[The Wagner mutiny exposed the weakness of the Russian state.
Behind the monolithic facade of Putinism are clans, networks and
corporations pursuing their own goals. They are quite capable of
bringing the country to collapse and civil war.]
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WAGNERIZATION: HOW PUTIN DEGRADED THE RUSSIAN STATE  
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Ilya Matveev
July 3, 2023
Left East
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_ The Wagner mutiny exposed the weakness of the Russian state. Behind
the monolithic facade of Putinism are clans, networks and corporations
pursuing their own goals. They are quite capable of bringing the
country to collapse and civil war. _

Yevgeny Prigozhin (right) taking Putin on a tour of his Concord food
catering factory 11, Wikimedia Foundation

 

_Founded in 2014 as a private military company owned by the Russian
businessman and Putin confidante Yevgeny Prigozhin, the Wagner Group
first saw action in Donbas, where it helped separatist forces against
the Ukrainian army. Subsequently, it had been deployed in Syria,
Libya, and a number of other African countries, usually offering
Russia a plausible deniability for its military interventions and
flexibility that the army could not provide. Wagner’s peak of fame,
however, came in the aftermath of Russia’s 2022 invasion of Ukraine.
Having grown since then thanks to generous recruitment packages
(officially valued at 850 bln roubles or $10 bln though unclear for
what period) and promises of freedom to Russian inmates who joined, it
has been touted as one of the most effective combat units on the
Russian side thanks largely to its commanders’s disregard for
casualties. More recently, Prigozhin and his media empire had been
criticizing the conduct of the war from the right and had entered into
a growing conflict with the leadership of the Russian army, which
culminated on June 24th 2023_ _into Wagner’s “March on
Moscow,” or “Prigozhin’s putsch.” Wagner troops had gotten
within 200 km south of Moscow, before Prigozhin called off his coup,
leaving most observers scrambling to explain the events of that day.
LeftEast is delighted to present Ilya Matveev’s politico-economic
analysis of the Wagner phenomenon, published originally in Russian on
the Важные истории
[[link removed]] platform._

In his article
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the Turn of the Millennium,” published back in December 1999,
Vladimir Putin wrote: “Russia needs a strong state power and must
have it.” He argued that _gosudarstvennichestvo_ (statism) is
organic for Russian history and society, and the restoration of the
state is his main task. Since then, “strong state power,” or the
“vertical of power,” has become one of the most enduring
ideologies of Putin’s rule, and the
term _gosudarsvtennik _(statist) has become a watchword by which the
Kremlin elite recognizes its own.

It is all the more strange that in the 23rd year of Putin’s rule,
the key role in the war unleashed by him was played by a
private military company, its numbers peaking
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40–50 thousand people — almost a third of the entire force that
invaded Ukraine on February 24, 2022. Moreover, in the end, PMC Wagner
Group attempted a coup d’état; a large regional center was captured
by rebel troops; armed columns marched to Moscow; several helicopters
and a plane of the Ministry of Defense were shot down; at least 13
people died
[[link removed]].
The monopoly on violence, through which the state has been defined
since the time of the German sociologist Max Weber, has been visibly
challenged, and the notorious “vertical of power” has turned out
to be as fragile as a porcelain cup. This time, the cup did not break,
but was covered with cracks — the sight of Yevgeny Prigozhin
scolding Deputy Minister of Defense Yevkurov, and the unhindered
movement of columns through the Russian regions almost to Moscow
itself, left an impression on the Russian elites; conclusions were
drawn. The fragility of power is a self-fulfilling prophecy.

In his emergency address on June 24, which lasted only five minutes,
Putin managed to bring another historical lesson, as he has generally
tended to do in the recent years. This time it was about the
revolution of 1917. One gets the impression that for Putin, periodic
troubles are a feature of Russian history, they are inevitable, like
the change of seasons, and the function of the Russian state and its
leader lies in the eternal opposition to them. In reality, this is
about history indeed — but only the history of the last 23 years.
The fragility of the Russian state revealed by Prigozhin is the result
of Putin’s own actions — he is the one who created this very
state.

