The first and the most obvious lesson that we can draw from the confiscation of Russian oligarchs’ assets is that the pre-February 24 Russia was not an oligarchy, as many believed, but an authoritarian autocracy.
btw, it is worth noting that most of the former Soviet republics (except for Baltic states) have eventually collapsed into similiar set up: strong autocrat with a few "oligarchs" around him without much real power. Except for just one coutntry - Ukraine! It seems that Ukraine never left "the 90s set up" with oligarchs controlling / robbing the state and no powerful figure in power. But this may change with recent developments of course.
anyway, it seems that speeding up privatization did not help rule of law in any of the former USSR republics (again, with the exception of Baltic states)
Yes, that (autocrat with a coterie of oligarchs) seems to be the most common approach. And you are very right about Ukraine. Until the most recent events it looked much more like the Russia of the 1990s with oligarchs fighting among themselves and those most successful running the govt. Thanks. B
I always enjoy your articles, but this one really got me wondering what might happen to Europe once it loses its status of a safe haven for the oligarh money. Country where I live, Cyprus, thrives on Russian and Chinese money and I'm sure it is not the only one.
I’m most concerned about the implications regarding the behavior of the US government. Any thing that results in lowering the standards that the state must meet to seize private property strikes me as undesirable and dangerous. You probably know that there have been intermittent efforts to reforms the rules and processes surrounding asset forfeiture the past few years….but state authorities in the US still have a huge degree of latitude and due process is by no means assured. Related (supposedly) to the Ukraine-Russia conflict, two representatives have drafted a bill makes private property forfeit based on little more than officials' claims that its owners are linked to Putin. Lowering the bar the state must meet to seize property strikes me as moving in a bad direction. Anyone who suggests that state actors will restrict themselves to using this power against wealthy Russians, might want to review the Canadian government’s recent actions to freeze financial assets of citizens who participated in or donated to the truckers’ convoy/ protest. Here’s a good piece that elaborates on these points https://reason.com/2022/04/08/officials-seizing-russian-yachts-now-may-steal-americans-property-in-the-future/
I agree re oligarchs preferring a regime with more distributed power instead of one under a single dictator. That said I’m not sure that it would make sense for Russian billionaires to move their money to alternative financial centers in India or the Gulf States to escape potential western sanctions.
Russian oligarchs have tried to play both sides: more or less supportive of Putin to keep business opportunities in Russia open to them, while buying assets in the West as a hedge to them falling out with the current or a future regime in their home country. Their western assets being less safe (coupled with less tolerance at home for oligarchs who are not fully supportive of the regime) won’t motivate them to move to Dubai; it will be force them to take sides: either support Putin, keep more money at home but lose their western assets; or keep their western assets by more openly opposing the regime but being blacklisted at home.
Moving assets to third countries more favorable to Russia will be a suboptimal hedge that will still signal less than full confidence and support towards the regime. Investment in those countries could still grow but only as much as this aligns with the regime goals; not as a hedge.
It is an interesting Q. It could be even presented in a model with different probabilities of asset confiscation against different probabilities of making money.
it seems that the article is misleading on many fronts. firstly, i doubt that the confiscation of Russian oligarch's assets has actually happened. What's happened is that oligarchs cannot access their assets. It is the court and the judicial system that decide about confiscation. there is no ground or legal premise in the US or any other western country to confiscate the Russian oligarch's assets. The executive branch of government in the West wants Russian oligarchs to remove Putin from power in exchange for access to the assets that these oligarchs accumulated in the West. In other words, the oligarch should kill Putin for the money. If this happens it will be in the same level of order as Judas's betrayal of Chris. But irony will be that a master will take your property and make you kill your next of kin in exchange to return your property. If the assassination of Putin by oligarchs happens, it will open a new chapter in Bible.
