War, Business and ‘Hybrid’ Warfare: The Case of the Wagner Private Military Company (Part One)

On March 27, the Russian government watered down the Duma bill proposing to legalize Private Military Companies (Chastnye Voennie Company—PMC) (Interfax, March 27). The parliamentary initiative was unanimously rejected by the Ministry of Defense (MoD), the Ministry of Foreign Affairs (MFA), the Russian National Guard (Rosgvardia), the Federal Security Service (FSB), the Foreign Intelligence Service (SVR), and the Federal Guard Service of the Russian Federation (FSO). Incidentally, previously such key figures as Sergei Lavrov (the head of the MFA), Dmitry Rogozin (Russian deputy prime minister on defense and space industry) and prominent siloviki (such as Colonel General Vladimir Shamanov) had given support to the PMC bill (Kommersant, January 15). Moreover, on April 12, 2012, then–prime minister Vladimir Putin called these structures “an instrument for the realization of national interests abroad without the direct participation of the state” (Vz.ru, April 11, 2012). Yet, the real situation is far more complicated than appears on the surface.

The first serious attempt to legalize PMCs in Russia was voiced in March 2016, by parliamentary deputies Gennady Nosovko and Oleg Mikheev from the Spravedlivaya Rossiya (A Just Russia) political party (Chvk.info, accessed April 15, 2018). However, their proposal (which notably did not allow Russian PMCs to take part in military conflicts abroad) was vehemently opposed by military intelligence (GRU) and the FSB. In many ways, this opposition from the security services played a key role in the legislative initiative’s eventual failure.

Despite a legal prohibition on mercenary activities (Article 359 of the Criminal Code of the Russian Federation), Russia has actively used military “volunteers” since 1992, when members of the “Rubicon” group (coordinated by the FSB) were sent to Bosnia (the city of Višegrad, a site of Serb-led ethnic cleansing) to take part in local hostilities (Informnapalm.org, November 23, 2015).

Since 2008, no fewer than ten PMCs have emerged in Russia, of which the most well-known had long been Slavonic Corps Limited. Registered in 2013, in Hong-Kong, Slavonic Corps was founded by members of the Moran Security Group, Vadim Gusev and Yevgeny Sidorov (subsequently, both men would be accused of “mercenary” activities and sentenced to three years in prison). The majority of the “security experts” hired by the organization were comprised of former members of the Russian federal riot police (OMON) and interior ministry special forces; and most had combat experience in regional conflicts (such as in the North Caucasus and Tajikistan). According to Russian sources, employees received a highly lucrative monthly salary of $4,000 and were entitled to $20,000 for severe injuries or $40,000 to their families in case of death. However, the unsuccessful October 2013 armed operation near the city of al-Sukhnah (proximate to the city of Homs), virtually put an end to the Slavonic Corps, thus opening up new opportunities to the so-called Wagner Group (Fontanka.ru, November 14, 2013).

Created by Dmitry “Wagner” Utkin (who formerly served in a Pskov-based unit of the GRU), the new formation was reportedly used as a vanguard of Russian land operations in Syria until last February, when it was hit hard by forces headed by the United States, suffering at least several hundred dead at Deir el-Zour (see EDM, February 15, 20, 2018). News of the deadly rout was first presented by Igor Strelkov, the former “minister of defense” of the self-proclaimed Donetsk People’s Republic, in eastern Ukraine (Apostrophe.ua, January 7). It was later reiterated by then-head of the US Central Intelligence Agency (CIA), Michael Pompeo, who mentioned “a couple hundred” Russians killed in Syria (Newsru.com, April 12).

The emergence and subsequent rise of the Wagner PMC is frequently traced to apparent financial support from Kremlin-connected Russian billionaire Yevgeny Prigozhin, whose wealth is estimated at 7.14 billion rubles ($120 million)—and the actual figure may be much higher. Nicknamed “Putin’s chef,” Prigozhin is the owner of Concord-M, a catering company that serves the St. Petersburg and the Moscow school systems as well as around 90 percent of the entire Russian military, which gave him approximately $1 billion worth of contracts. Additionally, investigators in Russia and the US have concluded that Concord-M allegedly stood behind the so-called Russian “troll farms” that produced and disseminated online anti-Western propaganda and disinformation campaigns (Meduza.io, June 9, 2016; see EDM, February 26, 2018).

It needs to be underscored that, to date, Russian investigative journalists have not been able to establish a direct link between Prigozhin and the Wagner Group. Nonetheless, the company Evro Polis (also close to Prigozhin), whose main business activities revolve around hydrocarbon extraction, could shed some new light to the issue. Established in 2016, in Krasnogorsk (Moscow Oblast), the company opened an office in Damascus, in May 2017, after allegedly receiving a sizable share (25 percent) of Syria’s oil and natural gas extraction business (Svoboda.org, June 27, 2017). It is highly unlikely that private businessmen (even powerful, well-connected ones, such as Prigozhin) would be the only stakeholders in this kind of major energy-sector deal with a foreign state. Rather, the prospect of Russia establishing control over the Syrian energy market—and the “huge financial possibilities for some people”—would automatically put Moscow in the leading position. According to Mikhail Krutihin, a partner at the RusEnergy Consulting Agency, at this juncture the main player could become state-owned Russian energy giant Rosneft, which already has vested interests in the Middle East (Mbk.media, February 18, 2018).

Another firm looking to scoop Prigozhin’s Syria energy deal may be STG Group (Stroytransgaz), linked to powerful Russian oligarch and close Putin associate Gennady Tymchenko. Stroytransgaz has already “managed to re-initiate the extraction of natural gas near Homs and the construction of gas-processing facilities near al-Raqqa” (Ehorussia.com, February 20). It, therefore, may have been no accident that the Conoco gas field in Deir el-Zour, generally regarded as part of Stroytransgaz’s sphere of interest inside Syria (RBC, June 27, 2017), was the site where the Prigozhin-backed Wagner Group forces were decimated as they unexpectedly pushed east of the Euphrates River.

Private Military Companies like the Wagner Group should, thus, be seen as a potential tool used by major Russian energy companies to achieve their objectives (current and more far-reaching) in war-torn Syria. Nevertheless, there is every reason to believe that such “business-related” activities constitute merely one side of the bigger picture involving Russian PMCs.

*To read Part Two, please click here.