Ukraine – The Beginning of the End?

Posted: 11th July 2023 Key

Part Three

Last weekend’s brief mutiny in Russia had been brewing for several months. Russia experts in the west detest Mr Putin’s violent, lawless, paranoid regime and wish that the mutiny had lasted longer. They hardly dare to hope that the regime might collapse any time soon, despite the weaknesses exposed by the events of the last few days. However, an examination of the facts leads to the conclusion that Mr Putin’s position has become untenable. This short article explains why that might be the case asking how Mr Putin’s dictatorship might end and what might replace it.

I have attached a brief dramatis personae at the end of this article.

First, a brief recap on the story so far.

Why is there a war in Ukraine?

The invasion of Ukraine began in 2014. A mass protest in the Maidan square in Kyiv led to the fall of Putin’s protégé, the spectacularly corrupt Victor Yanukovich, whose successor Poroshenko was a Ukrainian nationalist. Under Poroshenko, Ukraine orientated decisively westward, ultimately aiming to join NATO and the EU. If successful, Poroshenko’s policies would have dealt a fatal blow to Putin’s dream of creating a new Russian empire and brought NATO to Russia’s border. Putin’s response was to undermine the Ukrainian state, beginning with the bloodless annexation of the Crimean peninsula, and the fomentation of violent separatism in the Donbas region.

The ‘frozen conflict’ in the east of Ukraine rumbled on for a decade but didn’t lead to the hoped-for collapse of the government in Kyiv and the re-absorption of Ukraine into the Russian state. Putin, despite all evidence to the contrary, continues to believe that Ukraine has no legitimacy as an independent state. He invaded the country in February 2022, expecting that the Ukrainian soldiers would throw down their arms and embrace their Russian brothers. That didn’t happen, and never will until Ukrainians decide to overlook centuries of Russian repression.

The initial war aim, then, was to recover a region which Putin believes has always been a part of Russia. However, the events of the last sixteen months have forced Russia’s war aims to change. A year ago, it looked as if the Russian assault would prove unstoppable, despite the spirited resistance of the Ukrainian army, which had repelled the initial assault on Kyiv. But then in the autumn, Ukraine counter-attacked and retook a large area round Kharkiv in the north, together with the strategic city of Kherson in the south. A new counter-offensive began tentatively last month, with most forces as yet uncommitted. There has been no intelligence of Russia attempting to do any more than defend its existing gains. Putin has spoken in grandiose terms of the millions of men that he can mobilise, but nothing has happened since last autumn, while over a million young men of conscription age have left the country.

Obviously the ‘long-lost brothers’ narrative no longer works. Putin’s current rationale for the war is that Ukraine has fallen prey to a gang of neo-fascists supported by the evil capitalistic forces of NATO, which is ‘bent on the destruction’ of Russia itself. This latest explanation is itself undermined by the fact that Ukraine and its allies have scrupulously avoided encroaching onto Russian territory. Their war aims are crystal-clear – to defeat Russia’s illegal invasion.

If Russia still entertains hopes of a peaceful union with Ukraine, you would wonder why it continues its spiteful attacks on civilian targets. Russia continues to insist that it only attacks military targets, but it’s unlikely that anyone outside the Kremlin believes such cynical nonsense. The only possible explanation for Russia’s policy is that it hopes to weaken civilian morale to a point where Ukraine’s government has to sue for peace, or to prolong the war until Ukraine’s allies lose interest, for example if Donald Trump were to win a second term.

Why did the mutiny happen?

A feud had been developing between the Wagner Group, the largest of several militias fighting alongside the Russian regular army in Ukraine, and the leaders of the army itself. Yevgeny Prigozhin, founder and leader of Wagner, had been set the target of taking the northern city of Bakhmut, and had apparently undertaken to do so by Russian Victory Day on May 9th. He had criticised the military leaders with increasing bitterness, in a series of foul-mouthed rants, for starving the Wagner forces of ammunition and other supplies. When May 9th came and went without a clear victory in Bakhmut, Prigozhin escalated his attacks on the army top brass and eventually decided to take direct action. His men captured the military hub city of Rostov-on-Don and proceeded to march on Moscow, shooting down several army helicopters and killing around twenty military personnel as they went.

