A failed coup in Russia but there is more to come


The head of the Wagner Group, Yevgeny Prigozhin, staged a coup or mutiny, making accusations about Russian army leadership and the conduct of the war and threatening to bring 25,000 of his mercenaries to Moscow. But he backed down and is now in exile in Belarus.

Is the coup a sign of more upheaval to come?

The coup failed in the short term but, although he lost the first skirmish, Prigozhin showed the world that Putin’s leadership may be weaker than was generally thought. This changes the landscape for Putin, Russia, Ukraine and the war.

To a degree, Putin depended on mercenaries from the paramilitary Wagner Group for their ability to organize and fight. The recent “victory” in Bakhmut was largely credited to Wagner fighters. As Prigozhin’s influence grew the Russian Ministry of Defense (MOD) and some generals became dissatisfied. They disliked the fact that Prigozhin didn’t answer to any higher command, except Putin, with whom he had a longstanding relationship.

So far in the Ukraine war estimates of casualties (killed and wounded) are up to 100,000 Russian army fighters and 81,000 Wagner Group forces. The war is not going well, as Russian forces are in retreat and Ukraine is regaining small amounts of territory that was lost to Russia.


Yevgeny Prigozhin. Source: NBC


Prigozhin stated that Putin had made a mistake in starting the war and was misled by some generals and oligarchs who wanted the war for personal reasons. Prigozhin accused Russian army General Shoigu of attacking his mercenaries, with 2,000 killed, but that attack has not been verified.

The MOD ordered the Wagner Group to sign contracts with the military before July 1.

On the day of the end of the coup, June 24, Putin made a public appearance, denouncing the coup as treason. But Prigozhin and his fighters appear to have avoided sanctions. The coup exposes Putin’s regime as weak.

The failed coup raises the possibility of regime change, with Putin being replaced. If that happened in a chaotic way, it could be very disruptive. With widespread complacency in financial markets regarding Russia and the war with Ukraine, more uncertainty would be a negative.

The stability of the world’s largest commodity exporter with the largest nuclear weapons arsenal cannot be taken for granted. Higher crude oil prices might be the first sign of trouble, if the situation starts to unravel.

The Russian opposition leader, Alexei Navalny, has asked why he is jailed while Prigozhin is free. He is facing a new term in jail on charges of setting up an extremist organization.


Alexei Navalny. Source: CNN


A revolution in Russia with Putin’s removal would likely be viewed as inflationary. With central banks near the end of their hiking cycle a new surge in inflation would require a quick reset for many investors who are counting on lower interest rates in the near future.

Watch the volatile Russian situation for signs of a revolution and leadership change as it could impact financial markets negatively.


Hilliard MacBeth


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