Hello! This week, our main story is the extraordinary attempted rebellion carried out by the Wagner mercenary group and its leader, Yevgeny Prigozhin, against Russia’s military leadership. We also look at what could come next and the economic consequences of this crisis.
Saturday was an almost unbelievable day in Russia. Even now, the full magnitude of what happened is still difficult to comprehend. Yevgeny Prigozhin’s private army, facing the threat of being disbanded staged a mutiny and seized control of Rostov-on-Don, a city with a population of 1 million in southern Russia. They then embarked on a march towards Moscow, but their advance was halted 200 kilometers short of the capital, apparently after the Kremlin offered Prigozhin a deal. The specifics of this agreement remain unclear, leading Moscow's elites to speculate on the true motives behind the uprising and to anxiously consider its potential repercussions. What is apparent, however, is that Putin's autocracy has suffered a significant blow to its prestige and authority.
How the mutiny began
The seeds of the Wagner Group mutiny were sown long ago, stemming from Evgeny Prigozhin's ongoing conflict with Russia's military leadership. More than a year ago, Prigozhin began publicly humiliating Defense Minister Sergei Shoigu and Chief of the General Staff Valery Gerasimov. In June, Prigozhin saw a window of opportunity for his mutiny: his army had recently departed from Bakhmut, and they were well-rested and equipped.
Furthermore, this window of opportunity was set to close on July 1. On June 11, Defense Minister Sergei Shoigu signed an order clearly targeting Wagner, instructing all paramilitary formations to sign contracts with the Defense Ministry before this deadline. Compliance with this order would have effectively ended Wagner's autonomy. Prigozhin refused to sign. Two days later, Putin himself reiterated Shoigu's order, but Prigozhin insisted that Wagner's troops would not sign any contract. He lamented that "the Defense Ministry was privatized by a group of individuals."
Amid the chaos of Saturday's events, one crucial development was easily overlooked: Prigozhin released his own interview on Friday afternoon. In the interview, Prigozhin claimed that Ukraine and NATO had no plans to attack Russia, and he accused Shoigu of being the mastermind behind Russia's invasion of Ukraine, driven by his desire to enhance his own standing and earn the "Hero of Russia" decoration. Prigozhin further alleged that Shoigu was supported by oligarchs seeking to exploit Ukrainian resources. According to Prigozhin's estimation, Russia had suffered losses in the tens of thousands. Under Russia's current censorship laws, the statements he made could result in a 12-year prison sentence.
The information available, which U.S. intelligence had reportedly acquired in advance, supports the narrative of the mutiny's origins. A source told CNN that Prigozhin had been preparing for this event for some time, stockpiling ammunition and equipment. Last Monday, the concentration of Wagner forces on the border between Russia and the occupied territories in Ukraine was discussed in the U.S. Congress.
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What happens next?
While some of the consequences of Prigozhin's mutiny are obvious, such as the erosion of authority of the regime, the security forces and Putin himself, others remain uncertain. The fates of Shoigu, Gerasimov and Prigozhin hang in the balance. Prigozhin was supposedly ordered to go to Belarus as part of the deal on Saturday, but no information has surfaced about his whereabouts since then.
On Monday morning, the first indications emerged that the deal with Prigozhin was not entirely finalized. State media agency RIA Novosti reported that a criminal investigation against Prigozhin was still ongoing, despite Kremlin spokesman Dmitry Peskov's statement on Saturday that the case would be dropped.
Official comments following the Kremlin's agreement with Prigozhin also lacked unanimity. For instance, on Sunday, Andrei Kartalnov, head of the State Duma's Defense Committee, said that there were now "no complaints" against Wagner's troops. However, fellow committee member Andrei Gurulev expressed a different opinion during an appearance on Vladimir Solovyov's propaganda show, suggesting that the Wagner soldiers should face legal consequences, while Prigozhin and his commander Dmitry Utkin deserved nothing more than "bullets in the forehead."
Sunday's edition of Vesti Nedeli, Russia's main propaganda broadcast, opened with the claim that Prigozhin's actions constituted "betrayal" and repeated Putin's statement from Saturday which promised punishment for traitors. The party line insisted that the uprising had little support, and the authorities struck a deal with Prigozhin when he was on the brink of “bubbling into a bloody vapor,” according to the show's host, Dmitry Kiselyov. The summary conveyed a simple message: Russia has demonstrated its maturity as the country's patriots refrained from turning their arms against each other. Now, some of Wagner's forces will sign contracts with the Russian military. This entire topic was covered in a 10-minute segment of the show, which typically dedicates half an hour to its leading story.
The fate of Shoigu remains uncertain. On one hand, dismissing the defense minister after accommodating the demands of "rebels and traitors" would be a further humiliation. However, Shoigu has remained silent since Saturday. On Monday, the Defense Ministry press service released a video showing Shoigu supposedly inspecting a forward command point of one of the formations in the Western Group of Forces. Nonetheless, pro-military Telegram channels claim that this footage was pre-recorded, citing bloggers working with the Defense Ministry who posted about Shoigu's inspection tour in the Belgorod region on Friday.
The Moscow rumor mill
In the absence of concrete information, Moscow is rife with rumors. Many of these revolve around Alexei Dyumin, the head of the Tula region who has previously served as deputy defense minister, and a bodyguard to Putin. Since assuming the role of governor in 2016, Dyumin has emerged as a potential successor for Shoigu. Anonymous sources, amid the months-long conflict between Wagner and the Defense Ministry, have occasionally identified Dyumin as one of Prigozhin's influential backers, although this claim has never been substantiated.
Immediately following Saturday's agreement with the Kremlin, messages started to appear on Telegram channels suggesting that Dyumin was the actual broker, rather than Lukashenko. This quickly gave rise to a theory that the mutiny would elevate Dyumin to the position of defense minister, potentially accelerating the handover of power. One of the better informed political gossips in Moscow, Nezavisimaya Gazeta editor-in-chief Konstantin Remchukov, wrote in The New York Times that Putin might not seek re-election in the 2024 presidential election and would instead nominate a successor. Posts about Dyumin imply that he could be the chosen candidate.
Reports from state media agencies explicitly addressing the rumors surrounding the Tula governor further fueled speculation. On Saturday, TASS published a statement from Dyumin's press service refuting “reports of his role in talks with Wagner Group head Yevgeny Prigozhin.” Then, on Monday morning, RIA Novosti published an entire press release from the same source, affirming that “Dyumin is working in his region” and that negotiations with Prigozhin were beyond his jurisdiction. Normally, official media agencies refrain from commenting on rumors circulating on anonymous social media channels.
Friday evening witnessed mild panic in the Russian markets. As Prigozhin began discussing his march on Moscow, the exchanges were still open, resulting in a 2% decline. Although currency trading had already closed, Russian banks pushed the dollar rate up to 90-105 rubles, compared to the exchange rate of 85. However, by the time Monday's trading began, the ruble had recovered all of its weekend losses.
Yet, these immediate market fluctuations only scratch the surface. The short and medium-term consequences of the uprising, which exposed the regime's weakness and instability, are clear. The failed mutiny will only accelerate trends that were already visible long before. As we noted last week, “Russians out in the real world are not buying the officials' talking up of about the health of the economy. The Russians are sending their money abroad and switching to forms of payment that are difficult for the authorities to trace. The 'gray economy' is expanding, and points to growing anxiety among Russians about access to their bank accounts." All of these processes, which exacerbate imbalances within the Russian economy, will now progress at an even faster pace.