobalFootprintis provided by the Soufan Center and presented by Statista, highlights theregions where Wagner is operating, often far beyond the Near Abroad.

A comprehensive overviewof Wagner can be viewed through the following link entitled WSJ Documentary ShadowMen, Inside Russia’s Secret War Company released on video two weeks ago prior to themarch on Moscow. [Quite presciently, early in the video it was mentionedwhether this force was a threat to Putin himself].

In the videodocumentary, Wagner is described as a “state backed military cartel” with atleast 64 companies and many other front companies. According to John Kirby ofthe US National Security Council, in a public speech on 20 January 2023, statedthat Wagner has 50,000 personnel in Ukraine, 10,000 of whom are contractors and40,000 are convicts which gives new meaning to a state sponsored criminalorganization.

Its genesis was throughPrigozhin’s catering company called “Concord Management & Consulting” whichprovided food services to the Russian military but whose invoice amountsreflected far more than just culinary services. For many years the Russiangovernment has used Wagner to loot & pillage the resources-rich poor,politically unstable countries making their arrangements exceptionallylucrative.

Friend or Foe?

The following chartentitled Where Countries Standon Russiaprovided by the London-based research and advisory concern, EconomicIntelligence Unit (EIU) and presented by Statista, indicates each country’sstance towards Russia as of March 2023.

As long as Putinremains in power, I believe there will be few changes in each country’spolitical stance. I equate the recent showdown with Prigozhin as an internalmatter.

AFTERMATH

Whether Putin wasblackmailed or not, he is left with egg on his face and must contend with severepolitical damage control. Putin now faces a two-front war: internally and inUkraine where its military operations exposed Russia’s military as a cardboardcutout. Prigozhin’s successful audacious operation has symbolically thrown chumon Putin that may embolden his enemies.

Putin’s PraetorianGuard

Of huge concern toPutin is the newly established (2016) National Guard whose official name is theNational Guard of the Russian Federation. It is separate from the Russian ArmedForces.

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

The National Guard is headedby Viktor Zolotov, Putin’s former bodyguard since the 1990s who reportsdirectly 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 whatZolotov 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 followingsponsored report, GeopoliticalRisk by Economy provided by the Hinrich Foundation and presented by Visual Capitalist indicates risk assessment by country. The Hindrich Foundation is anAsia-based philanthropic organization that advances sustainable global trade.

The concern is how orwhether the recent incident triggers Putin’s psychological “unwinding” such asincreased paranoia and a smaller trusted circle.

One sector that wouldthreaten global food security is the renewal of the grain deal permittingexports of Ukrainian agricultural products. The current grain deal is scheduledto expire in late July.

Furthermore, there’sthe issue whether Russia will be a near future reliable supplier of energyparticularly to its biggest clients in China and India. Although Russian oilfields are physically unaffected, political turmoil could impact production andexports elsewhere. This includes Russia’s participation as a non-OPEC memberyet influential member of OPEC+ and compliance of production targets.

Conclusion &Takeaways

Russia’s historical bottomlesslabyrinth of shifting alliances, sub-alliances and the physical brutality andruthlessness exerted domestically and internationally make it extraordinarilydifficult to predict how events will play out.

Putin’s credibility as astrongman with widespread government agency backing is in question, avulnerability he can ill afford. Just over the horizon are the elections scheduledfor 17 March 2024. Should Putin remain as president up to that date, a victoryunder the new election laws would make the winner eligible for two 6-yearterms.

With respect toPrigozhin’s future, to paraphrase Ian Bremmer, a well-respected politicalscientist from the Eurasia Group, stated in an online interview, “Putin haskilled and jailed enemies for far less. Prigozhin is a ‘dead man walking’.

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

© Copyright 2023 Cerulean Council LLC

The Cerulean Council is a NYC-basedthink-tank that provides prescient, beyond-the-horizon, contrarian perspectivesand risk assessments on geopolitical dynamics and global urban security.