The crisis with Wagner PMC as an episode of SMO: Eurasian and Caspian dimensions

The crisis with Wagner PMC (President Vladimir Putin described the past events as an attempt of armed rebellion) resulted in several potentially important shifts in the Union State of Russia and Belarus, within EAEU and CSTO, as well as in the belt of external allies of the RF having closed their ranks quite noticeably.

The rapidity of the events on 23-24 June 2023, the clearly defined circle of the privy top figures (Putin’s telephone consultations with the heads of allied and partner states), practical settling of the crisis via joint efforts of the Kremlin, Russian defense, security and law enforcement agencies in combination with the political guarantees by Alexander Lukashenko – all this reveals sine new prerequisites potentially leading to strengthening integration bonds in the spheres of economy and security of the common Eurasian space. 

Strong crystallization of the far and the near «belts of neighbors» is currently going on along the orbits of military allies and economic partners.

Neutralization of the Wagner PMC rebellion showed that Russia is capable of «digesting» (from the position of profit for itself) risky situations of high intensity and information density. The system of governance quickly adapts such challenges transforming their energy into new opportunities. And that was done as quickly as possible (it is enough to compare the situation in Russia with the dragged acts of violence in Southern and Central France), and the follow-up events demonstrated that overcoming the crisis strengthened the Presidential power system despite numerous pressure groups and interests, despite different interpretations of the past events including expectations of collapse of the power vertical in the RF expressed by Western political communities.     

Several prospects arise on the basis of the results of the past events changing the security space and macroeconomic realities all over Eurasia.     

The system of balances between the Union State and EAEU/CIS 

Starting from the second week of July, Belarus finishes receiving the battlefield nuclear weapons from Russia with the option of its potential usage. Iskander-M army tactical missile systems are deployed in Belarus, Su-25 strike fighters were re-equipped for using such weapons. Repositioning of Wagner Private Military Company units and a certain group of its commanding officers in the territory of Belarus allows for preserving the combat potential of this PMC, in particular – for military operations far abroad, mitigates the frictions with the RF Defense Ministry, allows for preserving operating control of the group alignment in the zone of the Special Military Operation (SMO) by way of distributing the controlling structures and integrating them into the system of the RF Defense Ministry.  

Once again the potential for growing the capabilities of the Union State and the significant personal role of the President of Belarus Alexander Lukashenko were proved.  ãîñóäàðñòâî, Based on increasing the potential of Belarus, the Union State is becoming a new active player on the Eurasian arena: from the security sphere to macroeconomic projects (the commodity turnover between Russia and Belarus has achieved USD 50 bn exceeding the metrics of the RF foreign trade with other EAEU/CIS member states).

In addition to 28 effective joint programs, the same number of new programs are under development. They are associated with the development of space and defense engineering, in particular, the Program of improving the military infrastructure facilities planned for joint use in the interests of supporting the regional military groups (forces) of the Belarus Republic and the Russian Federation, and the Program of upgrading the sustainment facilities planned for joint use in the interests of supporting the regional military groups (forces) of the Belarus Republic and the Russian Federation.      

The share of processing industry in Belarus GDP makes 27.1%; to compare – in Russian GDP it makes 13.4%, and in GDP of Kazakhstan – 13%. The mechanisms of interaction inside the Union State allow for establishing new value chains, for implementing high-tech and science-intensive projects is such priority spheres as agricultural machine industry, car manufacturing, machine-tool engineering, radio electronics, pharmaceutical industry, consumer goods manufacturing, chemical industry, power engineering industry. 

The results of these programs will be displayed at Innoprom-2023 exhibition in Yekaterinburg, where Belarus is the partnering country.

In the current situation, the connection of the inner core of Russia – Belarus with the EAEU/CIS countries, first of all, with Kazakhstan, Uzbekistan, Azerbaijan, Armenia (keeping the formal neutrality to SMO), allows for resolving the tasks of active import phase-out and autonomous industrial development of EAEU/CIS region, as well as for receiving the necessary process components and materials from external markets via the «trading gates» of our common space, which are more or less free from sanctions-based restrictions.    

