He explained US sanctions against Wagner

the US Treasury On Tuesday he cleared gold and diamond mining concerns linked to the Wagner Group in Mali and the Central African Republic after Yevgeny Prigozhin, the mercenary group’s founder, tried to stage an insurrection in Russia last week.

Gold and diamond mining companies, as well as a UAE-based distributor and a Russian company that the US Treasury Department’s Office of Foreign Assets Control says was involved in the scheme, are enriching some of Wagner’s members and collaborators in Russia and African countries where they have a foothold. However, the amount the group earns from its illegal mining activities is negligible compared to its significant funding from the Russian government.

For several years, part of Wagner’s appeal was that he advanced Russia’s foreign policy goals with a modicum of plausible deniability. Wagner’s relationship with the Russian government has been a secret since the mercenary group began in 2014 and brought Crimea and Donbass under Russian control, but this connection was not clarified until the Russian invasion of Ukraine.

Part of Wagner’s appeal is its effectiveness compared to its relatively low price for the Russian government. Putin has admitted that The Russian government funds Wagner, to the tune of $1 billion over the year completed in May 2023, while Prigozhin made just over $900 million on top of that. Although the Russian government is not the only entity funding Wagner and its leaders, all indications are that it is by far the primary guarantor. Anything else, be it diamonds, gold, oil, nickel or gas, is just a drop in the bucket — “pocket money, some advice for Russian generals who control mercenaries,” according to Pavel Luzhin, a Russian military analyst and non-resident senior fellow at the Resilience Program. Democracy at the center of European policy analysis.

Untangling Wagner’s mining concerns in Africa

Extractive industries such as mining are notorious for financing conflicts and human rights abuses; The term conflict diamond was coined specifically to refer to the system through which diamond mining and sales contribute to direct financing Conflicts and rebellions. This is especially true of countries rich in natural resources but with unstable governments, such as Mali and the Central African Republic.

The US, UK and EU have focused on punishing Russia’s oil and gas sector – the main source of government income and thus the main source of funding for the war in Ukraine. But Russia’s diamond industry, which relies on small, locally mined diamonds, has come under international scrutiny for its potential contribution to the war effort. Citing US government data, the The New York Times It was reported that the Russian diamond industry accounted for $4.5 billion in exports in 2021, making it one of the largest non-oil sectors in Russia.

But Wagner’s extractive concessions in Mali and the Central African Republic are not so simple. according to Office of Foreign Assets Control statement on TuesdayThe United States imposed sanctions on Midas Ressources SARLU, a Central African Republic-based company linked to Prigozhin that controls “CAR-based mining concessions and licenses for the exploration and extraction of minerals, precious and semi-precious metals, and precious stones.” Moreover, the company “together with other companies linked to Prigozhin and operating in CAR, is key to financing Wagner’s operations in CAR and beyond” and works with the rebel group Unité pour la Paix en Centrafrique.

Diamville SAU, another CAR-based company linked to Prigozhin, ships raw materials to General Trading Industrial Resources in Dubai, as well as other companies in Europe and the UAE, which, according to the statement, delivered the proceeds from the illicit funds. Materials for Russia and Prigozhin.

Other companies linked to Prigozhin also operate in the CAR – but so far, these entities are more useful to the state capture project than sources of financing. according to June report by The SentryAn investigative and political group Works to disable Wagner seized many of the CAR’s most productive mines including the gold mine at Ndassima, terrorizing civilians in the captured areas.

Wagner’s mining operations serve more of a political purpose than a financial one

“Considering the fact that this sector is well corrupt and there are a number of local profiteers (local criminal groups, corrupt officials and politicians, etc.), the amount of money that the Wagner Group could hypothetically earn from this sector does not exceed much the operational costs of the Russian mercenaries there,” he said. Lusine for Fox.

“The important fact: Russian mercenaries don’t care about profit at all, they play a political role as a Kremlin agent, and that’s not the business.”

Rather than seeking to make profits from raw materials, Wagner’s wooing of mining concerns and other major industries in the African countries in which it operates is about controlling that economy and shaping government decision-making in their favour, a form of political appropriation called state families.

“It has always been primarily a political tool and has always been a means of acquiring and effectively taking over state control over isolated regimes that depend on an outside power,” Joseph Siegel, director of the Africa Center for Strategic Studies, told Vox. Wagner — as an agent of the Russian state — can embed itself deeply in countries such as Mali, the Central African Republic, and Sudan, Siegel said, where leadership is unstable or non-existent, and as these countries become more isolated, they are increasingly dependent on Wagner and Russia. .

“US sanctions against gold smuggling/diamond mining controlled by the Wagner Group are mostly an imitation of the activity rather than the outright elimination of Russian mercenaries in Mali and Central Africa using force,” Luzhin told Vox via email.

Siegel said that while OFAC’s sanctions are limited — they’re not a huge blow to Wagner’s income right now, nor to the country’s takeover plan — they do have benefits.

“For me, one of the values ​​of sanctions is that they provide evidence of connections that many of us would only expect based on our observations. It provides actual and empirical support for that connection.”

penalties too.”[call] The regimes that empower Wagner, Siegel explained, “such as the Faustin-Archange Touadéra in the Central African Republic and the military junta in Mali”.

Wagner’s financing and future are in doubt

It’s impossible to know the full extent of Wagner’s financing – how much of it comes from mining concessions in Africa, how much through Prigozhin’s consortium of companies and other Wagner-linked players that have stood in over the years, how much through state contracts with Prigozhin’s Concord Group business, and how much of it comes directly from the state.

“It’s basically a whack-a-mole with the enforcement entity because there are roughly 400 companies within Prigozhin’s broader network, and it’s very difficult for them to stand up to LLCs and other corporate entities,” Ben Dalton, Program Director for New America’s Future Program Frontlines, told Vox.

However, the Russian state seems to have already taken some action against Prigozhin’s empire; Luzhin told Vox that his media group, which owns the RIA FAN news website and the Nevskiye Novosti newspaper, was dismantled after his attempted uprising last week. Radio Free EuropeKommersant reported Sunday that Russia’s media censorship agency, Roskomnadzor, had blocked access to Prigozhin’s news media websites.

Given that the state appears to be retaliating for the still-unclear situation of Prigozhin and Wagner, it is difficult to imagine how Russia will continue to fund the project, to the extent that it exists, in the future.

As Siegel told Vox, Some of Wagner’s clients dealt directly with the groupBut some negotiate contracts through the Russian state. It is possible that Wagner will continue to negotiate at least some of these contracts and benefit from in-kind arrangements, Like getting mining privileges in exchange for protection.

Although Wagner’s operations in Africa don’t seem to have changed much over the past week, Sigel said, the future for Prigozhin’s forces is tenuous and complex at best. A week after Wagner’s March on Moscow, questions about what happened still outweigh answers, and will likely linger for some time.

But Russia’s foreign policy goals remain the same; Since it cannot win allies by diplomacy or soft power, it must do so by state capture or force. Whether it’s Wagner or someone else, Luzhin said, “Russia still needs proxy forces there to continue its trouble-making approach in Africa.”