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Executive Summary
State and nonstate actors of the Russian Federation have conducted a coordinated effort to take over the diamond extraction sector in the Central African Republic (CAR). This has been done through several economic, diplomatic, and strategic means. The affair thus far has concerned the United States regarding a wanted, sanctioned Russian oligarch, Yevgeniy Prigozhin, and his private military company Wagner Group. Yet, this individual and his assets are only one piece of a larger plan for the Russian state to use force to monopolize the CAR diamond trade. The United States Treasury should review the affair and determine if sanctions have been violated by involved entities. The US State Department should assess the affair and determine if its nature should be brought before the Kimberley Process for condemnation.
Introduction
On January 25, 2021, Central African Republic (C.A.R.) troops, aided by Russian, Rwandan, and UN coalition forces, successfully carried out an attack against rebel forces in the village of Boyali, roughly 90 kilometers from the capital city of Bangui. Just three days earlier in a failed attempt to overrun the capital, rebel groups seized the two main roads leading into Bangui. Only worsening the already catastrophic humanitarian crisis, the seizure resulted in President Touadéra declaring a 15-day state of emergency. In recent years, the Central African Republic has held divisive elections, been engulfed in complex factional conflicts, and endured economic stagnation. The current instability is rooted in the events of the past two decades.
Five years after the conclusion of the C.A.R. Bush War (2004-2007), the then-President of the Central African Republic, François Bozizé, was ousted by Michel Djotodia in March 2013. Djotodia, who commanded a coalition of Muslim armed groups known as Seleka in the Bush War, was appointed to a government post after peace was brokered. Not long afterward, he would again ignite conflict as he and his supporters accused the government of defying agreed-upon articles of the peace accord. After a brief period of fighting, Seleka forces assaulted the capital Bangui, and installed Djotodia as President. While he formally dissolved the Seleka groups, they continued their campaigns of violence and atrocities against the majority-Christian populace, and he was forced to resign only after 10 months in office. Following this, the country descended into anarchy, with the central government having no real power or control outside the capital. With the reemergence of armed Muslim groups, now known as ex-Seleka, an alliance of armed Christian militias known as anti-balaka (laka being local slang for AK-47, a popular weapon among Seleka fighters) began popping up all over the country to counter their advances and to protect their communities against violence.
Soon anti-balaka militias began committing the same crimes and atrocities against Muslims and Christians alike, as the power vacuum left by the state turned these fighters into warlords. France would be the first nation to send troops to the country to protect French citizens, followed a year later by a UN mission known as the Multidimensional Integrated Stabilization Mission in the Central African Republic (UN MINUSCA). As of 2021, there are approximately 12,000 foreign troops engaged in peacekeeping operations in the country, not including mercenary and paramilitary forces. The 2020-2021 elections sparked the emergence of the Coalition of Patriots for Change (CPC), a loose confederation of Muslim ex-Seleka fighters and anti-balaka Christian militias that once battled against them. The CPC opposes the leadership of the Touadéra administration, and is currently in control of approximately two-thirds of the entire country.
Such unrest led to the arrival of Russian advisors and supplies being brought in at the behest of President Touadéra. While this request for foreign assistance is fairly recent, Russian activities in the region are nothing new, with the Russian private military company Wagner Group being in the country as far back as early 2018. The mercenary group, led by Russian oligarch and Putin-ally Yevgeny Prigozhin, provides the central government with military advisors, conducts site security, and provides close personal security for President Touadéra and his cabinet. With Wagner Group’s close proximity to the country’s leadership, and Russia’s readiness to send assets to operate in one of the most underdeveloped countries in the world, the question must be asked: What are Russia’s interests in the Central African Republic, and why have the assets and services of Yevgeniy Prigozhin been called in?
The answer is diamonds.