Belarus is also becoming an active entity in the Caspian region developing trade and industrial communications within the North-South Transportation Corridor. Interaction was established and fine-tuned between the Mogilev Free Economic Zone (FEZ) and Astrakhan Special Economic Zone (SEZ) «Lotos» (a Cooperation Agreement in March 2023). The far-reaching plan is being developed between «Lotos» SEZ and «Brest» FEZ, Astrakhan has also established contacts with Vitebsk and «Grodno Invest» FEZ.

Astrakhan Region and Belarus have executed the Cooperation Agreement – Astrakhan Region supplies consumer goods and agricultural products, Belarus supplies household appliances, lifts, food products and textiles.

In the sphere of security policy Minsk is also strengthening its positions initiating the development and adoption of multi-lateral political declaration of the responsible countries about non-deployment of medium-range and shorter-range missiles. In this case it will be a serious head-start for the Union State to enter the negotiations on the common grounds during the post-conflict period in Eastern Europe.    

By mid-2023, a complicated network of EAEU/CIS has formed around the core of the Union State allowing for the latter to simultaneously perform the role of the leading out-post in confrontation with the global West, at the same time partially using the Western resources engaging the West into the projects in the territory of EAEU/CIS.   

The large-scale breakthrough of Kazakhstan in the sphere of «green» hydrogen may be used as an example. The Swedish-German consortium Svevind Energy confirmed its USD 50 bn investment into the «green» hydrogen producing plant on the Caspian shore of the Mangistau zone. The project investment agreement was signed in October 2022. It stipulates the construction of wind farms and photovoltaic plants with the rated capacity of 40 GW. By 2030, the electrolyzers manufacturing zone for 20 GW will emerge on the Caspian shore assuring the annual output of 20 mln tonnes of green’ hydrogen. 

The policy of non-alignment with the SMO allows for the Caspian countries to keep the political distance from confrontation with the West and due to that – to implement the industrial head-start of interacting with the main foreign corporations, owners of high technology. 

The result of this policy of maneuver – the extension of Alstom corporation activities in  Kazakhstan: in addition to the Electric Locomotives Assembly Plant in Astana engaged in manufacturing and maintenance of locomotives it now is the investor into the KazElectroPrivod plant manufacturing electric switch mechanisms in Almaty. This French corporation also plans to invest up to EUR 100 mln into developing the servicing centers network. Alstom plants are the only manufacturers of electric locomotives and electric switch mechanisms in the territory of Central Asia, as well as an important hub for Russian locomotive engineering. Obviously, the major part of new servicing and maintenance capacities may be utilized by the owners of Russian rolling stock.  

Hence, it is obvious that the crisis of the relations between the RF and the West becomes a catalyst of the new international identity emerging: «the Union State – EAEU – CIS» capable for resolving far-reaching geopolitical and macroeconomic tasks in Eurasia. 

Close and remote orbits of the allies

If the support of Russia by Turkey, Kazakhstan and Uzbekistan (these states form the core of the close Russian partnership) was more or less forecastable and already confirmed by the results of the first year of SMO, the support of the remote perimeter (African and Middle East countries) is the demonstration of the new geopolitical reality.  

In fact, the Southern «reference triangle» of Russian geo-economic policy now came clear: Turkey, Iran, the Persian Gulf countries. If we take the first week after 23-24 June, the main interlocutors for Vladimir Putin were the Arab states leaders: the UAE President, the Crown Prince of Saudi Arabia, the King of Bahrein, the Qatar Emir. All of them fully supported the Kremlin’s activities and confirmed the schedule of implementing the strategic projects, which had been planned earlier.