Defence minister Shoigu’s riposte to Prigozhin’s invective had been a proposal to bring the private soldiers into the regular army. Mr Putin must have agreed, and the merger is due to take place on July 1st, depriving Prigozhin of his command, together with a fee of around $1.2 billion a year.

The Mutiny

Prigozhin’s criticisms were aimed chiefly at Minister of Defence Sergei Shoigu and chief of the general staff Valery Gerasimov. Apart from withholding weapons from his private army, Prigozhin claims that their conduct of the war has been ineffective and that the war only started so that they could gain credit for winning it. Prigozhin appears to have believed that his march on Moscow would force Putin to turn against his war leaders and appoint himself as chief of the general staff. This was never likely to happen, as Putin had already decided against the Wagner chief by agreeing to Shoigu’s proposal.

On hearing news that the mutineers had seized control of Rostov-on-Don, Putin appears to have panicked. He went on national television to announce that the mutineers were traitors who could provoke a civil war. He then disappeared. Later that day, it transpired that under a deal brokered by Alexsandr Lukashenko, dictator of Belarus and Putin’s puppet, the mutiny had been called off. Prigozhin would go to Belarus and his men could either join him there, go home or preferably (from Russia’s point of view) return to the front line in Ukraine and be absorbed into the regular army. Mr Putin announced that they were not traitors after all.

Why Are These Events So Damaging for Mr Putin?

Putin must have seen the feud developing but failed to defuse it. Rather than confronting and resolving the dispute between his regular and irregular commanders, which might have kept both parties onside, he weakly agreed to the forced merger of Wagner with the army. He must have known that this proposal would infuriate Prigozhin, an irascible individual not known for keeping his vendettas to himself, and yet he appeared paralysed by the inevitable next step.

In his post-mutiny speech, Putin praised the Russian people for coming together to resist the threat to its national security. In fact, the Russian people did nothing – indeed Mr Prigozhin was cheered as he left Rostov-on-Don and his men were given flowers. Furthermore, the army and security services stood by while the Wagner force marched towards Moscow. There could be no clearer demonstration of the fact that support for the regime and its war are at all levels of society considerably less fervent than its propagandists would have us believe.

The deal was brokered by Mr Lukashenko, the corrupt and deeply unpopular dictator of tiny, impoverished Belarus, not by Mr Putin himself or any of his aides.

When danger was at its height Mr Putin disappeared from view.

The strongman of Russia doesn’t look strong any more. Once you’ve realised that the lake ahead of you isn’t a lake but a mirage, it never returns to resembling a lake. Can Mr Putin ever look strong again?

The Immediate Aftermath

The last few days have been a case of ‘every man in his humour’ with all parties behaving as you might expect. Mr Putin is on a charm offensive, filmed being received ‘like a rock star’ on a rare walkabout, while a crackdown on anyone suspected of sympathy with the mutineers has begun. The most high-profile detainee so far is General Surovikin, deputy commander of Russia’s forces in Ukraine and known to be friendly with Mr Prigozhin.

Ramzan Kadyrov, the stout, bearded warlord of Chechnya, and close friend of Mr Putin, has a private army of his own and is positioning himself to step into Mr Prigozhin’s shoes, posting videos of his fighters, armed to the teeth, parading across a bridge, while shouting out their loyalty to the cause. Observers comment that Kadyrov’s expertise lies principally in loud protestations of loyalty, while carefully deploying his men as far from the fighting as possible.

Mr Prigozhin paid a brief visit to his new base in Belarus but has since been flying round Russia in his private jet, including a stop at his home in St. Petersburg. He appears to be free to go where he pleases, for the time being at least.

The underlying situation remains extremely fragile.

Three things in particular will very soon give us a sense of where Russia is heading.

