Crocodile Tears for Russian Oligarchs
The Oligarchs’ Pact with the Devil
Much has been reported on western sanctions against Russia’s oligarchs [roughly translated from Greek means, “The rule of the few”] as a quick & easy method to isolate and disconnect Putin from his unelected de facto cabal of industrialists in every economic sector. The objective is to degrade the wealth of these oligarchs to such a level through draconian monetary restrictions that it might incentivize them to turn against their master.
An oligarch’s wealth always comes with a price when they buck against the government particularly in a non-democratic country. In a democracy it’s the IRS performing endless deep-dive audits; in an autocracy it’s literally [corporate] Siberia.
The “rich and shameless” lifestyles of present-day Russian oligarchs were not achieved by business acumen, rather by political favoritism, legal & financial governmental guarantees and support, and a fixed market. These perks require unquestioned fealty, forever, to Putin himself. The oligarchs are merely the caretakers of Russia’s essential industries who enjoy mind-blowing perks so long as they submit and abide by the rules, whatever they may be at the time.
With respect to Putin, his domestic control resembles that of Mel Brooks’ role as an all-powerful king in the movie The History of the World (1981) who abuses his powers and unabashedly blurts, “It’s good to be the king.”
So you want to become an oligarch?
According to Forbes there are 2,668 billionaires worldwide present-day with a total net worth of $12.7 trillion. Because of the Russo-Ukraine war and sanctions, there are 34 fewer Russian billionaires, most of whom lost 50% of their net worth on average, but whose present-day total membership totals 83.
A billionaire’s wealth is so astoundingly mind-boggling, I’ve provided a chart that explains what it would take on an average salary to achieve this level of wealth. In the following chart entitled Three Million Years to Become the Next Elon Musk provided by the collaboration of Forbes, OECD, Picodi and the National Bureau of Statistics of China. A US worker earning $69,392 annually in 2020 would take three million years to reach Elon Musk’s average annual wage.
The following chart entitled How Russia’s Ultra-Wealthy Eclipse Their Country’s Economy provided by Bloomberg Billionaires Index and the IMF, underscore Russia’s lead in the extreme income inequity. Interestingly Russian billionaires’ # 1 rank as a share of GDP is the only non-democratic country in the top 8 countries listed. This is rather typical in an historically autocratic country that is rich in natural resources and whose revenues are export-dependent.
In February, as the Russian military advanced in Ukraine, the US and western countries applied sanctions against the Russian oligarchs. The following chart entitled Russian Billionaires’ Wealth Crunch provided by Bloomberg Billionaire Index presents an estimate of their financial losses which crimped their lifestyle from glitzy glamorous to merely enjoying an extremely comfortable life akin to going from private jets to first-class on commercial airlines.
According to the following chart entitled The US Billionaires Profiting the Most from the Pandemic provided by Forbes, their American billionaire counterparts have profited, and continue to do so, rather handsomely through the pandemic and present-day during the Russo-Ukraine conflict with the fortune of being loyal to the markets and not “The Man”.
Taking Away Their “Toys”
Sanctions against Russian oligarchs have prevented them from enjoying their stupefyingly expensive and ostentatious “toys” such as superyachts, private jets and super cars which have been seized and impounded. The following chart entitled The Frozen Russian Superyachts (And Those That Got Away) provided by Forbes, Russia Asset Tracker and other media reports. It articulates the top Russian oligarchs and the status of their superyacht, defined as a luxury maritime vessel of at least 80 feet (24 meters) although most oligarchs’ superyachts are far bigger.
With respect to market share, Russian oligarchs own 10% of the world’s superyachts replete with helicopter pads, swimming pools, even comprehensive wine cellars.
How Taxpayers Pay for Billionaire Asset Storage
The process of seizing billionaire yachts, private jets and super cars, however, is far more complicated. This section paraphrases passages in the article in The Atlantic published 7 April 2022, entitled. A Yacht Owner’s Worst Nightmare.
Nabbing billionaire property, legally and physically, is like grabbing and holding onto a slippery eel with your hands. Whatever the nationality of the billionaire, they are well-versed in the art of evasion.
Prior to property seizure the challenge is identifying and confirming that the oligarch is indeed the owner of said property. Like any wealthy property owner, they’ve already established a byzantine series of shell companies to obscure the legal owner. Sometimes those superyachts are ahead of the game, set sail and disappear because they’ve turned off their tracking devices.
To ensure that this property doesn’t leave the premises, whoever the legal owner might be, the government often “freezes” these assets by not allowing them to leave or deregistering them which negates the insurance policy making departure a high-risk financial adventure.
Once the government seizes the yacht, private jet, super car, etc. they must maintain it in the same condition they seized it otherwise the government could face damages & lawsuits afterwards from the owner should it be returned. To offset this risk, the government sometimes with a “wink and a nod” allows the seized property to be maintained by service companies hired by the owner. Nonetheless the government assumes the cost of storing and maintaining it funded by taxpayer dollars.
Since the start of the Russo-Ukrainian conflict evermore Russian oligarchs have been sanctioned. Many have taken it “personally” since they are legally civilians. But because of their direct and intimate financial, operating and political connections to Putin and the Kremlin, they can be considered government officials carrying out orders.
According to the following chart The World’s Most-Sanctioned Countries provided by Castellum.AI, a global risk database that tracks law enforcement actions worldwide, sanctions against Russia have vaulted them to the # 1 ranking.
Widening this perspective with respect to billionaires worldwide, the elite have no problem in leaving far more than their share the proverbial human detritus in the environment as the following article entitled The One Percent’s Huge Carbon Footprint provided by Carbonbrief. Disturbingly the world’s top 1% is responsible for 48% of the world’s CO2 emissions.
The Billionaire Next Door
The following chart entitled Where the Super Rich Reside provided by Forbes, gives a bird’s eye global view of the regions billionaires prefer to reside.
The “salt of the earth” subsidizes, through their taxes, the storage and maintenance of the elites’ super-luxury toys whether they’re sanctioned or under investigation for alleged criminal activities. Oftentimes they own the same engaging in preferential hiring practices and discriminating treatment of the few minorities who work for them. It’s a closed-end tax loop for criminals in which they play and we pay.
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The Cerulean Council is a NYC-based think-tank that provides prescient, beyond-the-horizon, contrarian perspectives and risk assessments on geopolitical dynamics and global urban security.