Secondly, comparing Putin and Stalin is out of logic. An analogy is a bad thing in general. But this comparison of Stalin vs. Putin makes no sense. Stalin presided over Politburo. Putin inherited and still keeps Yeltsin's constitution that Yeltsin wrote for himself as a Tzar of Russia. Yeltsin has left this world in deep shame. There is none left who didn't ridicule alcoholic Yeltsin.
Thanks for your comment. I see your point but I think that it will be very difficult to "unfreeze" these assets. As far as I understand, they have been "frozen" by an executive decision. But taking a reverse decision that would give assets back to some oligarchs would be a very unpopular decision in today's political climate in the West, and I am not sure that any politician will do it. However, if assets remain "frozen" but not confiscated for, say, 5-10 years, things will change and then, esp. if the actions are questionable legally, perhaps that some oligarchs or their descendants might recover some of the money and ""things" back.
Thanks for your comment. I see your point but I think that it will be very difficult to "unfreeze" these assets. As far as I understand, they have been "frozen" by an executive decision. But taking a reverse decision that would give assets back to some oligarchs would be a very unpopular decision in today's political climate in the West, and I am not sure that any politician will do it. However, if assets remain "frozen" but not confiscated for, say, 5-10 years, things will change and then, esp. if the actions are questionable legally, perhaps that some oligarchs or their descendants might recover some of the money and ""things" back.
I think that collective leadership, if it ensues, will not consist of oligarchs either, but of heads of state corporations and state agencies.
But your second point is much more important. I am sure that the best cosequence of all current events for the Russian people (as separate from the Russian state) is this forceful domestication of expatriate elites, now really interested in the rule of law at home. The plunder of Russia in form of wholesale exporting its capital by its elites was too profitable for the West to be stopped in anything but the most critical situation - critical enough for the West to start acting agains its own material interest.
I just hope its not critical enough for the World War 3 at the same time - though hysterical attitude of many NATO leaders makes me rather doubtful of that.
very good article!
btw, it is worth noting that most of the former Soviet republics (except for Baltic states) have eventually collapsed into similiar set up: strong autocrat with a few "oligarchs" around him without much real power. Except for just one coutntry - Ukraine! It seems that Ukraine never left "the 90s set up" with oligarchs controlling / robbing the state and no powerful figure in power. But this may change with recent developments of course.
anyway, it seems that speeding up privatization did not help rule of law in any of the former USSR republics (again, with the exception of Baltic states)
Yes, that (autocrat with a coterie of oligarchs) seems to be the most common approach. And you are very right about Ukraine. Until the most recent events it looked much more like the Russia of the 1990s with oligarchs fighting among themselves and those most successful running the govt. Thanks. B
I always enjoy your articles, but this one really got me wondering what might happen to Europe once it loses its status of a safe haven for the oligarh money. Country where I live, Cyprus, thrives on Russian and Chinese money and I'm sure it is not the only one.
What anybody can do with 100 yachts and 200 expensive cars,et. ?
Does anybody really mean seizing it will stop the war ?!
Is any country included ,alculated the cost of maintaining the yacht (5-10 % of the value per year) ,cars,security,insurance,etc.?!
Not to mention legal costs,since there is no legal reason to seize it,at the end ?!
Main off-shore countries for oligarchs worldwide are the US and the UK,including crown territories .
What can go possibly wrong ?!
I’m most concerned about the implications regarding the behavior of the US government. Any thing that results in lowering the standards that the state must meet to seize private property strikes me as undesirable and dangerous. You probably know that there have been intermittent efforts to reforms the rules and processes surrounding asset forfeiture the past few years….but state authorities in the US still have a huge degree of latitude and due process is by no means assured. Related (supposedly) to the Ukraine-Russia conflict, two representatives have drafted a bill makes private property forfeit based on little more than officials' claims that its owners are linked to Putin. Lowering the bar the state must meet to seize property strikes me as moving in a bad direction. Anyone who suggests that state actors will restrict themselves to using this power against wealthy Russians, might want to review the Canadian government’s recent actions to freeze financial assets of citizens who participated in or donated to the truckers’ convoy/ protest. Here’s a good piece that elaborates on these points https://reason.com/2022/04/08/officials-seizing-russian-yachts-now-may-steal-americans-property-in-the-future/
I agree re oligarchs preferring a regime with more distributed power instead of one under a single dictator. That said I’m not sure that it would make sense for Russian billionaires to move their money to alternative financial centers in India or the Gulf States to escape potential western sanctions.
