‘Life Is Becoming Impossible’: Activists Say Sanctions on Russian Oligarchs Don’t Go Far Enough

Wealthy Russians are facing sanctions over Putin’s invasion of Ukraine, but anti-corruption advocates say there are still loopholes left to close.

By , a Pentagon and national security reporter at Foreign Policy.
Russian billionaire Roman Abramovich's mansion in London
Russian billionaire Roman Abramovich's mansion in London
A pedestrian walks past a mansion owned by Russian billionaire Roman Abramovich in London on March 4. Tolga Akmen/AFP via Getty Images

Over the last week, a range of U.S. and European Union sanctions issued in response to the Russian invasion of Ukraine have wreaked a punishing toll on Russian oligarchs close to the Kremlin. Steel magnate Oleg Deripaska—already under U.S. sanctions—warned the economic penalties could trigger a recession, while Roman Abramovich, the owner of the European champion Chelsea Football Club, is looking to sell the franchise following outcry from British lawmakers over his ties to the Kremlin. Igor Sechin, a confidant of Russian President Vladimir Putin and head of the Russian state-owned oil giant Rosneft, woke up earlier this week to find that French authorities had confiscated his $120 million superyacht docked on the Mediterranean Sea. 

But privately, anti-corruption activists on both sides of the Atlantic as well as U.S. congressional aides are pushing for even more stringent measures to crack down on the flow of illicit Russian money into the West—an issue some believe the United States and European capitals haven’t treated skeptically enough over the past two decades. 

On Thursday, the Biden administration unveiled expanded sanctions imposing visa restrictions on 19 top Russian oligarchs and 47 of their family members and close friends. The U.S. move is the latest in a series of Western steps to make life less comfortable for Russian elites during the invasion of Ukraine, with the hope that they will in turn pressure Putin to reverse course. The British government also imposed sanctions this week on 15 oligarchs, freezing their assets. 

Over the last week, a range of U.S. and European Union sanctions issued in response to the Russian invasion of Ukraine have wreaked a punishing toll on Russian oligarchs close to the Kremlin. Steel magnate Oleg Deripaska—already under U.S. sanctions—warned the economic penalties could trigger a recession, while Roman Abramovich, the owner of the European champion Chelsea Football Club, is looking to sell the franchise following outcry from British lawmakers over his ties to the Kremlin. Igor Sechin, a confidant of Russian President Vladimir Putin and head of the Russian state-owned oil giant Rosneft, woke up earlier this week to find that French authorities had confiscated his $120 million superyacht docked on the Mediterranean Sea. 

But privately, anti-corruption activists on both sides of the Atlantic as well as U.S. congressional aides are pushing for even more stringent measures to crack down on the flow of illicit Russian money into the West—an issue some believe the United States and European capitals haven’t treated skeptically enough over the past two decades. 

On Thursday, the Biden administration unveiled expanded sanctions imposing visa restrictions on 19 top Russian oligarchs and 47 of their family members and close friends. The U.S. move is the latest in a series of Western steps to make life less comfortable for Russian elites during the invasion of Ukraine, with the hope that they will in turn pressure Putin to reverse course. The British government also imposed sanctions this week on 15 oligarchs, freezing their assets. 

“There has been this train of thought that you want to split the oligarchs: You want some of them to speak out against Putin or at least try to resist what he’s doing,” said Brian O’Toole, a sanctions expert at the Atlantic Council think tank and former U.S. Treasury Department official. But, he added, “It’s still a bit of a tenuous hope that all of a sudden Roman Abramovich or [major Russian industrial tycoon] Alisher Usmanov, these very rich guys are going to rise up and force Putin to do something.” During the 1990s, top Russian oligarchs, many of whom rapidly accumulated wealth after being given large shares in state-owned companies that had belonged to the Soviet Union, became instant billionaires in exchange for backing Boris Yeltsin’s presidential campaign. The plan was part of Yeltsin’s economic restructuring known as “shock therapy,” an effort to shake off Russia’s communist trappings after he became the nation’s first leader after the fall of the Soviet Union in 1991. 

