Russia's Wartime Assets Grab: Targeting Tycoons With Foreign Ties

In a move that has raised eyebrows and concerns among the international community, Russia has been targeting tycoons with foreign ties in a wartime assets grab. The Russian government has been seizing assets and nationalizing businesses owned by local tycoons, many of whom have amassed significant fortunes since the 1990s. This trend has been accelerating since the start of Moscow's invasion of Ukraine two years ago, with prosecutors filing at least 55 cases seeking to nationalize assets.

The latest example of this trend is the case of Makfa JSC, Russia's largest pasta producer. Prosecutors have filed a court case in Chelyabinsk, central Russia, to wrest control of the company, which is controlled by the families of Mikhail Yurevich, a former governor of the Chelyabinsk region, and former Duma deputy Vadim Belousov. The total value of the assets is $497 million, and prosecutors claim that Yurevich and Belousov were de-facto controlling and managing the business when they were officials, which is banned by Russian law.

This trend has raised concerns among Russian businesses, who are seeking guarantees from the Kremlin that they won't face asset seizures and privatization reviews. Oleg Vyugin, a former first deputy governor of Russia's central bank, has warned that "the creeping redistribution of property has begun," and that Putin is seeking a "new elite" that is loyal to him. Prosecutors have been filing cases to nationalize assets, often citing violations of Russian law by the owners.

The international community has responded to Russia's targeting of tycoons with foreign ties by imposing sanctions and freezing assets. However, these measures have had limited success in isolating Putin and choking off financial support for the war in Ukraine. Some experts have suggested that offering tycoons a more clearly defined route off sanctions lists in exchange for cash and condemning Putin could be a more effective approach. This could involve creating a process for tycoons to divest their assets and pay a penalty, while also committing to support Ukraine and condemn the war.



However, this approach may also be politically controversial, as it could be seen as rewarding those who have profited from their association with Putin. Additionally, it may not be effective in the long run, as it has not yet led to a significant change in behavior among the targeted tycoons. Some tycoons are fighting back in court, calling the sanctions process opaque, illegal, and unfair, which could further complicate the situation.

In conclusion, Russia's targeting of tycoons with foreign ties in a wartime assets grab has raised concerns among the international community and the Russian business community. While the international community has responded with sanctions and asset freezes, these measures have had limited success. Offering tycoons a more clearly defined route off sanctions lists could be a more effective approach, but it may also be politically controversial and may not be effective in the long run. The situation is complex and evolving, and it will be important for the international community to continue to monitor the situation and adapt its response as needed.