Prigozhin's Hand
While conflict is nothing new to the region, Wagner Group’s presence and proximity to President Touadéra is fairly recent. For many it is a cause for alarm, or at the very least, heightened awareness. Directing the operations Yevgeny Prigozhin, the aforementioned billionaire oligarch with close ties to Vladimir Putin, whose commercial interests add an extra level of complexities in a region already rife with instability. For many years, Wagner Group has served as a proxy for Russian military and intelligence branches. As a private army, it can be deployed when plausible deniability is preferred by the Russian state. The group has been spotted operating in various warzones of the past decade: Syria, Libya, Ukraine, and more recently in places like Sudan and the Central African Republic, whose limited state capacity, civil strife, and natural resource wealth has attracted a lot of foreign attention. While Wagner Group does the fighting top side, other companies with ties to Prigozhin deal with business below the surface.
Two companies that are never far from conflict are M-Finance and M-Invest. M-Finance has been registered since August 2015, and has been connected to Russia’s special operations in both Ukraine and Syria; this company is known to buy and sell vehicles and weapons, but also has been known to hire geological surveyors and make loans to other companies affiliated with Prigozhin and his allies. M-Invest has been registered since February 2017, and deals with mining and resource extraction operations, most notably a gold prospecting contract offered by Sudan’s Ministry of Minerals and signed off by Russia’s Prime Minister Medvedev in November that same year. M-Invest has also recently done deals with South African and Chinese companies to produce diamond-mining and boring equipment. Alongside Wagner Group’s recent involvement in the C.A.R, a developing nation with an abundance of gold, diamonds, and uranium, M-Invest found the perfect opportunity to strike a deal with the Touadéra government, reinforcing the Russian commitment to the security and mineral sector development of the region. Specifically for ventures in the C.A.R, Prigozhin founded Lobaye Invest Sarlu. This financial support body funds the mercenary and mining operations in a similar manner as M-Finance and M-Invest would, but is registered locally in the C.A.R. instead of Saint Petersburg as the other two companies are.
Another one of Prigozhin’s companies acting on Russia’s behalf to assert influence or control abroad is the Internet Research Agency. The Internet Research Agency (IRA) is a misinformation bot farm that has been tied to Prigozhin by the United States Treasury as a foreign asset that was found to have conducted interference in the 2018 US Midterm Elections. Facebook has stated that the Internet Research Agency was reportedly found to have interfered in the 2020 C.A.R. Presidential Elections. In essence, IRA was in competition to peddle misinformation in a rivalry with an opposing campaign with ties to the French military, with IRA supporting the re-election of Touadéra and the other supporting his main opponent, Anicet-Georges Dologuélé. Facebook flagged both campaigns as coordinated inauthentic behavior (CIB) of foreign origin.
Russian tactical strategy can be defined in two parts. First, there is armament. The Russian Armed Forces, (not Wagner Group), have donated many hard assets to the Touadéra government over the past year. In October 2020, Russia donated 10 BRDM-2 armored personnel carriers to the C.A.R. These Cold War-era vehicles come from the vast surplus of military equipment Russia can spare. This is in addition to the two MI-8 Helicopters and hundreds of small arms Russia has shipped into the country. The Russian foreign ministry has been vague on its personnel in the country, claiming both that Russian state military advisors are and are not present in the C.A.R. It was estimated that by the end of 2020, there were about 300 Russian operators in the C.A.R, but which were Wagner Group, Sewa Security Service, and military regulars remains unclear.
The second part of tactical strategy would be day-to-day operations. It is a primary task of Wagner Group to provide the close personal protection of President Touadéra. There are several photos of the mercenaries dressed in camouflage escorting and watching over the president, toting AK-47s. Other photos suggest that Russian mercenaries carry out other security related missions in the C.A.R., such as advising local government forces throughout the country. A known headquarters for Wagner Group in the C.A.R. is the Bokassa Residence, northeast of Mbaïki. The grounds of the estate of former Central African President and Emperor, Jean-Bédel Bokassa, now serve as a training ground for C.A.R. soldiers to be trained by elite mercenaries. The residence is next to an airstrip to its east and a shooting range to the north.
Satellite image of the Bokassa Residence, sourced from the open-content collaborative mapping site wikimapia.com. Note the Cyrillic text at the top spelling "стрельбище" (strelbishche), meaning "Shooting range".
