Russia Deploys a Potent Weapon in Syria: The Profit Motive

Most Middle Eastern wars are suspected of having some variant of this deal, but it is seldom made as explicit as in the Russian contracts

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Smoke and flames rise from buildings following a reported government strike on a rebel-held area in Syria's southern city of Daraa late on July 3, 2017
Smoke and flames rise from buildings following a reported government strike on a rebel-held area in Syria's southern city of Daraa late on July 3, 2017Credit: AFP PHOTO / Mohamad ABAZEED

MOSCOW — The Kremlin is bringing a new weapon to the fight against the Islamic State militant group in Syria, using market-based incentives tied to oil and mining rights to reward private security contractors who secure territory from the extremists, Russian news outlets have reported.

So far, two Russian companies are known to have received contracts under the new policy, according to the reports: Evro Polis, which is set to receive profits from oil and gas wells it seizes from the Islamic State using contract soldiers, and Stroytransgaz, which signed a phosphate-mining deal for a site that was under militant control at the time.

The agreements, made with the Syrian government, are seen as incentives for companies affiliated with Russian security contractors, who reportedly employ about 2,500 soldiers in the country, to push the Islamic State, also known as ISIS or ISIL, out of territory near Palmyra, in central Syria.

Most Middle Eastern wars are suspected of having some variant of this deal, but it is seldom made as explicit as in the Russian contracts.

“It’s all very simple,” Ivan P. Konovalov, director of the Center for Strategic Trends Studies, said by telephone of the deals, struck in December but just recently reported. “If a company provides security, then the country getting that service should pay. It doesn’t matter how the payment is made.”

In the petroleum deal, Evro Polis, a corporation formed last summer, will receive a 25 percent share of oil and natural gas produced on territory it captures from the Islamic State, the news site reported.

The website has a record of accurately reporting about private security companies in Russia, and just last month Washington appeared to corroborate one of its earlier reports by imposing sanctions on a Russianwhose activities first came to light in the publication.

Fontanka’s latest article on the topic, published last week, detailed how Evro Polis was cooperating with a shadowy Russian private security group called Wagner, which American sanctions suggest has also provided contract soldiers to the war in Ukraine.

The deal is distinct from the common practice of oil majors and other corporations outsourcing security in hot spots in the Middle East and elsewhere. Under the contract, the wells are not just to be guarded, but to be captured first, the article said.

“The arrangement returns to the times of Francis Drake and Cecil Rhodes,” it noted, referring to two figures from British history whose careers mixed warfare and private profit.

Evro Polis, according to Fontanka and public company records in Russia, is part of a network of companies owned by Evgeniy Prigozhin, a St. Petersburg businessman close to President Vladimir V. Putin and known as “the Kremlin’s chef” for his exclusive catering contracts with the administration. His company, Concord Catering, also supplies food to many of Moscow’s public schools, according to Russian news reports.

Journalists have reported that Mr. Prigozhin engaged in another recent Russian experiment in restoring influence abroad while keeping costs down: He set up a factory of so-called internet trolls in St. Petersburg, an office packed with low-paid people posting online under assumed identities to influence public opinion in foreign countries, including the United States.

Last month, the Treasury Department in Washington imposed sanctions on Dmitri Utkin, the founder of Wagner, the private security group the report said would capture the Syrian oil and gas wells for Evro Polis. Fontanka first linked Mr. Utkin to Wagner in an article in 2015.

In the other deal, the Russian energy company Stroytransgaz won rights to mine phosphate in central Syria under the condition it secure the mine site, the Russian news outlet RBC reported.

Stroytransgaz, which is majority owned by another Russian under United States sanctions, Gennady Timchenko, signed a deal with the Syrian government to resume mining at the Sharqiya phosphate deposit, which was under Islamic State control at the time, RBC reported. Under the agreement, an unidentified Russian private military contractor would guard the site.

In this instance, however, Russian, Iranian and Syrian soldiers — rather than private contractors — conducted the operations in May that expelled Islamic State militants from the mining site, RBC reported.

In anticipation of the commercial payoff, the report said, a Russian ship laden with mining equipment docked at the Syrian port city of Tartus, where Russia has a naval base, even before the military operation began.

Russian officials have not commented publicly on either deal.

The Russian Energy Ministry did not respond to written questions about the reported oil and gas deal. The owner of Evro Polis did not reply to an email sent to an address listed on company records.

Asked on a conference call with journalists about the Syrian oil deal, the Kremlin press secretary, Dmitri S. Peskov, said, “We do not monitor some entrepreneurial activity” of Russian companies abroad.

Mr. Konovalov, the military analyst, said the Syrian government was more than willing to strike such deals, trading natural resources for security.

“They get the better side of this contract,” he said. “They get our participation in the security sector in Syria, which is very valuable.”

The Fontanka report suggested that Russian security contractors had already put the agreement to work, fighting to expel the Islamic State from natural gas fields near Palmyra.

The Russians are training and fighting alongside a unit of the Syrian Army called ISIS Hunters, whose exploits are widely promoted in the Russian state news media. The Fontanka report linked to a video filmed from a body camera worn by a Russian-speaking soldier with ISIS Hunters during a firefight in the desert.

“Friendly, don’t shoot!” the soldier yelled in Russian, apparently to other Russian soldiers nearby.

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