Relations Between Putin and Prigozhin

The events of the last few weeks must be deeply embarrassing for Mr Putin. He and Prigozhin are birds of a feather – ruthless, lawless opportunists and they have been close associates since the early days in St Petersburg. They share a kind of brutal charisma, are fluent public speakers and have been the two strongest characters in the Kremlin’s inner circle. Prigozhin is technically an outsider, but what matters in a dictatorship is to have the dictator’s trust. Prigozhin has certainly had that up to now.

In the early nineties, Prigozhin was jailed for the theft of a young woman’s gold earrings, which he physically ripped out of her ears. On release from prison, he set up hot-dog stalls in St Petersburg before moving on to managing fashionable restaurants, where he met deputy mayor Vladimir Putin. Through his connection to Putin, Prigozhin’s company has become chief caterer to the Russian government and its armed forces. His Wagner group has operated effectively in Syria and sub-Saharan Africa, as well as in Ukraine, while his trolling factories have acted as the Kremlin’s remote tools for the spread of disinformation and the influencing of elections. Wagner’s Ukraine operation has been effectively nationalised (though Mr Prigozhin is said to have received a substantial payment as part of the deal) but his catering company continues to supply the army in Ukraine and Wagner operates in Africa as before and would no doubt go wherever the pay was good enough.

Putin can do one of two things. He can either leave his old friend to go his own way, or he can attempt to destroy him. Putin is said to dislike disloyalty above all else, so the latter course is perhaps the more likely. The catering contracts can be terminated easily enough. Whether Wagner can go on operating in Africa when no longer under the aegis of Russia remains to be seen.

The Kremlin responds to people who it sees as a threat by either bankrupting or murdering them. In Belarus, Prigozhin would be in mortal danger. It would be tempting but too obvious to poison him with Novichok. More likely would be an unexplained fall from a window while he was alone in the house, or a car accident on a quiet road. Prigozhin will be all too aware of this and is unlikely to base himself in Belarus. I expect him to continue developing his empire from a safe distance, perhaps entertaining hopes of being the next president, after the fall of Vladimir Putin. I doubt we have heard the last of Yevgeny Prigozhin.

Relations Between Putin and His Military Chiefs

Sergei Shoigu was appointed Minister of Defence by Putin in 2012. The two men are close friends, and have shared numerous weekend breaks in Siberia. Shoigu has been popular at home for masterminding the bloodless coup in the Crimea in 2014 but is increasingly being seen as responsible from Russia’s failure to make progress in Ukraine.

By agreeing to the merger of the private militias into the regular army, Putin appears to have sided with Shoigu and Chief of Staff Gerasimov against their critics. Putin may feel the need to deflect criticism from himself by dismissing his top commanders, but doing so could be seen as a sign of weakness, as the dismissal of Shoigu and Gerasimov was exactly what Prigozhin demanded. Also, Putin might worry that replacing his top commanders might weaken the war effort.

So, on the one hand, Putin needs to fire his chiefs to show leadership and distance himself from Russia’s lack of progress in the war, but on the other hand, he can’t.

Relations Between Russia and China

China and Russia have drawn closer since the war began. China is a huge market for Russian goods and buys much of the oil that no longer flows westwards. Also, China has supported Russia with armaments in a small way.

But how will China’s attitude be affected by Mr Putin’s demotion to lame-duck status? Will it back off, or it might get more involved, even trying to influence the transition to another China-friendly regime?

On the other hand, if China is serious about a rapprochement with the US, which would be in the interests of both countries (and the world), it might feel less inclined to get involved in bolstering a failing Russia.

What Mr Putin needs now, above all, is military success in Ukraine. But what does success look like? Russia’s policy at present is one of containment, aiming to drag the war out until western electorates refuse to continue bearing the cost of support. Then a peace settlement legitimising the annexation of Crimea and the Donbas region would do nicely, leaving the door open for further incursions at some future time. Meanwhile, the best possible outcome for Russia looks like a continuation of the status quo, in other words a bloody stalemate, which may not be enough to save Mr Putin. If the integration of the militias turns out badly, or Ukraine makes a significant breakthrough, the pressure for change at the top can only increase.