Russian oligarchs have tried to play both sides: more or less supportive of Putin to keep business opportunities in Russia open to them, while buying assets in the West as a hedge to them falling out with the current or a future regime in their home country. Their western assets being less safe (coupled with less tolerance at home for oligarchs who are not fully supportive of the regime) won’t motivate them to move to Dubai; it will be force them to take sides: either support Putin, keep more money at home but lose their western assets; or keep their western assets by more openly opposing the regime but being blacklisted at home.
Moving assets to third countries more favorable to Russia will be a suboptimal hedge that will still signal less than full confidence and support towards the regime. Investment in those countries could still grow but only as much as this aligns with the regime goals; not as a hedge.
It is an interesting Q. It could be even presented in a model with different probabilities of asset confiscation against different probabilities of making money.
it seems that the article is misleading on many fronts. firstly, i doubt that the confiscation of Russian oligarch's assets has actually happened. What's happened is that oligarchs cannot access their assets. It is the court and the judicial system that decide about confiscation. there is no ground or legal premise in the US or any other western country to confiscate the Russian oligarch's assets. The executive branch of government in the West wants Russian oligarchs to remove Putin from power in exchange for access to the assets that these oligarchs accumulated in the West. In other words, the oligarch should kill Putin for the money. If this happens it will be in the same level of order as Judas's betrayal of Chris. But irony will be that a master will take your property and make you kill your next of kin in exchange to return your property. If the assassination of Putin by oligarchs happens, it will open a new chapter in Bible.
Secondly, comparing Putin and Stalin is out of logic. An analogy is a bad thing in general. But this comparison of Stalin vs. Putin makes no sense. Stalin presided over Politburo. Putin inherited and still keeps Yeltsin's constitution that Yeltsin wrote for himself as a Tzar of Russia. Yeltsin has left this world in deep shame. There is none left who didn't ridicule alcoholic Yeltsin.
Thanks for your comment. I see your point but I think that it will be very difficult to "unfreeze" these assets. As far as I understand, they have been "frozen" by an executive decision. But taking a reverse decision that would give assets back to some oligarchs would be a very unpopular decision in today's political climate in the West, and I am not sure that any politician will do it. However, if assets remain "frozen" but not confiscated for, say, 5-10 years, things will change and then, esp. if the actions are questionable legally, perhaps that some oligarchs or their descendants might recover some of the money and ""things" back.
Thanks for your comment. I see your point but I think that it will be very difficult to "unfreeze" these assets. As far as I understand, they have been "frozen" by an executive decision. But taking a reverse decision that would give assets back to some oligarchs would be a very unpopular decision in today's political climate in the West, and I am not sure that any politician will do it. However, if assets remain "frozen" but not confiscated for, say, 5-10 years, things will change and then, esp. if the actions are questionable legally, perhaps that some oligarchs or their descendants might recover some of the money and ""things" back.
I think that collective leadership, if it ensues, will not consist of oligarchs either, but of heads of state corporations and state agencies.
But your second point is much more important. I am sure that the best cosequence of all current events for the Russian people (as separate from the Russian state) is this forceful domestication of expatriate elites, now really interested in the rule of law at home. The plunder of Russia in form of wholesale exporting its capital by its elites was too profitable for the West to be stopped in anything but the most critical situation - critical enough for the West to start acting agains its own material interest.
I just hope its not critical enough for the World War 3 at the same time - though hysterical attitude of many NATO leaders makes me rather doubtful of that.
Thanks for your comment.