U.S. sanctions on Russia’s oligarchy miss the wealthiest people

Washington (AP) — The term Russian oligarch is reminiscent of the image of a luxurious London mansion, a gold-plated Bentley, and a sophisticated superyacht in the Mediterranean.

However, the raft of sanctions against oligarchs announced this week by President Joe Biden in response to the Ukrainian invasion may rarely dim Russia’s ultra-rich and infamous Russian jet-like lifestyle. ..

US sanctions are against Russian President Vladimir Putin and a small number of individuals believed to be one of his closest security advisers, including Foreign Minister Sergeĭ Viklov.However list Most of the top names on Forbes’ list of wealthiest Russians are from investing in Silicon Valley start-ups to the English Premier League football team.

Citing the concerns of its European allies, the United States also bans Russia from SWIFT, the international financial system banks use to move money around the world, and imposes what is considered the most severe punishment at their disposal. did not do it.

Mr Biden said Thursday that new US sanctions would cripple Russia’s financial system and hinder economic growth by targeting Russia’s largest banks. The Treasury said it owns nearly 80% of the country’s total banking assets.

“Putin is an invader. Putin chose this war, and now he and his country will bear the consequences,” Biden said, “immediately and long-term serious to the Russian economy. “Implement costs” measures have been launched.

However, much of the wealth of Russia’s wealthiest people is not stored in licensed Russian banks. Putin and his partner Oligarch have been hiding their assets abroad for decades, many of which were hidden in ways specially designed to avoid sanctions.

The Kremlin officially reports Putin’s income at $ 131,900 a year, but the Russian president is believed to benefit from billions of cash and foreign assets held by trusted friends and relatives.

A 2017 study of Russian oligarchs released by the U.S.-based Department of Economic Affairs estimates that $ 800 billion of wealthy Russians own the UK, Switzerland, Cyprus, and similar offshore banking centers. It has been. Its immense wealth, owned by hundreds of ultra-rich people, is roughly equal to the wealth of the entire remaining Russian population of 144 million.

Some oligarchs also have dual citizenship in the United Kingdom and other Western countries, adding legal complexity to attempts to unilaterally seize assets.

One example is Roman Abramovich, a former Russian governor and ally of Putin, a steel and metal mogul. Abramovich, a dual Israeli citizen with an estimated net worth of over $ 13 billion, used his fortune to buy homes for the British football club Chelsea and London and New York. He and his current ex-wife frequently associated with Ivanka Trump and Jared Kushner, the daughter and son-in-law of former President Donald Trump.

Abramovich also owns the 455-foot-long Solaris, which is considered to be the most expensive superyacht in the world. This Solaris has helicopter hangers, tennis courts, a pool, and a berth for about 100 guests and crew.

The sanctions list also does not include Alisher Usmanov, another Russian metal king who was an early investor in Facebook. His wealth is estimated at over $ 14 billion.

Usmanov recently sold a stake in the British football club Arsenal for $ 700 million, and according to Forbes, two vast real estate properties in London, Beachwood House and Sutton Place, are worth $ 300 million. The Usmanov superyacht, Dilbar, is 512 feet long from the bow to the stern, even longer than the Abramovich superyacht.

Daniel Fried, a former U.S. official in the Democratic and Republican administrations who helped create U.S. sanctions against Moscow after Putin invaded the Crimean Peninsula in 2014, was on the sanctions list released Thursday. He said he was surprised that Abramovic and Usmanov were not included. A long connection between Putin and the visible assets of the West.

However, Fried warns that sanctioning Russia’s oligarchs is likely to have limited impact on persuading Putin to divert Ukraine.

“He absolutely owns them. He smashes them and they exist only by his suffering,” Fried said. “The idea that he can imprison or kill them, and that the oligarchs can claim their influence over Putin is stupid.”

Still, he said the opinion of the wealthy and educated elite has an intangible weight that Putin challenges at his own risk. Sanctions are unlikely to drive the oligarchs out of Putin, but they raise the cost of their ongoing support for them.

