PMC Wagner Betrayal Saga Continues….Meetings in the Kremlin and More
How is Mr. Prigozhin not jailed? Who is PMC Wagner and Yevgeny Prigozhin? What will happen to PMC Wagner and Mr. Prigozhin? How does this impact Putin’s power?
In last week’s debut publication of “Barbershop Whispers….Russia” I discussed the initial fallout of the evolving Prigozhin Revolt. This issue follows up on this event as it continues to unfold. Much of what happens in the aftermath of the Wagner Revolt, together with the success or failure of the Ukrainian counter-offensive, will have a material impact on Putin’s ability to remain in power.
In this week’s issue, we will discuss how a mercenary leader who led a revolt against the Ministry of Defense, resulting in the death of 13 regular Army troops, is then invited to the Kremlin for talks rather than being jailed or killed.
My Takeaways of the Unfolding Event:
Putin’s dependence on Wagner Group to prosecute the war is already a major risk to Putin’s power;
Siloviki panic over the direction of the war and Mr. Prigozhin’s growing power forced them to invite him in for discussions;
Mr. Prigozhin will live and work freely as long as he delivers value in the war, but that value will also be a function of the success or failure of the Ukrainian counter-offensive;
For months, Mr. Putin set up the Ministry of Defense as the scapegoat for the failure of the war to date. Minster Shoigu and General Gerasimov will be replaced in an attempt to pass on the responsibility for that failure;
The Ministry of Defense purge of Wagner sympathizers continues. Thirteen officers detained, including General Sergei Surovikin, and fifteen have been removed or fired;
Putin has lost control over the nationalist movement, a key base of support;
Russia does not have the resources – materiel, soldiers, passion – to prosecute the war.
What is PMC Wagner and who is Yevgeny Prigozhin? What will happen to PMC Wagner and Mr. Prigozhin? And how does this impact Mr. Putin’s power?
Kremlin Meetings….Who Was There and Who Was Not…Now What?
Mr. Prigozhin and nearly three dozen Wagner commanders were hosted in the Kremlin by Mr. Putin and other government officials for a three-hour-long meeting on 29 Jun.. Absent from the Kremlin meetings were Defense Minister Sergei Shoigu and General Valery Gerasimov yet, according to several Russian Telegram channels, Mr. Prigozhin also met privately with Nikolai Patrushev, Secretary of the Security Council, Sergei Naryshkin, Director of Foreign Intelligence (SVR), and Viktor Zolotov, Director of the National Guard (Rosgvardia).
As per Presidential Spokesperson Dmitry Peskov, President Putin gave his assessment of the rebellion, and the Wagner commanders explained their reasons for the revolt, while also assuring the president of their loyalty and desire to fight for Russia.
In the meantime, the Ministry of Defense purge of Wagner sympathizers continues. At least 13 senior Russian military officers were detained for questioning, including General Sergei Surovikin, after the revolt and around 15 officers have been removed from service or fired. General Surovikin is said to have had advanced knowledge of the revolt. He is allegedly in custody in Moscow.
Since the revolt, rumors of the deal “brokered” by “President” Lukashenko included resettling Mr. Prigozhin and the Wagner Group to Belarus, dismantling of the Wagner and Concord Group, and dismissing FSB investigations into both Prigozhin’s revolt and finances. However, the details of what was agreed, if anything, remain vague, and what will happen next to Wagner and Prigozhin remains to be seen. Why is Prigozhin not sitting in jail and Wagner still operating? Let’s start with…
Who is PMC Wagner and Yevgeny Prigozhin?
PMC Wagner Group is a Private Military Company, founded by Lt. Col. Dmitry Utkin (ret.), and a subsidiary of Concord Management and Consulting, a St. Petersburg (Russia)-based company owned by Mr. Prigozhin. Other key Concord subsidiaries include:
Internet Research Agency – Infamous for global social media trolling and online influence operations, known to be the center of US elections interference;
Concord Catering – A network of restaurants and food kitchens fulfilling Russian government contacts. Days after the revolt, Concord Catering was awarded the Ruble equivalent of $12M government catering contract servicing Russian schools and hospitals;
Patriot Media Company – A collection of online websites and news portals (Peoples News, Neva News, Politics Todays, and others) that operate in Russia and abroad.