The Peace Dividend

NATO is fighting for two objectives – to support Ukraine’s sovereignty and against Russian aggression. Not against Russia itself, but against the aggression of Mr Putin’s regime which does all it can by legal and illegal means to undermine the west.

Victory in this conflict would come in two parts. The first would be military and has already begun. Russia’s armies stopped advancing almost a year ago. The war would finally be won if a time came when Russia lost its appetite for the war and was forced to negotiate from a position of weakness.

Which happens first, the fall of Putin’s government or the end of the war? I’m guessing that Putin’s government will fall first. Negotiating a settlement would be far easier if conducted by a new regime that could distance itself from the atrocities that have routinely been committed over the last sixteen months. A quarter-century of dictatorship has hollowed out Russia’s institutions to a point where the state is perfectly adapted to be run by a brutal clique, and little else. The easiest transition would be from the current clique to a different one. The new clique might not be as pathologically anti-west as Putin’s, and might even aspire to repairing relations that existed pre-war, with a view to reversing Russia’s pariah status and restoring prosperity.

The real win would be a victory for the democratic opposition in Russia, centred round Alexei Navalny, who the regime failed to poison with Novichok a couple of years ago (naturally, it denied trying to) and is currently in prison for thirty years on charges of ‘extremism’.

Recently, Mikhail Khodorkovsky has been arguing that ‘the west should bet big on Russia’s democratic opposition’. Khodorkovsky, who as head of the oil giant Yukos, was Russia’s richest man in the Yeltsin era, made the mistake in the early days of the Putin era of backing the Communist Party. The regime bankrupted Yukos by discovering $24 billion of unpaid tax and sent Mr Khodorkovsky to the gulags for nine years’ hard labour. He now lives in London. When the regime collapses, he argues, the west should be prepared to support, with force, if necessary, the democratic apparatus that has been driven underground.

Should the Russian people be able to rise up against the warlords, as the Ukrainian people did a decade ago, the peace dividend would be incalculable, both for Russia and for all of us in the west.

Tony Yarrow
July 2023


Dramatis Personae

Vladimir Putin – President and effective dictator of Russia since 2000. Aims to rebuild Russia’s empire as near as possible to its former size.
Yevgeny Prigozhin – billionaire entrepreneur and warlord. Founder of the Wagner Group of mercenaries and until recently close associate of Mr Putin. Vocal opponent of the army top brass (Messrs Shoigu and Gerasimov in particular) and their conduct of the Ukraine war
Sergei Shoigu – Putin’s Defence Minister since 2012 and close associate of Vladimir Putin
Valery Gerasimov – Russia’s Chief of Staff, the most senior figure in Russia’s armed forces.
Aleksandr Lukashenko – corrupt and deeply unpopular president of Belarus, a small landlocked country on Russia’ borders, maintained in power by military support from Russia. Lukashenko recently brokered the deal which ended the Wagner group’s mutiny.
Ramzan Kadyrov – portly, bearded warlord, close associate of Putin’s. His private army rivals Wagner and has been involved in Ukraine.
Mikhail Khodorkovsky – former head of oil company Yukos. Advocate of the reinstatement of democracy in Russia.
Alexei Navalny – lawyer, head of Russia’s main democratic opposition, currently serving a 30-year prison sentence for ‘extremism’.
Sergei Surovikin – Russian general, number two in Ukraine. Known to be friendly with Mr Prigozhin, currently under arrest following the recent mutiny.

Please note, these views represent the opinions of Tony Yarrow and do not constitute investment advice. This document is not intended as a recommendation to invest in any particular asset class, security or strategy. The information provided is for educational purposes only and should not be relied upon as a recommendation to buy or sell securities. The value of investments can go down as well as up and you may not get back the amount originally invested. Wise Investment is authorised and regulated by the Financial Conduct Authority, number 230553.



Tony Yarrow