The talks of Vladimir Putin and Narendra Modi, the Prime Minister of India, was of special importance. India is currently performing as the SCO and G20 President, it is also very influential within the BRICS format. During the recent visit of Prime Minister Modi to the US, Washington tried to persuade him for gradual phase-out of its relations with Russia. The US Administration is counting that the New Delhi will be gradually receding  its partnership with the RF in the military sphere and switching to the American weapons.

If we take off the table the military and technical cooperation between India and the USA, which brings various benefits to New Delhi, India continues to extend its multipolarity policy common for the Non-Aligned Movement minimizing the dependency and pressure points on behalf of the global West. That is why India will continue to perform as the intensifier of Russian influence over the global South and Asia. But not necessarily by way of direct extension of programs of cooperation with Russia. For New Delhi it is enough to redistribute of its economic projects to the common orbit of the Union State – EAEU – CIS to achieve the similar effect as the one from direct cooperation with the RF due to the synergy of the common space.

It is interesting to note that both Asian leaders – China and India – are gradually decreasing the trade with the United States. According to UNCTAD, the US share in the overall export from China decreased from 18% in Q1 2022 down to 15% in Q1 2023, and in the same period the share of China in the overall export from the USA decreased from over 19% down to slightly over 14%. The overall trade interdependence, which is calculated as the ratio of the bilateral trade (import plus export) of the USA and the PRC to the overall trade turnover of these two countries, decreased YoY from 14% to 12%. This is a quite important indicator of the potential turn of the global South and East towards their own regions (Africa and Asia) and towards Russia and its neighboring countries of the close belt of partnership. 

The food market is one of the key instruments of influencing the global South, as well as the key component of Russian economic influence in the Caspian region. Based on 2022 results, the Russian Federation is back in the top 20 global agricultural exporters. The growth of its share in global export of grain and food from 1.9% up to 2.1% allowed for Russia to get up from the 18th to the 17th line in the global rating. In monetary terms, Russian YoY agricultural export grew by 12% up to USD 41.6 bn. The major buyers of Russian food are China (12.3%), Turkey (12.2%), Kazakhstan (8.2%), Belarus (6.7%), South Korea (5.6%) and Egypt (5.3%). If we take this list, except for maybe South Korea, the main consumers of Russian food form the core of the RF supporting group with respect to SMO and non-alignment with anti-Russian sanctions. 

Russia is also the biggest global exporter of mineral fertilizers. According to the estimate by Andrei Guryev, the member of the Bureau of the Management Bord of the Russian Union of Industrialists and Entrepreneurs, as of today, 1.5 bn people on Earth consume food grown with the application of Russian fertilizers.

It is obvious that the policy of anti-Russian sanctions does not lead to border closure, but increases financial costs – on one side, the supplies of components and nodes to Russia are becoming more difficult, on the other side, the negative effect in the «Third World» countries, especially in the poorest ones, there is less and less food and it growing more and more expensive. 

That is why the interaction of Russia with that part of the planet during 18 months of the SMO is growing rapidly: energy projects emerge including the nuclear plants, as well as food security projects, there are some serious opportunities for joint use of outer space (Baikonur Cosmodrome will continue to play an important role in this sphere). 

The crisis around Wagner PMC raised numerous questions and at the same time it was just an episode in the history of Russia turning to the South and to the East. The concentration of economic interests, the development of the new trunk infrastructure and logistics in the key Caspian region contributes to re-orientation of export from Western routes and also forms new clusters in the territory of Russia and Caspian states: oil-and-gas cluster, grain cluster, chemical cluster (fertilizers and low-tonnage chemistry). The Caspian region is also becoming the venue of tourist communications and inter-cultural exchange.

At the same time, this region is the rear and the front line for operations against the Western coalition in Ukraine: launches of missiles by the strategic aviation aircrafts of Russian Aerospace Defense Forces from the air envelope above the Caspian Sea water area are the safest ones. Just like during the times of the Second World War, the strategic rear area of Russia is formed here, as well as the large-scale portal of trunk infrastructure for entering the Southern hemisphere.