Russian billionaires are leaving Europe as it becomes more hostile over time, with Russia becoming more friendly and appealing for investments.
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Russian President Vladimir Putin, center, and Russian CEO of Rosneft oil company Igor Sechin, right, visit “Zvezda” Shipbuilding Complex in the Bay of Bolshoy Kamen, in the far eastern region of Primorsky Krai, Russia, September 11, 2023 (Sputnik)
In the wake of international sanctions and calls from President Vladimir Putin to repatriate their wealth, Russian billionaires have been relocating their assets from Europe, resulting in a significant shift of capital.
The billionaires in question moved assets valued at tens of billions of dollars out of Europe since the start of the Ukraine war and the imposition of sanctions on Russia, with recent notable instances including the relocation of United Medical Group CY Plc and MD Medical Group Investments Plc from Cyprus to Russia, both controlled by Igor Shilov and Mark Kurtser, Bloomberg reported.
The media conglomerate said data it compiled highlights that this trend has brought the total value of assets moved by the wealthiest Russians to at least $50 billion.
The sanctions imposed by the collective West, namely the United States, the European Union, the United Kingdom, and other allies, forced Russian billionaires few options for gains in Europe, with many instead taking their cash elsewhere that would be more friendly for the funds, such as the United Arab Emirates, Kazakhstan, and even Russia.
The family holdings of fertilizer billionaire Andrey Guryev, steel tycoon Victor Rashnikov, and billionaire Igor Altushkin have notably made it out of Europe to other nations, with Cyprus, Jersey, and Switzerland being the most affected.
The effort to undercut reliance on the West has been pushed for by Moscow as the former became a more and more hostile environment for Russian interests. In August, President Putin directed the government to establish mechanisms to regain control over Russian companies previously held through foreign entities that were lost due to sanctions.
Russia also made efforts to make repatriation more appealing to Russian investors, introducing low-tax domestic “offshore” zones in 2018 as it continues to refine them over time. Moscow also increased the costs associated with maintaining assets in traditional tax havens like Cyprus and Malta, while holdings re-registered in Russia with international assets may qualify for tax benefits.
Notably, it’s not only billionaires who are moving their assets back to Russia; other Russian companies have also relocated. First Deputy Economy Minister Ilya Torosov revealed that 115 companies moved to domestic “offshore” zones this year, bringing the total to 254.
Though there are still many Russian companies maintaining their assets in Europe, the trend is very apparent and shows that Europe may soon be void of any and all Russian companies, or at least down the line, if it continues to be such a hostile environment toward Russia and its nationals.
Europe is not only harming its interest by reducing the amount of foreign assets it has, but it is also helping boost the Russian economy by allowing there to be more funds in the country, which puts into question the economic and foreign policies of the West.
A report issued in August highlighted how the sanctions that were supposed to be a deadly blow to Russia’s economy have turned into a nightmare for Germany, Europe’s largest economy.
The hysteric sanctions, unprecedented in history in terms of volume and period span in which they were adopted, did not subdue Moscow, rather, they shoved the German industrial complex downhill, leaving one of the EU’s most powerful countries vulnerable to rising energy prices and sticky inflation rates.
Germany is on a steady path of economic downfall and de-industrialization as a result of Europe’s anti-Russia policies and sanctions, German MP Uwe Schulz, a member of the right-wing AfD party, declared.
Read more: Making sense of a self-induced recession in Europe
Punitive measures against Russia have failed but struck Germany’s economy, he said in a statement that was published on his party’s website.
Russia was ranked in the top five world’s largest economies as of the end of 2022 as per a recent World Economics report, and it outgrew all of its European peers in terms of purchasing power parity (PPP).
The politician pointed out that evidence of the extreme impact of sanctioning Russia on the German economy is the “disappointing economic prospects [for the country] for 2023,” as well as “poor results in the automotive industry, [which] continue to lead to lower manufacturing output.” In this regard, the lawmaker called on the German government to immediately “lift economic sanctions against Russia” in order to “prevent [further] economic damage.”
In June, the Eurozone officially announced it had entered recession. Among the main factors for this financial crisis was the downturn of the bloc’s biggest economies, on top of which was Germany.
Following this event, official data showed that the German industrial output experienced a significant decline in June. Germany’s crucial industrial heavyweight, the automobile sector, experienced a significant drop of 3.5%, further exacerbating the overall decline. The situation is exacerbated by fluctuations in significant orders, which have significantly impacted the industrial economy, despite rising demand.
The German Economy Ministry, meanwhile, warned of a pessimistic outlook for the economy attributing the slump to surging energy prices and elevated interest rates that have adversely impacted various sectors of industry.