PMC as a way to rule the country

In 2008, the Russian political sociologist
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entitled “State Corporations: Another Institutional Experiment.”
His reasoning was as follows: by the mid-2000s, rising energy prices
had allowed the Russian state to accumulate significant reserves, and
the question was how to spend them. Putin was aware of the task of
modernizing the Russian economy, but he did not trust either private
business or, importantly, the state itself to accomplish this task. As
a result, state corporations
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born. In essence, they are the vehicles for spending public money,
protected from both market competition and government inspections and
control. State corporations have been in a gray zone, which led the
experts and even members of the government to debate: how, after all,
to characterize the consolidation of assets within their framework —
as a creeping nationalization or as a hidden privatization? Volkov
himself proposed the term “personified state property”: “This
property remains state property to the extent that it is controlled by
the head of state.”

In the gray zone, protected from both market discipline and formal
state control, the main instrument of governance is Putin’s personal
relationships with the heads of state corporations — and large state
companies, which in this sense do not differ from state corporations.
Putin’s state is a collective of “statists”, sealed by Putin’s
personal trust, and not by formal legal relations. Accordingly, the
“statism” in Putin’s version is not a commitment to Weber’s
ideal of a rational, meritocratic corps of bureaucrats, but rather an
ideology of “national interests” achieved by any means necessary,
with no concern for formalities. And since “national interest” is
an extremely vague concept, it is not surprising that “statists”
successfully replace it in everyday governance practice with their own
private interest, engaging in personal gain in their posts.

In the gray zone, the main instrument of governance is Putin’s
personal relationships with the heads of state corporations

Occasionally, Putin’s skepticism about formal state institutions
(despite his declared commitment to “statism”) broke through
publicly. The story of the Rosneftegaz company, which receives
dividends from Rosneft and partly from Gazprom, is quite
characteristic in this regard. This mysterious company not only
accumulates huge amounts of money, but also invests it in projects all
over the country; who is behind the choice of objects for investment,
was not explained to the population for a long time. Finally,
Putin answered [[link removed]] a
direct question from Vedomosti journalist Margarita Papchenkova during
his press conference in 2016: “Yes, there is such a reserve as the
money of Rosneftegaz. <…> And we finance some things from there when
the government forgets that there are priorities that need to be paid
attention to.” This was tantamount to admitting that the
“statist” Putin simply does not believe in his own state,
preferring, against the backdrop of a crisis-induced budget deficit,
to have a second, parallel budget, which is in the gray zone of his
personal relations with Igor Sechin and, possibly, other players
(Putin did not specify who “we” are). The Wagner Group fits well
into this management model. If there is a parallel budget, why not
create a parallel army? 

Residents of the gray zone have already participated in mutinies —
albeit not armed ones — against the official executive power, the
government of the Russian Federation. For example, the heads of
state-owned companies (Russian Railways, Rosneft, Gazprom) refused to
publish their salaries, despite the request of Dmitry Medvedev, then
prime minister. As a result, in 2015 the government had to revise
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inscribing into law its impotence in the face of Putin’s powerful
friends. State-owned companies are also known
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their constant butting with the Ministry of Finance on the share of
their income transferred to the budget.

A clash with actors from the gray zone can end badly for the
government. So, an attempt 
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preventing Rosneft from taking over the assets of another oil company,
Bashneft, cost the Minister of Economic Development Alexei Ulyukaev
his freedom, despite the fact that his position was fully consistent
with Putin’s earlier directive to prevent further growth of state
property. The arrest of Ulyukaev, which Sechin carried out with the
help of FSB officers seconded to Rosneft indicated the privatization
of elements of the power apparatus by a political player who used this
resource to attack the federal minister (i.e., the state itself) for
his own personal purposes and interests. No violent confrontation
happened at that time — after all, Ulyukaev was the minister of
economic development, not defense, — but typologically this
situation is similar to Prigozhin’s mutiny.

