Wagner's Prigozhin is in Russia, Belarus leader says, despite Putin deal to end mutiny

Wagner Group mercenary boss Yevgeny Prigozhin is currently in the Russian city of St. Petersburg, Belarusian leader Alexander Lukashenko told reporters Thursday, despite supposedly being exiled to Belarus.

On June 27, Lukashenko apparently confirmed that Prigozhin had arrived in Belarus per the terms of a deal with the Kremlin that saw him avoid prosecution for leading Wagner in an aborted mutiny. This came after his fighters seized the southern city of Rostov-on-Don and marched toward Moscow.

Lukashenko said Thursday that Prigozhin was in St. Petersburg, adding that "he is not in the territory of Belarus" and that he is "free," having spoken to the Wagner chief on the phone. Lukashenko did not confirm whether Prigozhin had actually been in Belarus since the coup, and his whereabouts have been somewhat of a mystery.

"It seems that Prigozhin is allowed free movement in Russia and retains his assets. This does not imply he is being rehabilitated but equally he is not public enemy number 1 either," Chris Weafer, chief executive of the Moscow-based economic consultancy Macro-Advisory, told CNBC in an emailed statement.

The Belarusian leader brokered a deal that purportedly ended Prigozhin's armed mutiny, launched in protest at what he saw as corruption and incompetence in the Russian armed forces' handling of the war in Ukraine, and alleged firing on Wagner forces. The deal reportedly granted him exile in Belarus and immunity from prosecution.

Lukashenko also reiterated an offer on Thursday for Wagner to station some of its mercenary fighters in Belarus, a suggestion that has troubled neighboring NATO countries.

His comments highlight the scale of uncertainty surrounding the future of Prigozhin and his Kremlin-backed mercenary force after the aborted insurrection that Russian President Vladimir Putin has said could have triggered a civil war.

Russian state TV on Wednesday insisted that an investigation into the Wagner rebellion was still ongoing and launched a stinging attack on Prigozhin.

The business jet linked to the Wagner leader, Putin's former close ally and Kremlin chef, was tracked leaving St. Petersburg for Moscow on Wednesday and heading to the south of the country on Thursday before returning north, but it was unclear whether Prigozhin himself was onboard.

Weafer said that the new development meant that Prigozhin "has reached an 'understanding' with the Kremlin: he will not again threaten the regime, and in exchange, he can remain free to manage his business interests and, possibly, to continue managing Wagner."

"Wagner, or some variation of it, will continue to be useful for the Kremlin in several countries in Africa. It is unlikely they will again operate in eastern Ukraine ... It is a very Russian solution to what is essentially an internal power dispute," Weafer added.