But the Putin era has seen a dramatic shift in the relationship between the oligarchs and the regime, experts said. “The essential deal Putin has struck is, ‘You can get rich, but you don’t mess around in my business. And if you mess around in my business, the scary knuckle-draggers are coming after you,” O’Toole said. Even with the Russian economy flagging and Russian yachts being seized in European ports, O’Toole believes that the threat that Putin could lash out against the oligarchs would prevent them from speaking up. 

One senior congressional source, speaking on condition of anonymity to talk candidly about ongoing policy discussions, acknowledged that the sanctions on oligarchs were a “useful exercise” but might not materially impact the Russian economy or Putin’s overall wealth, because the Kremlin is able to pass money through different hands and fronts. “The more that the U.S., the EU, and Britain can do to cut off this gangrenous limb that is Russian money needs to be done right now,” the source said, adding that U.S. sanctions on major Russian industries and secondary sanctions on banks were likely to have a greater effect. 

But difficulties remain in getting Western governments all on the same page when it comes to whom to sanction. On Thursday, for instance, the U.S. sanctioned Usmanov but did not target Alfa Bank chair Petr Aven or its co-founder Mikhail Fridman, both of whom were targeted with EU sanctions earlier this week. And many of the so-called Navalny 35—a list of Russian officials and oligarchs Russian opposition leader Alexei Navalny’s nonprofit Anti-Corruption Foundation asked U.S. and European officials to sanction last year after Putin’s poisoning of Navalny—have yet to be targeted.

There are other internal procedural hurdles, too: The U.S. Treasury Department’s Office of Foreign Assets Control, the main government clearinghouse for sanctions, can easily get bottlenecked as an office of just 200 people, U.S. officials and aides who spoke to Foreign Policy said. 

Other measures could take time. Bloomberg reported this week that going after the finances of Abramovich, the Chelsea owner, would require the British government to build a complex legal case to siphon off his assets. That can also backfire: Deripaska, the steel tycoon, sued the U.S. government in 2019 in an effort to have sanctions against him removed. (He eventually lost the case.) 

And oligarchs have other loopholes to protect their U.S. assets and interests. A second senior congressional aide, speaking on condition of anonymity to talk about pending legislation, told Foreign Policy that members of both parties had been looking to tighten up both federal and congressional lobbying rules. 

While U.S. laws require agents of foreign governments to register as lobbyists, both China and Russia have been able to flout the rules by having special interest groups pose as other entities, befuddling regulators. “The Russians use this model, but the greatest offender of all is China,” the second congressional aide said. “China officially has nobody lobbying for them except for our entire Chamber of Commerce. They don’t have to report anything.” 

While some think going after oligarchs is merely a cathartic measure, other anti-corruption activists see it as a way to chip away at Putin’s mandate within Russia. Experts said Russia’s wealthy have gotten used to sending their children to top private universities around the world and splurging on shopping trips in cities such as London and Paris—and can be slapped with easy visa bans to stop it. 

Edward Lucas, a columnist at the Times in London who has covered Russian corruption for years and is running for Parliament in Britain, has proposed targeting thousands of prominent Russians and members of their families, such as members of Russia’s government and unicameral parliament that is stacked with Putin’s United Russia party, with visa bans—which are harder to challenge legally than asset freezes—unless they resign their positions.  

“That way you get very sharp pressure because a lot of these people have a daughter at Sciences Po and a son at [the London School of Economics], and their wife goes and has shopping trips in Paris or London, and the mom’s having her teeth fixed in Germany, and the sister runs a hotel in Cyprus,” Lucas said. “They’re very globalized, and suddenly the entire family is dumping on this person, saying, ‘You’ve got to quit your job, because our life is becoming impossible.’”

Lucas proposed this week that the freezes should also extend to lobbyists who represent Russia and Russian-owned companies, such as former German Chancellor Gerhard Schröder, who serves as chairman of the board of the Russian state-owned oil company Rosneft and chairman of the shareholders committee of Gazprom-controlled Nord Stream AG. Lucas has also called for new laws across Europe to prevent so-called shell companies from owning property, through which many Russian oligarchs are able to hide their assets. (The United States has similar laws in many states.) 

“I think the caviar express has just hit the buffers, actually—or derailed,” he said. “This is the biggest change in the normative consumer regulatory climate for dealing with Russia since 1991, and it’s happened in about a week.”

Jack Detsch is a Pentagon and national security reporter at Foreign Policy. Twitter: @JackDetsch

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