“The vertical of power” against the state 

Why did Putin create this gray zone and allow its practices, such as
the privatization of profits and the socialization of costs, to
envelop the entire state apparatus? One answer is that such a system
is functional. Political scientist Vladimir Gelman indicates
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corruption is one of the ways to solve the agency problem (in general
terms, the problem of ensuring that subordinates follow the orders of
superiors). The possibility of personal gain creates an incentive to
act in the interests of the principal (boss). Thus, on the whole, the
“Russian system”, as the late Gleb Pavlovsky called it, is
governable. It allows Putin to achieve his goals — but only within
certain limits. The costs can be measured in money (plundered and lost
for the state); the quality of state managers (extremely low due to
the dominance of the principle “it’s who you know, not what you
know”); the inability to pursue a consistent policy course (which is
inevitably watered down under the influence of various private
interests which Putin himself gave free rein to); and finally, cracks
in the very foundation of the state system (which were revealed by the
mutiny of the gray zone actor Yevgeny Prigozhin).

If there is a parallel budget, why not create a parallel army?

Putin created this kind of state because his main task is to maintain
the regime of personal power. After all, the agency problem can be
solved at a much lower cost with the help of democratic
accountability, which ensures the control of the population over state
representatives at all levels. Under conditions of authoritarianism,
this mechanism is, by definition, inaccessible, which means that only
two other options remain: vertical monitoring through formal
indicators (which, as Putin himself recognizes
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paper) and corruption, which serves as a lubricant for the rusted
state machine. Moreover, attempts at the forceful “restoration of
order” within the framework of a dictatorship are dangerous in that
they undermine the very foundations of Putin’s personal power, as it
relies on the loyalty of his high-ranking associates. This loyalty is
by no means unconditional, and attempts to replace corrupt friends
with competent managers may well lead to the situation in which
Putin’s friends will replace Putin himself. Hence the notorious
Putin’s credo of the “stability of personnel” and his
unwillingness to shuffle the deck of influential people.

Attempts to replace corrupt friends with competent managers may well
lead to the situation in which Putin’s friends will replace Putin
himself. Hence the notorious Putin’s credo of the “stability of
personnel”.

Paradoxically, the strengthening of the political regime (i.e., the
regime of Putin’s personal power) leads to the weakening of the
state, and measures to strengthen the state can lead to the weakening
and even collapse of the political regime. This dynamic has been
captured by political researcher Neil Robinson, who distinguishes
between state-building and regime-building.
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a certain extent, the dictator is interested in strengthening the
state: for example, restoring the functionality of law enforcement
agencies allows him to more effectively deal with political opponents.
In addition, a capable state increases a regime’s legitimacy in the
eyes of the population — no dictatorship can rely solely on
bayonets. Nevertheless, in strengthening the state, the dictator
quickly hits the ceiling — a massive campaign against corruption and
personnel purges without democratization lead to a decrease in
governability and erosion of the political base of the dictatorship.
Thus, the formation of a regime of personal power, which may initially
coincide with an increase in state capacity, very quickly begins to
interfere with this capacity: the preservation of the dictatorship
degrades state institutions. That is why examples of successful
dictatorships are vanishingly rare. Economist Dani Rodrik remarked
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“For every authoritarian country that has managed to grow rapidly,
there are several that have floundered. For every President Lee Kuan
Yew of Singapore, there are many like President Mobutu Sese Seko of
Zaire (now called the Democratic Republic of the Congo).”

This logic is fully applicable to Russia as well. In the early 2000s,
Putin did achieve the strengthening of the state: tax revenues rose,
financing of state bodies was restored, and a single legal space for
the whole country was established. However, progress quickly stopped,
giving way to rare local successes against the background of general
stagnation, and in some places even regression. The goal of
regime-building took precedence over the goal of state-building. This
is how the gray zone of not quite private and not quite public
organizations emerged. Until recently, Yevgeny Prigozhin was one of
its residents.

