Updated Mar 1, 2022 - Economy

The West ramps up the pressure on Putin's inner circle

Photo illustration: Aïda Amer/Axios. Photos: Andrey Rudakov/Bloomberg via Getty Images, Mikhail Svetlov/Getty Images

As broad-based sanctions cripple the Russian economy, the West is also ratcheting up economic pressure targeted at the country's oligarchs — known for their splashy yachts, big-name investments and piles of dark money squirreled away around the globe.

Why it matters: Some of these wealthy Russians may have a measure of influence over Russian President Vladimir Putin. The U.S. and Europe are hoping that if they squeeze the oligarchs, the oligarchs may pressure Putin. In the longer term, going after hidden Russian wealth could curtail the power of Putin and his circle.

Driving the news: The EU on Monday banned travel and froze the assets of 26 leading businessmen, government officials and even journalists with longstanding ties to Putin, the FT first reported. The sanctions add to a pile that have been levied against oligarchs and their family members.

  • On the list: Igor Sechin, CEO of Rosneft, Russia's state oil company, "considered to be one of the most powerful members of the Russian Political elite," the EU said in its statement.
  • Nikolay Tokarev, the CEO of Transneft, a major oil and gas company, is also among the West's specific targets. He served with Putin in the KGB in the 1980s, and is one of the oligarchs who took control of state assets in the 2000s, the EU said.

Details: There are three classes of Russian elite, said Chris Miller, Director of the Eurasia program at the Foreign Policy Research Institute.

  • First there are folks who made their money in business and had to cut deals with Putin and his predecessors to keep hold of their assets. They're the most well-known oligarchs, he said. They include Mikhail Fridman, the cofounder of Alfa Group, a Russian conglomerate. He was on Monday's EU blacklist.
  • Then there are a small number of elite who acquired fortunes simply because they've been given stakes in companies — "judo sparring partners from the 90s who are now billionaires," Miller said.
  • Finally, there are the men who have control over real economic assets. This category includes the CEOs Sechin and Tokarev. "They actually have political influence; their careers and networks extend beyond their relationship with Putin," Miller said.

Yes, but: There's a lot of Russian money hidden around the globe, including in the U.S. and U.K. — and it's not always clear where it is. "Nobody knows anything and therefore can't do anything," said Anders Åsland, a senior fellow at the Stockholm Free World Forum and the author of "Russia's Crony Capitalism."

  • Recent laws passed in the U.S. and EU are intensifying efforts to untangle this dark web, but they're just at the start.

The bottom line: "How much can we disrupt the oligarchs? We don’t know," said Gary Kalman, director of Transparency International, an anti-corruption group. "There’s money all over the world we can’t touch because we have no idea where it is."

Go deeper