How Russian oligarchs find refuge in Turkey and the United Arab Emirates
Yet, as Abramovich and other Russian oligarchs find out, someone still loves a billionaire. Luckily for Abramovich, those people appear to include Turkish President Recep Tayyip Erdogan. Abramovich, who attended the ongoing Russian and Ukrainian peace talks hosted by Erdogan in Istanbul, is said to have moved not one, but two superyachts into Turkish waters. Reports surfaced that he flew his lavish private jet to Turkey, a country that has not sanctioned Russian oligarchs.
Even financial havens like the Cayman Islands apply sanctions. But last week Erdogan seemed keen on rolling out a red carpet for the Russians. “Some capital groups,” he said, could “park their facilities with us.” A day later, its foreign minister, Mevlut Cavusoglu, told CNBC that sanctioned Russian oligarchs were welcome in Turkey as tourists and investors, as long as their business dealings respected international law.
Despite a slew of new Western sanctions against Russian oligarchs since the Kremlin invaded Ukraine, Turkey’s awareness of the oligarchs suggests how difficult it could be for the United States, Britain and the Union European Union to punish a gallery of thugs of the richest Russian President Vladimir Putin. friends.
When it comes to reining in sanctioned Russian wealth, the West faces a host of challenges. The assets of the super-rich are often hidden away professionally, with legal ownership buried inside a Matryoshka doll of shell companies within shell companies. The world of asset ownership is so opaque that the EU Tax Observatory, a Paris-based research lab, is proposing a new “European Asset Registry” to circumvent legal subterfuge and establish ownership of large stakes. .
“There’s a lot of information out there about who owns what, but it’s unrelated and not systematically checked,” Theresa Neef, a researcher at the EU Tax Observatory, told me. The Asset Registry “would bring together all the information you have from land registries, business registries, central title depositories [and other sources] and connect them. This would check Russian oligarchs, but also cases of tax evasion, money laundering, etc.
But after decades that saw the property markets of cities like London and Miami transformed by Russian wealth, other countries now seem to sense an opportunity in the West’s crackdown. Even Russians who haven’t been blacklisted are getting nervous about owning assets in the West. Vagit Alekperov, CEO of the Russian oil and gas company Lukoil, for example, was not sanctioned. But it would nonetheless have moved expensive assets like yachts from western ports. Others, like Abramovich, have faced sanctions in Britain and the European Union, but not in the United States.
This created a sort of gray area for countries keen to woo Russian money. The Turks are not alone. My colleagues reported that a handful of luxury yachts owned by Russian billionaires were heading to the Maldives, an island nation in the Indian Ocean that does not have an extradition treaty with the United States, and Montenegro , a non-EU nation that for years has struggled with a reputation as a center of money laundering, organized crime and corruption.
Bloomberg News reports that Abramovich – whose value is estimated at nearly $14 billion – is just one of many wealthy Russians who have been looking for a home in Dubai. Like Turkey, the United Arab Emirates has rejected sanctions against Putin-linked oligarchs and is increasingly seen as a sanctuary for Russian money. The same teenage tracker who followed Elon Musk monitoring the movements of his private jet also tracked the March arrival in Dubai of a Boeing 787-8 Dreamliner owned by Abramovich on March 4.
At least 38 business executives or officials linked to Putin own a slew of properties in Dubai worth more than $314 million, The New York Times reported, citing data compiled by the Center for Advanced Defense Studies at non-profit. Some of these owners are subject to sanctions from the United States or the European Union.
“The sanctions are only as strong as the weakest link,” Adam M. Smith, a lawyer and former adviser to the US Treasury Department, told The New York Times. “Any financial center that is ready to do business when others are not could create a leak in the levee and undermine overall measures.”
Sinan Ulgen, a visiting scholar at Carnegie Europe, told me that Turkey has seen a rush of nearly 30,000 Russian exiles since Putin’s invasion of Ukraine. Most, he says, are professionals — employees of multinational corporations, nongovernmental organizations, think tanks and others who fled Moscow’s Orwellian crackdown on dissent in Russia, where it’s now illegal to even call the invasion a “war”. They are people looking for a safe haven, and Istanbul – the city where most also flock – is almost sure to see a positive cultural and economic injection upon their arrival.
Erdogan may also see the extreme wealth of the Russian oligarchs as a way to fill a gaping hole in Turkey’s economy, which has suffered a severe surge in inflation under his unorthodox economic policies. Although Turkish officials have sought to make it clear that they do not condone transfers or investments that violate international law, they have also been clear that Turkey is a sanctions-free zone for Russians worried about the safety of their wealth in the West.
“It’s a very slippery slope,” Ulgen said. Erdogan “is trying to soften the economic shock in Turkey, and one way to do that is to attract Russian money that is not under sanctions. This is Turkey’s argument. However, it remains to be seen whether even this flexibility will be tolerated, particularly by the United States.
“There is the legal argument that it can be done,” he continued. “But it’s the wrong lens. And there is no real economic benefit to having a Russian megayacht in a Turkish port.