Wagner’s real money never came from diamonds and gold

Wagner’s real money never came from diamonds and gold

Wagner’s businesses in Africa isolate and create dependent economies, not funding for private armies.

The US Treasury Department on Tuesday sanctioned gold and diamond mining concerns connected to the Wagner group in Mali and the Central African Republic after Yevgeny Prigozhin, the mercenary group’s founder, attempted to stage a mutiny in Russia last weekend.

The gold and diamond mining enterprises, as well as a UAE-based distributor and a Russian company that the Treasury’s Office of Foreign Assets Control (OFAC) says is involved in the scheme, serve to enrich some members of Wagner and their collaborators in Russia and the African countries where they have a foothold. However, the amount the group earns from its illicit mining activities is negligible compared to its significant funding from the Russian government.

For several years part of Wagner’s appeal was that it furthered Russia’s foreign policy goals with a modicum of plausible deniability. Wagner’s connection to the Russian government has been an open secret since the mercenary group started in 2014 and brought Crimea and the Donbas under Russian control, but it wasn’t until Russia’s invasion of Ukraine that that connection was made explicit.

Part of Wagner’s appeal has been its effectiveness compared to its relatively small price tag for the Russian government. Putin has admitted that the Russian government funds Wagner, to the tune of $1 billion over the year completed May 2023, while Prigozhin made just over $900 million on top of that. Though the Russian government isn’t the only entity that funds Wagner and its leaders, all indications are that it is by far the primary underwriter. Anything else, whether that’s diamonds, gold, oil, nickel, or gas, is just a drop in the bucket — “pocket money, some tips for the Russian generals who control the mercenaries,” according to Pavel Luzin, a Russian military analyst and non-resident senior fellow with the Democratic Resilience Program at the Center for European Policy Analysis.

Untangling Wagner’s mining concerns in Africa

Extractive industries like mining are notorious for funding conflict and human rights abuses; the term conflict diamond was coined specifically to refer to the system by which diamond mining and sales contribute to or outright fund conflicts and insurgencies. That applies particularly in countries rich in natural resources but with unstable governments, like Mali and the Central African Republic, or CAR.

The US, the UK, and the European Union have focused on sanctioning Russia’s oil and gas sector — the government’s primary source of income and thereby the main source of funding for the war in Ukraine. But Russia’s own diamond industry, which relies on domestically mined small diamonds, has come under international scrutiny for its potential contribution to the war effort. Citing US government data, the New York Times reports that Russia’s diamond industry accounted for $4.5 billion in exports in 2021, making it one of the largest non-fuel sectors in Russia.

But Wagner’s extractive concessions in Mali and CAR aren’t as straightforward. According to OFAC’s Tuesday statement, the US has sanctioned Midas Ressources SARLU, a CAR-based business associated with Prigozhin that controls “CAR-based mining concessions and licenses for prospecting and extracting minerals, precious and semi-precious metals, and gems.” Furthermore, the company “along with other Prigozhin-linked firms operating in the CAR, is key to financing Wagner’s operations in the CAR and beyond” and works with the rebel group Unité pour la Paix en Centrafrique.

Diamville SAU, another CAR-based and Prigozhin-linked business, ships raw materials to Industrial Resources General Trading in Dubai, as well as other businesses in Europe and the UAE, which, according to the statement, handed over proceeds from the ill-gotten materials to Russia and Prigozhin.

Other companies linked to Prigozhin also operate in CAR — but so far, those entities are more useful to the project of state capture than as sources of funding. According to a June report by The Sentry, an investigative and policy group that works to disable networks that profit from conflict, Wagner has captured several of CAR’s most productive mines including the gold mine at Ndassima, reportedly terrorizing civilians in the areas it captures.

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

“Considering the fact that this sector is well-corrupted and there are a number of local beneficiaries (local criminal groups, corrupted officials and politicians, etc), the amount of money that the Wagner group could hypothetically gain from the sector does not exceed much the operational costs of the Russian mercenaries there,” Luzin told Vox.

“The important fact: the Russian mercenaries do not care about the profit at all, they play a political role as the Kremlin’s proxy, it is not the business.”

Rather than seeking to profit off raw materials, Wagner’s co-optation of mining concerns and other major industries of the African countries where it operates is about controlling that economy and shaping the government’s decision-making to their advantage, a form of political appropriation called state capture.

Read more at: vox.com;

Photo: vox.com, Roman Romokhov/AFP via Getty Images;

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