The downing of Malaysian Airlines flight 17 has raised tensions that seemed to be cooling between Vladimir Putin’s Russia and the West. Western leaders have threatened to levy additional sanctions against the Russian economy as finger pointing over the incident continues. The West has joined together to decide just how to punish Russia, with British Foreign Secretary Phillip Hammond calling for a complete ban on arms sales to Russia. But what effect have the sanctions already in place had on Russia? Quite a bit.
While many Russian oligarchs have found safety moving their money into the London housing market, sanctions pose more burdensome for many. One notable Russian billionaire, Gennady Timchenko, sold his shares of a business widely believed to be owned in part by Vladimir Putin. While EU travel bans have hindered Russian oligarchs’ movements, the US sanctions have hit them in their wallets.
Bloomberg News reported yesterday that Russian oligarchs were in horror as Putin continues to isolate Russia from the world. Russian billionaires have lost $14.5 billion since the Ukrainian crisis began, while US billionaires have made gains totaling $56.5 billion. While shared economic concerns may cause the EU to flinch, the US has shown a more aggressive attack, already having sanctioned prominent state-owned businesses and members of Putin’s inner circle, including Gennady Timchenko and Arkady Rotenberg. New sanctions announced the day before the downing of the Malaysia Airs flight restricted Timchenko’s gas company OAO Novatek’s use of US debt markets.
On Sunday Secretary of State John Kerry said there was mounting evidence that Russia had assisted Russian-Separatists in Ukraine in the attack on the Malaysian airliner that resulted in the death of one American. Kerry called for new, tougher sanctions against Russia and an increase of military aid to Ukraine.
While some believe Putin ultimately calls the shots in Russia, it was the circle of Boris Yeltsin associates known as The Family and Russian oligarchs who made Putin a national and then an international figure. It was Russian money that pulled Putin from obscurity and picked him as the man to succeed Yeltsin. If the moneyed powers of Russia continue to take losses, look for Putin’s tone to dramatically change. If not, look for Russian money to begin looking for someone to replace him.