What If Russian Oligarchs Pull Their Money from the West But Don’t Return It to Russia?

Paul Goble

            Staunton, January 22 – Most commentators have suggested that the imposition of personal sanctions on Russian oligarchs and businessmen will force them to return their money to Russia, potentially hurting some in the West but likely helping Vladimir Putin by providing the Kremlin leader with an infusion of new money in Russia.

            But there is another possibility, one that Moscow analyst Vasily Makarov points to on the Versiya portal today: the Russian rich may very well decide to pull their funds from the US but park it in offshore tax havens instead of repatriating the funds (versia.ru/viktor-vekselberg-izbavlyaetsya-ot-aktivov-na-zapade-no-ne-speshit-vozvrashhat-dengi-v-rossiyu).

            On the one hand, that will protect those who own the funds from the risk of losing them in Putin’s Russia.  But on the other, it may give both them and at least in principle their Kremlin bosses the chance to play one Western government off against another, with the promise or threat of moving these funds to or away from this or that country.

            The possibility that the flow of Russian capital out of the US and the EU without going back to Russia at least immediately, Makarov says, has been raised by the behavior of Viktor Vekselberg, who not only has shifted money out of London where his company is incorporated but talked openly about not wanting to return it to the Russian Federation.

            Vekselberg sold off more than 330 million US dollars in assets in London at the end of last year but shortly thereafter declared that he had no interest in repatriating the money via the purchase of special foreign loan bonds with the Russian finance ministry has announced plans to issue.

            The Russian entrepreneur said, Makarov continues, that he wanted to keep his money working for him and indicated that in his view, conditions in Russia were not suitable for that, given the various taxes and fees Moscow has been imposing on Russian business in order to fill government coffers.

            Other Russian businessmen may be thinking and doing the same thing, the Versiya analyst continues, “but all of them have tried to keep it quiet.”  Now that Vekselberg has gone public, however, the number seeking this way out for themselves but not for Moscow is likely to grow.