4°2'39"N 18°7'14"E
The Russian Diamond Sector
The motives that have brought Russian influence into the Central African region are far removed from any humanitarian or altruistic goals of solely bringing stability to the country. The Central African Republic has significant natural resources that have defined much of its past foreign relations. Resource extraction shaped the colonial period under France, where private corporations benefited on an imperial model of labor exploitation. Independence from this system however did not allow for the nation prospering from natural resources. The C.A.R has had its modern history marked with conflict and violence, which often would relate to the ownership and extraction of goods like oil, precious gems, and gold. Such realities have led to the C.A.R being ranked as one of the least wealthy countries in the world, despite its abundance of exportable resources. This bottleneck to prosperity, and the possibility of relieving it, is what allowed Russian interests the trust of the country’s leadership.
Diamonds are a vital pillar of understanding the current affairs in the C.A.R. and other African nations. In numerous conflicts, warring factions have used diamonds to finance their campaigns, often forcing others against their will to mine for them. These instances contributed to the larger trend of the “Blood Diamond” market throughout sub-Saharan Africa, in which diamonds mined to fund conflict or coming from conflict regions were entering the international gem and jewelry markets. In response, the international jewelry sector in 2003 by a United Nations resolution established the Kimberley Process. The Kimberley Process (KP) is the UN-affiliated international body responsible for designating diamond sources as conflict diamonds and drafting sanction frameworks to remove such diamonds from the international precious gem market. Currently, 81 nations are participants. During the C.A.R. Bush War and the subsequent years, there was the constant use of forced labor by various factions to extract diamonds and use the profits to acquire funding. In 2013, the Kimberley Process placed sanctions on the C.A.R. in which any diamonds sourced from the country were prohibited from reaching the international rough diamond market.
Geographically, Russia is the world’s largest producer of rough diamonds, and Russia’s partially state-owned diamond mining company, Alrosa, is the largest diamond company in the world. The Russian government owns one-third of Alrosa’s public shares. One in four of all diamonds ever mined are Alrosa diamonds. Many of these are sourced from Yakutia, where Alrosa runs the world's largest diamond mine, the Aikhal mine. Alrosa has also expanded into Africa. In Angola, Alrosa owns 38% of the Catoca diamond mine, the world's fourth largest diamond mine. In Zimbabwe, the new entity Alrosa Zimbabwe Limited and Zimbabwe Consolidated Diamond Company (ZCDC) agreed in 2020 to have direct investment into the diamond extraction sector from Russia with Alrosa having special rights to the mines.
Since 2017, Alrosa has publicly stated its interest in beginning a venture in the C.A.R. In 2019, President Touadéra invited the famed South African DeBeers Diamond Group and Alrosa to bid for exclusive rights to mine for diamonds in the country. Although there had been provisions in 2016 that allowed for some diamonds to be exported from known secure zones, President Touadéra wished to see the sanctions fully lifted. Mining had been a topic of discussion between President Touadéra and President Putin at the 2019 Russia-Africa Economic Forum in Sochi, of which Alrosa acted as a co-organizer. Alrosa has since been awarded the contract. Touadéra was likely eager to take the Russian option over DeBeers, because 2020 and 2021 are years in which the Russian Federation chairs the Kimberley Process. Russian Deputy Finance Minister Alexey Moiseev will be the Chairperson for the KP for the next 10 months, and it was his advocacy that streamlined the lifting of all KP diamond export sanctions from the C.A.R.. Moiseev insisted that Russia would take the role of guiding the C.A.R. toward rejuvenation and security in the sector. Moiseev is also on the Alrosa Supervisory Board, and is Chairman of the Alrosa Strategic Planning Committee. The role of Moiseev is significant because it illustrates the nexus of intergovernmental, national, and commercial interests in the Russian presence in the C.A.R.
The coordinated efforts of the Russian-Led Kimberley Process, Prigozhin’s financial mechanisms, and hard assets like Wagner Group have paved the way for Alrosa to move into the C.A.R, exclusively. International policy, local politics, regional security, and developmental funding were all matters that had to be dealt to make the affair possible to ensure that Russia would have access to C.A.R. diamonds.