While there are numerous Russian private military companies, PMC Wagner as part of the Concord Group, offers a unique value proposition to the Kremlin. By engaging its sister companies, Wagner compliments its paramilitary services with effective influence operations. For example, the media and consulting group launch social media campaigns and organize local grass roots civil organizations — the latter activity known as “astroturfing" — in support of the local regime. In return, Wagner and its sister companies receive financial interests in profitable local businesses, e.g. mining gold, copper, or diamonds, as seen in several African states. Through these active operations, the Kremlin is able to project power at a subsidized cost, given that the host regime is underwriting the cost of the Concord/Wagner services. PMC Wagner and its sister companies are the most active and reliable of any Russian PMC, with operations in Africa, Middle East, and Latin America. Below is a list of some Russian PMCs with links to government agencies and regions of activity:
(Source: Center for Strategic & International Studies, “Russia’s Corporate Soldiers”, July 2021)
And who is Yevgeniy Prigozhin? He was born in Leningrad and spent approximately nine years in prison for various gang-related criminal activities as a young man in Soviet times. He studied at the Leningrad Chemical and Pharmaceutical Institute but never completed his degree. In the early 1990s, Mr. Prigozhin sold hotdogs on street corners until he and two partners launched various businesses including restaurants and a casino. At the time, Vladimir Putin was chairman of the St. Petersburg Supervisory Board for Casinos and Gambling, as part of his official portfolio of responsibilities as deputy to St. Petersburg Mayor Sobchak. It was in this role that Mr. Putin met Mr. Prigozhin in St. Petersburg. Mr. Prigozhin’s 1990s gangland St. Petersburg and casino industry experiences served him well then, and later when he launched and acquired other businesses, in particular PMC Wagner.
Over the years, Mr. Prigozhin received the patronage of President Putin through the Concord Catering business, earning him the nickname “Putin’s Chef”. In this capacity, his company prepared Kremlin state dinners for visiting dignitaries such as US President George W. Bush and French President Jacques Chirac, among others. In addition to formal state dinners, Concord Catering also received lucrative multi-million dollar contracts to supply food to state hospitals, state schools, and other government organizations across Russia.
Mr. Prigozhin is a savvy opportunistic entrepreneur fluent in the underworld arts and enjoying Mr. Putin’s patronage and protection. However, he has tested this patronage and protection with the revolt. While he did not challenge the president directly, he did challenge his judgement — the choice of wartime leadership at the Ministry of Defense and offhandedly the reason for the war.
During Mr. Prigozhin’s rant several weeks ago over the Defense Ministry’s handling of the war during the “March of Justice” to the Kremlin, he stated:
"The Armed Forces of Ukraine were not going to attack Russia with NATO... The war was needed for a bunch of scumbags to triumph and show how strong of an army they are."
This is an idea that continues to take hold among the regular troops.
What Will Happen to PMC Wagner and Mr. Prigozhin?
PMC Wagner has demonstrated battlefield success (Bakmut, Ukraine) and effective Kremlin power projection abroad (security for Venezuelan President Maduro, seizure of oil fields in the Middle East). The group has proven more effective than the regular army in the Ukraine war, helping push back the need for another mobilization, albeit at a high price of dead Wagner irregulars.
Allegedly, the Kremlin presented Wagner commanders and soldiers with the following options:
Join the regular army and contract with the Ministry of Defense;
Relocate to Belarus for deployment in the Ukraine theater and training of Belarusian troops;
Relocate to Africa.
Separately, rumors are circulating that Concord’s Patriot Media Group will be acquired by National Media Group (NMG). NMG was founded by billionaire banker and close Putin ally Yuri Kovalchuk, in 2008. Mr. Putin’s significant other, Alina Kabayeva, is the chair of NMG board of directors.
If these actions to restructure the Wagner/Concord Group are implemented, it will weaken the Kremlin’s ability to prosecute the Ukraine war — an immediate priority — and to project power abroad.
