Eeeenteresting. That may be all this development is in the long run, but it may open up some extended options for sanctions on Wagner Group leader Yevgeny Prigozhin and any people or entities supplying them.

Of course, the US and its NATO allies have spent the past year squeezing Vladimir Putin, Prigozhin, and Russia. Will this add much other than some clarity to Wagner Group activities and purpose?

US designates Russian mercenary group Wagner, as a "significant transnational criminal organization" – allowing for additional avenues to squeeze their operations around the world, increase sanctions https://t.co/e23Stle7zJ

— Jacqui Heinrich (@JacquiHeinrich) January 20, 2023

CNN pre-reported it right before the announcement:

The US Treasury Department is expected to designate the Russian mercenary organization Wagner Group as a “transnational criminal organization” on Friday, and will impose additional sanctions next week against the group and its support network across the world, the White House said on Friday.

“These actions recognize the transcontinental threat that Wagner poses, including through its ongoing pattern of serious criminal activity,” National Security Council Coordinator for Strategic Communications John Kirby is expected to tell reporters on Friday, ahead of the Treasury Department announcement.

This is similar, although not identical, to the US designation of Iran’s Revolutionary Guard as a terrorist organization. Iran had already been under a heavy sanctions regime, but this action stripped the usual deference to a uniformed official military of a nation in regard to terror-list designations. It allowed for an expansion of financial and security sanctions, but mainly served a political purpose in reinforcing Iran’s status as a state sponsor of terrorism.

This feels like a similar move. The Wagner Group are technically mercenaries, but with state sponsorship and ultimately controlled by the Kremlin, which makes the distinction muddier. The Biden administration likely wants to emphasize that distinction, plus find ways to make Prigozhin an even bigger pariah than he is at the moment. He’s no stranger to US sanctions, though, and the DoJ has an outstanding indictment against Prigozhin for his “information warfare” against the US during the 2016 election.

There may be one other reason for this designation specific to Prigozhin. Two months ago, The Intercept reported that Interpol had quietly rejected the US “red notice” on the oligarch in 2020 that would have resulted in his arrest and extradition if Prigozhin turned up in a cooperating country:

In 2018, a federal grand jury indicted Prigozhin for engaging in “information warfare against the U.S.,” and he was placed on a list of individuals wanted by the FBI, with a $250,000 reward for information leading to his arrest. U.S. officials also obtained a “red notice” from Interpol, requesting that the international police organization’s members arrest him if he came into their jurisdiction.

In 2020, Interpol quietly withdrew the notice. The only announcement of the move came from one of Prigozhin’s companies, though without an explanation of why it happened. Interpol and the Department of Justice remained silent. But now a hacked Interpol document reviewed by The Intercept reveals that the organization’s oversight body determined that the red notice requested by the U.S. was of a “predominantly political character” — and a violation of Interpol’s principle of political neutrality.

The emergence of the Interpol document — and Prigozhin’s admission to election interference, which he repeated in even stronger words in a statement to The Intercept — are likely to prove controversial. Mueller’s investigation continues to be a lightning rod in American politics, with former President Donald Trump still insisting it was a “witch hunt” aimed at unjustly connecting him to Russian involvement in the election he won against Hillary Clinton. Interpol’s determination that the red notice request was politically motivated might be seen as bolstering the claims of the former president and his supporters. But Prigozhin’s admission that he did in fact seek to interfere in U.S. elections is also likely to renew questions about Interpol at a time when the agency is already facing intense criticism that it is vulnerable to political exploitation.

It’s possible that the new US designation of Wagner Group as a transnational criminal enterprise with Prigozhin as its leader will allow Interpol a face-saving way to restore the previous “red notice.” If not, the US could reapply for a new red notice, although the DoJ might have to get a grand jury to indict Prigozhin on charges relating to Wagner Group rather than the “Internet Research Agency” troll farm in Mueller’s indictment. That would require the Wagner Group to have committed a crime in a US jurisdiction, however.

What impact will this have on the war in Ukraine? Probably not much, especially in the short term. If the sanctions this unlocks against Prigozhin’s suppliers are new and/or massively harder, perhaps it will degrade those lines of support in the longer term. It’s clear at the moment that Prigozhin’s mercenaries are outperforming Russia’s military in the field, though, so any and every little bit counts.

And maybe the US is looking to exploit a rift emerging between Prigozhin and others in the Kremlin. That reportedly includes Putin himself, ISW notes, who might be getting coup vibes from his old pal:

Russian President Vladimir Putin is increasingly siding with the adversaries of Wagner Group financier Yevgeny Prigozhin, likely in an ongoing effort to degrade Prigozhin’s influence in Russia. Putin met on January 18, 2023, with St. Petersburg Governor Alexander Beglov – one of Prigozhin’s overt enemies – for the first time since early March 2022 to discuss St. Petersburg’s role in the Russian war effort.[25] Beglov stated that his administration formed three volunteer battalions that support Russia’s invasion of Ukraine under the Russian Western Military District (WMD). ISW previously reported that Prigozhin had launched an intensive campaign petitioning Russian State Duma officials to remove Beglov from his office and had even called on the Russian Prosecutor General’s office to investigate Beglov for treason for failing to adequately support the Russian war effort.[26] Prigozhin-affiliated outlets also published exposés on Beglov over the summer of 2022, claiming that Beglov deliberately impeded the advertising efforts for recruitment into the three local volunteer battalions.[27] Prigozhin had also suggested that he assisted Beglov in campaigning for the governor role – claiming that he had made Beglov’s career and made several proposals to improve his administration.

Putin’s demonstrative meeting with Beglov and their specific discussion of Beglov’s contribution to the war effort directly challenges Prigozhin’s ongoing effort to assert his own authority over Beglov and St. Petersburg. Putin had also recently reappointed Colonel General Aleksandr Lapin, former commander of the Central Military District (CMD) as the Chief of Staff of the Russian Ground Forces despite Lapin receiving significant criticism from the siloviki faction of which Prigozhin is a prominent member.[28] Putin had also doubled down on the official rhetoric that only Russian forces contributed to the capture of Soledar, Donetsk Oblast, rejecting Prigozhin’s claims that Wagner forces had accomplished the tactical victory.[29] Putin is likely attempting to reduce Prigozhin’s prominence in favor of the re-emerging professional Russian military and Russian government officials. …

Chief of the General Staff Army General Valery Gerasimov reportedly declared that the Wagner Group does not belong in the structure of the Russian Armed Forces. Gerasimov allegedly responded to Moscow City Duma parliamentarian Yevgeny Stupin’s inquiry on the status of the Wagner Group and its “operational interaction” with the Russian Armed Forces in an official letter, dated December 29, 2022, that Stupin shared on his Telegram on January 19.[37]Stupin stated that he had received numerous complaints from his constituents who have relatives serving in Wagner detachments that they are unable to contact officials that would connect them with their family members on the frontlines. Gerasimov stated in the letter that “the organization [Stupin] referred to as PMC Wagner does not belong to the structure of the Armed Forces of the Russian Federation” and that the Russian Ministry of Defense (MoD) is not responsible for Wagner servicemen[38].” Stupin asserted that the letter is real, although ISW has no independent verification of his claim.

Perhaps the new designation by the US intends to suggest a face-saving way out of the disaster for Putin. Blame it all on Prigozhin and withdraw, it might hint, and we’ll work something out. If this war continues to go badly, Putin might be tempted by such an option, even if he’s not ready to contemplate it at this precise moment. If Prigozhin continues to empire-build at the Kremlin’s expense, that moment might come even sooner.