Sanction Violations
The sanctions released on September 23, 2020 by the US Treasury Department is a recent addition to the many condemnations against Yevgeniy Prigozhin. The statement cites Wagner Group’s involvement in several operations that contradicted US interests, such as in Ukraine, Syria, and Libya. It also cites that Prigozhin’s Internet Research Agency was designated by the Office of Foreign Asset Controls (OFAC) in 2018 as a hostile entity to sovereignties of various nations, including the United States. The 2020 sanctions highlight Prigozhin’s activities and travels to the C.A.R., and call for further sanctioning of any interaction with his enterprises and ventures in the C.A.R. This means that any entity assists in advancing Russian interests in the C.A.R. or assists other organizations in sanction evasion related to the Russian C.A.R. affair would be in violation of US sanctions. Alrosa is traded as a Public Joint-Stock Company (PJSC), with operations licensed overseas.
One such operation is Alrosa USA Incorporated, the company’s affiliate entity for trading within the United States. Alrosa USA has an office in the New York City jewelry district, and is registered in the State of Delaware as a Foreign Business Corporation. Alrosa USA is a facilitator for gems held by the parent company to make it to American retailers like Signet Jewelers, and their subordinate entities of Zales, Kay Jewelers, and Jared. Alrosa also enjoys a memorandum of cooperation with the US-based auction house Sotheby's.
Because Alrosa PJSC is clearly an advocate for Russian interests in the C.A.R and directly benefits from the actions of Yevgeniy Prigozhin, their American-based assets should be subject to the sanctions and their enforcement.
September 23, 2020 announcement from the United States Department of the Treasury
WASHINGTON – Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) took further action against the network of Kremlin-connected Russian operative Yevgeniy Prigozhin (Prigozhin), by targeting entities and individuals working on behalf of Prigozhin to advance Russia’s influence in the Central African Republic (CAR). Concurrently, OFAC is targeting those that have supported the Russian Federal Security Service directly, as well as those that assist persons helping designated Russian actors to evade U.S. sanctions.
“Yevgeniy Prigozhin has an international network of supporters to spread his malign political and economic influence around the globe,” said Secretary Steven T. Mnuchin. “The United States will continue to target the ability of Prigozhin to conduct operations globally.”
https://home.treasury.gov/news/press-releases/sm1133
Armed Commercialism as a trend
At the time of this writing, there is not evidence of the diamonds being mined in a way that violates human rights. The diamonds also enter the market legally at the time of excavation. The United States cannot presently state that the diamonds coming out of the C.A.R. as conflict diamonds or blood diamonds, however the US State Department should bring the nature of the affair before the Kimberley Process. This should be done to express that there is a line between conducting international trade agreements, and doing so through the employment of individuals who have been cited to conduct election interference and command clandestine armies who provide plausible deniability for their homeland. One can speculate that if concerns of Wagner Group’s and Prigozhin’s involvement in the diamond market is brought before the Kimberley Process, it would likely be dismissed by the chair nation, Russia, who benefits from the very venture that it has been entrusted by the international community to monitor.
Some have argued that the increase of Russian presence and influence in the Central African Republic is a product of power projection between the Russian Federation and the West. This would be to the end of asserting influence in the region through both hard and soft power at the deficit of other foreign powers with presences in Africa, such as the United States, France, or China. This is simply not the case. If it was, then why would the affair maintain a clandestine nature? Power projection would entail primarily the deployment of marked Russian government troops, not unmarked mercenaries. Their mission there would be defined by strategic objectives, and would likely call for the construction of bases. Of the Russian Federation’s foreign policy objectives, there are several that likely are more pressing to the state than the internal conflict within the C.A.R. The mining interests however were too precious to Russia’s stature in the diamond trade, and warranted action. Commercial soldiers and companies fulfilled this commercial objective. For Prigozhin and his affiliates, this may be business as usual, but the Russia-C.A.R. Diamond affair unfortunately shows that conflicts of interests and secret armies can buy out a sector of trade. To counter this reality, such affairs should be monitored, and condemned if appropriate, by the international community.
MPSG will continue to follow these key world events as they unfold. It is important to know that this story is a developing one, and will warrant subsequent inquiries into the region by MP Strategic Group. All content-related inquires may be directed to Robert Sanchez, Director of Research, MP Strategic Group LLC. (robertsanchez@mpstrategicgroup.com)