“They can’t stop him or vote for his absence, but he’s only in full control until he’s gone,” said a fellow of the Atlantic Council, now based in Washington. One Fried said.

The property of many families of Russian millionaires dates back to the 1990s, a decade of turmoil after the collapse of the Soviet Union. Under the infamous corrupt president of Boris Yeltsin, major state assets such as oil refineries, steel mills, aluminum smelters and tractor factories were often purchased with the help of government-sponsored loans. It was eaten by influence.

Then, in 1999, Yeltsin unexpectedly resigned, and Putin, who was relatively unknown at the time, was appointed acting president. Putin, a former KGB agent, was previously appointed by Yeltsin to head the Russian FSB, one of Russia’s most powerful espionage and security agencies.

Putin has dominated Russia for the past 22 years and has crushed those who dared to challenge him.

Once believed to be Russia’s wealthiest man, oil baron Mikhail Khodorkovsky rebelled against Putin when he embraced the free market more completely and began to criticize the traces of the Soviet Central Plan. Khodorkovsky was arrested by Russian authorities in 2003 and charged with fraud, money laundering and embezzlement. After spending 10 years in prison, he was released in 2013 and fled to London. So he is now heading the Dossier Center, a foundation dedicated to exposing criminal activity by Kremlin insiders.

Mathematician Boris Berezovsky was absent from school for fraud and embezzlement after fleeing to London in 2000.

He was found dead in 2013 on the bathroom floor of his home in southern England. His daughter said she was afraid he might have been poisoned after losing a large court battle with his former business partner Abramovich. The coroner, originally believed to be suicide, recorded that the cause of death was not definitive.

“All oligarchs owe the Kremlin their wealth,” said Max Bergman, a senior researcher at the American Progress who also worked for the State Department during the Obama administration. “The oligarchs are an important pillar of the Putin administration, and their assets are highly exposed as they are stored in the west, namely villas in southern France, real estate condos in Trump, and sports teams.”

Maria Shagina, a sanctions expert at the Finnish Institute for International Affairs, based in Helsinki, said European countries could use natural gas piped to Germany, diamonds imported from Siberian mines, Italian luxury goods and more. He said he was trying to isolate his country’s economic interests from the effects of sanctions. Cars and designer handbags for sale in Moscow or St. Petersburg.

“Europeans don’t want to pay for sanctions,” says Shagina. “It’s a pain for everyone.”

But experts said the sanctions announced this week would cause pain and ultimately force the Kremlin to make tight budget choices by weakening the Russian economy.

Most Russians are considerably poorer than Westerners. According to World Bank data for 2020, the Russian Federation ranks 83rd in GDP per capita, just under $ 11,000 per capita. This is less than one-third of the European Union average and about one-sixth of the United States’ per capita GDP.

“Putin will have to choose between putting money in the army or paying pensioners, so sanctions will help Putin’s strength and strength to decline in the long run,” Bergman said.

Meanwhile, wealthy Russians have invested in cryptocurrencies and used other new strategies to protect their property, as they adapted to Putin’s early round of US sanctions after Putin’s invasion of Crimea. doing.

“Sanctions enforcement is essentially a cat-and-mouse game,” said Marsal Billingsley, who helped set the Trump administration’s sanctions policy. Flow into the government. “

Edward Fishman, a former State Department official during the Obama administration, said the transition to Putin sanctions would signal strong support to Ukrainians under attack. However, economic penalties have no substantial impact on Russian leaders.

“Sanctions cannot dramatically reduce Putin’s quality of life … Putin treats the Russian economy as his own personal piggy bank,” Fishman said. “President Putin’s wealth comes from the hard-earned wages of Russian taxpayers and Russia’s oil exports.”


Goodman reported from Miami and Eldive from Beirut.


Contact AP’s Global Investigative Team at [email protected]