Putin surrounded by Prigozhins

In the case of Wagner Group, the features of the “Russian system”
overlapped with the typical features of private military companies.
PMCs as a whole gravitate towards the gray zone of corrupt government
contracts, old boys’ networks, international adventurism and covert
operations under the cover of plausible deniability. This kind of gray
zone exists in democracies as well, although its significance is much
less than in Russia. Thus, the subversive activities of Wagner Group
in Africa are not too different from the reckless gambles of the
British PMC Sandline
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founders Tim Spicer and Simon Mann. With the beginning of the
Ukrainian invasion, Wagner began to perform another function, more
characteristic of American PMCs: recruiting soldiers for major
imperialist wars without conducting a general mobilization. Russia
lacked soldiers in Ukraine in the same way that the US lacked soldiers
in Iraq and Afghanistan; in both cases, PMCs became the solution to
the personnel issue.

The democratic transition in Russia, which is not accompanied by the
disorganization of the state similar to the 1990s, will be a real
miracle.

The PMC model itself (which is contrary to the fundamental feature of
modern states — the centralization and monopolization of violence)
is organic to Putin’s style of governance. It is not surprising that
it was the PMC that played a crucial role in the Russo-Ukrainian war.
Of course, Wagner Group has unique characteristics: in no other
country do PMCs cover all branches of the military, including aviation
— neither do they recruit prisoners with a promise of pardon after
the expiration of the contract; no other PMC is funded by corrupt
state contracts, as a result of which rotten breakfasts are delivered
to schools and soldiers’ barracks; no other PMC owner engages in so
many types of provocations at the same time — runs a troll factory
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network of tabloid media used for political attacks, etc. In this
sense, Prigozhin and Wagner are products of Putinism, not just
international trends towards the expansion of the role of PMCs.

But more importantly, the very political environment in which
Prigozhin operated was also created by Putin. The Wagner mutiny
exposed the weakness of the Russian state. Behind the monolithic
facade of Putinism are clans, networks and corporations pursuing their
own goals. They are quite capable of bringing the country to collapse
and civil war. Even the security forces are separated not only by
corporate, but also by clan-patronage lines. Suffice it to say that
the Wagner mutiny was supposed to be suppressed by … Ramzan
Kadyrov’s “Akhmat” battalion. One can easily imagine a situation
in which Kadyrov’s troops themselves stage a mutiny, and the regular
army is sent to suppress it. Suddenly it will be revealed that the
regular army itself consists of regional volunteer formations, units
of other PMCs that the Ministry of Defense has taken control of, etc.

A democratic transition in Russia, which is not accompanied by the
disorganization of the state similar to the 1990s, will be a real
miracle. And yet, only a democratic transition can ultimately lead to
the emergence of a strong, capable state in Russia. Putin’s model of
authoritarian state-building showed its results after 23 years: the
bombing of the highway near Voronezh, the dead pilots, the Deputy
Minister of Defense, being scolded by a former criminal who now leads
the army of criminals. “Russia needs a strong state power and must
have it.”

_ILYA MATVEEV IS A RESEARCHER FOCUSING ON RUSSIAN AND COMPARATIVE
POLITICAL ECONOMY. HIS ACADEMIC WORK HAS APPEARED IN SOUTH ATLANTIC
QUARTERLY, JOURNAL OF LABOR AND SOCIETY, EUROPE-ASIA STUDIES, EAST
EUROPEAN POLITICS AND OTHER JOURNALS. HE HAS CONTRIBUTED TO JACOBIN,
OPENDEMOCRACY AND OTHER MEDIA OUTLETS. HE IS A MEMBER OF THE PUBLIC
SOCIOLOGY LABORATORY, A GROUP OF RUSSIAN SOCIAL SCIENTISTS STUDYING
POST-SOVIET SOCIETIES FROM A CRITICAL PERSPECTIVE. ILYA IS ALSO AN
AFFILIATE OF THE ALAMEDA INSTITUTE, A NEW RESEARCH NETWORK OF
LEFT-WING INTELLECTUALS._

* Russia
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* Vladimir Putin
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* Yevgeny Prigozhin
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