Benjamin Marsh considers the extent to which private contractor encroachment into a previously protected strategic sector is indicative of a broader shift away from statism in Russia.
Early this year, 300 men were killed in the Syrian desert near Deir ez-Zor, following a US bombardment from the air and sea. They had been moving in the direction of a military base controlled by US-backed forces. The Russian foreign ministry stated on 20 February 2018, that the dead men were Russians acting of “their own accord and for a variety of reasons”. Later reports linked the dead to a Russian private military contractor, Wagner PMC, highlighting the increasing tendency for Russian PMCs to fight alongside Russian armed forces.
A state-dominated economy
The Russian state dominates its economy. The move to a market-based economy stalled in the early 2000s, as one school of thought, the status-quo statists, won over the other, the free-market liberals. President Vladimir Putin shunned radial reforms for stable macroeconomics, aiming to keep debt levels and inflation low, and spreading the tentacles of the state into the economy. For instance, enlarging state-owned institutions, while restricting private businesses from ‘strategic sectors’ like the armed forces.
The Strategic Sectors Law 2008 enshrined the ideology into law. While predominately aimed at foreign businesses, it also restricted Russians from participating in ‘strategic sectors’. In 2009, Basic Element, a Russian oil company owned by oligarch Oleg Deripaska, was prevented from purchasing RussNeft; his company was registered offshore.
But the Kremlin’s regular hiring of PMCs seems like a prime example of private business in a strategic sector. Aside from Wagner PMC, PMCs such as E.N.O.T, RSB Group, and the controversial, Hong Kong-registered Slavonic Corps are reported to have operated in Ukraine and Syria. Such activity is in violation of a sector of “strategic importance for ensuring the country’s defence” for it involves, for instance, as Article 6 of the 2008 law outlines, the “utilization of weapons and military equipment”.
Private military contractors and privatisation
PMCs usually emerge in free-market environments. In such countries, PMCs are encouraged as means to grow the economy, to create jobs, to minimise the hand of government. Does the increase in PMCs in Russia, therefore, represent a willingness in Russia to open up ‘strategic sectors’ to private business, foreign or indigenous?
The Slavonic Corps (SC) involvement in Syria in 2013 indicates that a move away from statism is far off. On landing in Moscow, members of SC were arrested because of, the Russian authorities stated, an “unsanctioned mission”, echoing the explanation of the presence of Russians near Deir ez-Zor.
Evidence indicates, on the contrary, that the Kremlin sanctioned SC’s involvement in Syria. For instance, the SC head is a commander in the FSB reserve. The FSB, in turn, would be required to clear any involvement of PMCs in foreign theatres.
A government agency’s likely authorisation and direction of a PMC, let alone one registered abroad, is indicative of persistent statist ideological thinking in Russia.
Legislative Action
In the early 2010s, legislative activity on PMCs focused on providing regulatory and legal parameters for them to operate. In 2012, for instance, the Duma deputy submitted an unsuccessful bill on the regulation of PMCs, allowing them “to provide other military services” and “to carry out…income-generating activities”. Two years later, a similar bill was also snuffed out, reportedly by the Security Council.
Earlier this year, Vladimir Shamanov, a retired general and presently a United Russia politician, sought greater clarification on the status of PMCs, for “the state must be directly involved in issues related to life and health of our citizens”. Yet Russian PMCs are reported to continue to operate, despite their legal status being unresolved; they are technically illegal because of laws banning mercenary activity and the purchasing of modern weapons of war.
Why PMCs?
The question is then, if a statist ideology prevails in Russia, why turn to a private company in the realm of national security? Two reasons stand out.
First, PMCs help to maintain the rent-seeking oligarchy in Russia. Yevgeny Prigozhin, the reported owner of Wagner PMC, received a billion-dollar contract to provide food and services for the military and a considerable stake in a Syrian oil venture, according to analysts, as incentives for operating a PMC in Syria.
Second, PMCs play a vital role in Russian foreign policy, a key to Putin’s legitimacy. Russian foreign policy in Eastern Europe and the Middle East is characterised as short-term and pragmatic, designed to achieve specific goals: from the political – avoiding any further international isolation; to the economic – securing a presence in Middle Eastern oil markets.
And PMCs enable such a foreign policy. Their presence in foreign theatres allows the Kremlin to deny its involvement, and to therefore circumvent the restrictions of international law. Their efficient business operation gives Putin flexibility that state institutions are unable to emulate.
Once on the battlefield, PMCs cover up deficiencies in Russian capabilities. For example, Wagner PMC at first only protected facilities but is reported to have provided manpower in the fight to reclaim Palmyra in 2016, and therefore prevent death from poor soldiering and body bag syndrome. Should accidents reoccur like the one earlier this March, when 39 servicemen were killed when a plane crashed in Syria, the case for the involvement of PMCs will only grow. However, this trend should not be seen as indicative of a broader move away from statism, especially following the re-election of Putin and no evidence thus far of a renewal of his inner circle.