The assimilation of Wagner troops into the regular army will be difficult for several reasons. First, Wagner’s battlefield success has been partly driven by competent command and control, a function of experienced junior officers, who are lacking in the regular army. Second, a material number of Wagner troops are convicts fighting for their promised freedom. They are motived to fight and live. Third, Wagner salaries are twice as much as those in the regular army. Regular army soldiers receive ruble equivalents of $930 to $2,330/month; Wagner soldiers receive ruble equivalents of $3,500/month.
The restructuring will also disrupt and jeopardize the seamless way that Wagner’s paramilitary services complement Concord’s influence operations. Dividing these companies between different owners eliminates the aligned financial interests embedded in a single ownership structure and complicates Wagner and Concord’s ability to negotiate their compensation and activities with the client regime buying the service. The client regime must now negotiate with several unrelated and independent representatives rather than only one — Mr. Prigozhin. This will negatively impact operations in Africa and reduce cashflows from foreign governments that buy these services, thus increasing the financial and reputational cost to the Kremlin.
Mr. Prigozhin has transformed himself into an underdog, an image that appeals to both regular army troops and war hawk nationalists, and he now has a formidable following with both groups important to the war effort. His rants about the lack of equipment, clothing, food, and “greedy scumbag generals” resonates with regular army troops. This further threatens the already weak leadership positions of Minister Shoigu and General Gerasimov — not only with the regular troops, but also with President Putin.
The Kremlin clearly recognizes Mr. Prigozhin’s following and influence and is seeking to control him without disrupting the already difficult but relatively stable frontlines in the occupied territories. With the Ukrainian counter-offensive beginning, Russian troop morale low, and nationalists hawks pushing for more resources to prosecute the war, Mr. Putin can ill afford jailing or punishing Mr. Prigozhin at this time and risk turning him into a martyr.
How Does This Impact Putin’s Power?
The revolt continues to expose President Putin’s indecisiveness and weaknesses, and plants the seed for others to question the president’s judgement.
The row between Mr. Prigozhin and the Ministry of Defense had been festering for many months without presidential interference up until four weeks before the revolt, when, with the approval of the president, Minister Shoigu announced that all PMCs would sign cooperation contracts with the Ministry of Defense, effectively bring them under the Ministry’s control. The president’s absence as a mediator in the dispute contributed to the revolt and leaves Mr. Prigozhin accountable for the death of 13 regular army soldiers. Then after declaring Prigozhin and the participating Wagner troops “traitors,” they are invited to the Kremlin to “explain” their actions, rather than being jailed.
This about-face will hurt already low troop morale, and it will destabilize civilian confidence in Putin’s ability to control his government as well as win the Ukraine war, whose purpose was brought into question by Putin’s own creation, Mr. Prigozhin.
The population is worried that another mobilization is on the horizon. How long will it be before the women — mothers, wives, and daughters — of dead and mobilized soldiers rise up in civil protest. There are already signs of this happening in the regions of Russia. For example, mothers in Dagestan protest the mobilization of their sons.
Putin continues to contend with growing threats, in order of priority:
Ukrainian Army Counter-Offensive - A well trained regular army fighting with their hearts and minds;
Domestic Nationalists - A leader in the form of Mr. Prigozhin appears to be emerging.
3. Regular Army Morale - Abysmal. The president will have no choice but to remove Minister Shoigu and General Gerasimov, but when and with whom are they replaced?
4. Civil Unrest -There are signs of women’s protests in the regions. This problem will reach a tipping point as the body bags continue to come from the frontlines and when the next mobilization is called, to defend against the Ukrainian counter-offensive. The counter-offensive need only be halfway successful to tip the scales on army morale and civil unrest.
Hello Friends and Colleagues,
Thank you for reading “Barbershop Whispers…Russia”.
This series of publications covers Russian politics, business, the war and from time to time true stories - with unavoidable colorful embellishments - about my experiences in Russia.
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Adam A Blanco, Author & Publisher
Vol 1, No 2 - BWR 15.07.2023
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