Russian Oligarchs Fear Economic Casualties if Ukraine Crisis Escalates

When Vladimir V. Putin returned to the Russian presidency in 2012, one of the first messages he sent to his political elite, many of them heads of banks and large corporations, was that the times had changed: Owning assets outside Russia makes you too vulnerable to moves by foreign governments, he told them. It’s time to bring your wealth home.

Nearly two years later, those words sound like preparation.

Russian Oligarchs Fear Economic Casualties if Ukraine Crisis Escalates

Lest anyone still think that Putin is all warm and fuzzy, the Russian Kleptocracy is being kept tight and moving towards a Nth Korean style autarchy where keeping power is the only consideration, and if that means isolating the whole country from the rest of eth world in order to keep power then so be it, and to hell with everyone else.

But Mr. Putin, whose return to the presidency was opposed by many urban liberals, now makes his most important decisions in an inner circle of men who emerged from Soviet security services. Among the first new projects in his new presidency was a push to “nationalize the elite,” requiring officials to sell off investments and properties outside Russia that could, in his view, undermine their loyalty in the event of a confrontation with the West.

Indeed, among the small group of people present when Mr. Putin made the final decision on Crimea, according to officials and analysts, were five or six former K.G.B. colleagues believed to have minimal assets outside Russia, and therefore not vulnerable to sanctions.

reply to post by Aloysius the Gaul


Yes, most of the wealth that was portable has already been absconded with. The only thing keeping Russia afloat now is gas and oil.

Seems like Putin is following a script which we have all read before.

reply to post by Aloysius the Gaul


What's more, Crimea is a fixer-upper. It requires so much infrastructure repair due to the Ukrainian oligarchs' embezzling that it would be a drain on the Russian economy if they absorb it.

reply to post by DJW001


Well the whole of Ukraine is like that - in some ways the best option to "shut Russia up" would be to "let" them take Ukraine "back".....then they'd be economically screwed for a decade or more!!

Economic risks for Russia

He's trying to make himself and his Oligarch cronies sanction-proof. Consolidate their wealth inside Russia where it can't be freezed by the US or EU. This was a good example that the events in the Ukraine were pre-planned. The only thing that can't be consolidated inside the RF is Gazprom, Putin's most vulnerable asset.

Good catch.

reply to post by Aloysius the Gaul


Actually....come to think of it perhaps this is a cunning ploy - Putin gets the nationalist vote at home, but only has to rebuild Crimea, not the whole of Ukraine - he might be very happy to let "the west" look after the bulk of that basket case!!

DJW001
reply to post by Aloysius the Gaul

 

What's more, Crimea is a fixer-upper. It requires so much infrastructure repair due to the Ukrainian oligarchs' embezzling that it would be a drain on the Russian economy if they absorb it.

I think you have got a valid point. You could ask why incorporate land into an existing political system. A few years back it would have been for feeding your expanding population. But these days the best yields come from technologically advanced glass houses .The Netherlands being one example. So as far as agricultural yields invasion is pointless. In fact in the modern world, Invasion has so many negatives, especially when the peaceful state is far better for wealth making for all concerned.
Historically Russia flirts with the West, then after it has got what it wants, it goes back into its shell. All the buffer states set up by Stalin were becoming a headache for Russia, as the modern world made them restless for decent consumer goods. I think Putins main worry, will be keeping Russia intact. The infra structure is shoddy, the population wants a modern world and the present system isn't delivering fast enough. Any money seems to get spent in Moscow or St Petersburg. So this expensive incursion into the Crimea, wont do anything for the average Russian, all the money made by the oligarchs will be transferred and spent in the more stable countries of the west along with the immigrants .Putin is between a rock and a hard place, traditionally vodka is the mainstay of the economy, and the Army mops up the unemployment. I cant see much changing anytime soon.

reply to post by Aloysius the Gaul

Among the first new projects in his new presidency was a push to “nationalize the elite,” requiring officials to sell off investments and properties outside Russia that could, in his view, undermine their loyalty in the event of a confrontation with the West.

I find this quote from the article to be interesting. One of the issues of the globalization of capitalism has been transborder markets developing that lie outside of the home nation states. This results in a lot of money being moved outside of a home country and being held in virtual limbo. We have that problem here in the US as well. One of the things that our country did in response to encourage investing within Americans companies and the paying out of dividends was the creation of qualifying dividends. That hasn't really worked to resolve some of the issues as some companies, such as Hanes off the top of my head, haven't paid dividends in a very, very long time. Again in the US, it was cited that $4 trillion was being held offshore to avoid taxation.

A couple of my SBA professors talked about the issue and how it comes into fruition. Basically you have global entities whose executives may be riding around on jets all over the world most of the year. How does one expect them to feel any sense of national loyalty in that sort of situation? While the NY Times can cite this as if this is some control mongering by Putin, we're just as guilty of it here and well, when the shoe has been on our foot, NY Times has published articles basically referencing the same issues with the US:

www.nytimes.com...

But hey, Putin trying to handle the same issue gets the "nationalize the elite" remark. A pretty good and fairly objective paper on the subject can be found here. It's worth a read as it explains a whole lot of what is going on these days and outside of those financial markets: www.mtholyoke.edu...