For Russia’s richest, will sanctions hurt? Probably not
The term Russian oligarch conjures images of posh London mansions, gold-plated Bentleys and sleek superyachts in the Mediterranean, their decks draped with partiers dripping in jewels.
But the raft of sanctions on oligarchs announced by President Joe Biden this week in response to the invasion of Ukraine may do little to dim the jet-setting lifestyles of Russia’s ultra-rich and infamous – much less force a withdrawal of tanks and troops.
U.S. sanctions target Russian President Vladmir Putin and a handful of individuals believed to be among his closest security advisers, including Foreign Minister Sergey Lavrov. But the list is just as notable for who isn’t on it — most of the top names from Forbes’ list of the richest Russians whose multi-billion-dollar fortunes are now largely intertwined with the West, from investments in Silicon Valley start-ups to British Premier League soccer teams.
Citing the concerns of European allies, the U.S. also didn’t impose what was seen as the harshest punishment at its disposal, banning Russia from SWIFT, the international financial system that banks use to move money around the world.
With no appetite for military confrontation, the U.S. and its allies are relying on sweeping economic sanctions to persuade Russian President Vladimir Putin to pull out of Ukraine.
But the effectiveness of those measures is anything but certain, relying on a host of factors that includes how much China is willing to come to Moscow’s aid.
Placing a stranglehold on Russia’s $1.5 trillion economy will not be easy, especially since it began trying to buffer itself from international sanctions after it annexed Crimea from Ukraine in 2014.
Russia has sidelined growth to pare down its debt and built up its reserves of foreign currency and gold — so much so that it reached record levels this year at over $640 billion.
The reserves help soften the financial blowback of Russia’s invasion.
The U.S. and European allies announced sweeping asset freezes and other penalties this week against Russia’s banks, state-owned enterprises and elites.
The sanctions put a new chill on what had been weeks of repeated diplomatic efforts with Russia as Putin built up forces on Ukraine’s borders.
At the same time, Ukraine refugees are fleeing their homes to take shelter or leave the country as the Russia invasion advances.