Project SyndicateProject Syndicate

Stealing Russia

By Anders Åslund

07 Feb 2023 · 4 min read

Editor's Note

Sanctions against Russia were meant to punish the country's leaders. But the redistribution of assets caused by the sanctions only further benefits Putin's cronies, according to this PS analysis.

STOCKHOLM – Wars and sanctions usually lead to major redistributions of property through nationalization, confiscation, and often criminalization. Russia today is no exception. Largely underreported, a radical redistribution of property is underway in the country. Just as the Kremlin’s war of aggression in Ukraine is increasing President Vladimir Putin’s control of society, it is severely damaging economic efficiency, with international sanctions hitting energy, banking, armaments, and other core industries with increasing force.

Before Russia invaded Ukraine last February, it boasted cumulative foreign direct investment of about $500 billion. But most of this was from Western companies that have since declared their intention to leave the country. According to Yale University’s Jeffrey A. Sonnenfeld, more than 1,000 firms have announced that they are cutting back operations in Russia beyond what is required by sanctions. Assets worth hundreds of billions of dollars are up for grabs, and though the changes of ownership will be gradual and non-transparent, the nature of the transformation is clear.

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