The Russian Elite Can’t Stand the Sanctions

The latest measures are far more effective than Western powers’ past efforts to target Russia’s elite.

Illustration of a Russian ruble tied up in strings.
The Atlantic

About the author: Brooke Harrington is a sociology professor at Dartmouth College. She is the author of Pop Finance and Capital Without Borders: Wealth Management and the One Percent. Her site is brookeharrington.com.

The United States, United Kingdom, and European Union had barely announced sanctions on overseas Russian wealth when the oligarchs began to whine and protest. That meant the policy—enacted after Russia invaded Ukraine—was working as intended, to punish Russia’s elites for supporting President Vladimir Putin. By last weekend in Moscow, the Russian-state-television host Vladimir Solovyev raged on camera over what the sanctions would mean for him personally: loss of access to his two luxury homes in Lake Como, Italy, near the villa of George Clooney.

Amid a broad suite of economic sanctions targeting the Russian financial system, which has driven the ruble’s value to record lows, Western powers also are significantly increasing their efforts to identify and freeze the assets of Putin’s business allies. And some of Russia’s best-known oligarchs—business figures who have built up huge fortunes, in most cases through their connections to the state—are now calling for an end to the war. By Sunday, the billionaire industrialist Oleg Deripaska and Mikhail Fridman, a founder of Russia’s largest private bank, both urged an end to Putin’s war. This was a startling break in ranks among the country’s elites. Deripaska is on the U.S. sanctions list; Fridman is on the EU’s. Even those who have not yet faced individual sanctions appear to be feeling pressure. Another billionaire businessman and close associate of Putin’s, Roman Abramovich, has put his British soccer club up for sale and vowed to donate the proceeds to “all victims of the war in Ukraine.” Over the weekend, Abramovich also accepted the Ukrainian government’s request for mediation help in peace talks with Russia. Oleg Tinkov, a banker and entrepreneur, frequently uses his Instagram account to post photos of things like his 253-foot yacht with mini submarine, but he told his 634,000 followers last week, “Innocent people are dying in Ukraine now, every day, this is unthinkable and unacceptable.”

If figures like these are calling for, even demanding, an end to the war, the sanctions are far more effective than past efforts by Western powers to target the Russian elite.

The oligarchs play essential roles in Putin’s Russia: They provide invaluable public support for the regime, lead key companies and institutions, and distract attention from and, by some accounts, help conceal the president’s own enormous wealth. As the jailed anti-corruption campaigner Alexei Navalny has been arguing for years, Putin’s continuing ability to exercise power requires the cooperation and support of others. Navalny listed 35 such individuals as essential supports to Putin’s regime. (Navalny, the U.S., the U.K., and the EU all have somewhat different names on their lists.)

Precisely how much power these figures exercise over Putin is a matter of debate, and some critics have argued that sanctions are designed only to make Westerners feel good. But the wealthiest Russians are far better placed than the average citizen to communicate to Putin how his invasion is devastating his own country. And the lavish lifestyles that oligarchs and their families lead mean they’re highly vulnerable to external pressure—if Western powers make a more concerted effort to target them than they have in the past.

Oligarchs who are cut off from accessing their offshore wealth won’t starve, but they will be unable to maintain their jet-setting luxury lifestyle. As Josep Borrell, the EU’s high representative for foreign affairs, quipped in a now-deleted tweet, this means:

No more:

Shopping in #Milano

Partying in #SaintTropez

Diamonds in #Antwerp

That tweet attracted attention precisely because it touches on a phenomenon of great significance that is often overlooked: Looting your country’s wealth is pointless if you can’t show off the spoils.

What is an oligarch without ostentation? For many Russian elites, the answer is apparently “nothing.” The sanctions threaten oligarchs with a kind of annihilation, similar to the phenomenon that sociologists describe as “social death.” That is why Russian elites were so quick to gather up their expensive toys as soon as sanctions were announced, and why several have taken the extraordinary step of publicly begging Putin for a quick end to the war.

Although economists and policy makers may pooh-pooh such ideas, sociologists—including me—have long understood that the need to see and be seen is a fundamental driver of human affairs. Perhaps surprisingly, oligarchs need not just to be filthy rich; the need to be seen as such seems to only increase with economic wealth. That’s one reason billionaires such as Elon Musk, Jeff Bezos, and Richard Branson flamboyantly compete among themselves to launch rockets into space amid great media fanfare, rather than discreetly enjoying their fortunes in private.

I have spent the past 15 years researching the offshore wealth of the super-rich. In my efforts to understand how oligarchs’ wealth was hidden from tax agencies, divorcing spouses, and disgruntled business partners, I have been astonished again and again at how many oligarchs cannot seem to live without the splashy public display of their wealth, even when it puts them at risk. In recent days, Internet sleuths and government agents alike have been closely tracking the movements of Russian oligarchs’ private jets and multimillion-dollar yachts. Instagram posts from plush locations are a major strategic asset for anyone seeking to impose accountability on people who otherwise seem to be untouchable. For example, a niche profession has developed in tracking down transnational oligarchs via their social-media posts so they can be served with legal papers to freeze their assets in debt-collection proceedings. These high-end collection agents, the Boba Fetts of the ultra-high-net-worth crowd, can do their job precisely because the oligarchs and their globe-trotting family members can’t help themselves. They seem compelled to post photos of themselves hobnobbing with celebrities or posing with race cars, even when they know they are under investigation. Many people claiming bankruptcy in the face of heavy fines and court judgments have been exposed to the courts as frauds after unintentionally or intentionally exposing the extent of their assets.

This tendency appears pronounced among the families of Russian oligarchs. The now-locked Instagram account “Rich Russian Kids” acquired 1.5 million followers just aggregating the images of decadent luxury posted by the sons and daughters of wealthy Russians.

As social scientists have argued for more than a century, the evidence is overwhelming that, beyond a subsistence level, people will fight even harder for status than they do for money. We see that fight now in the anti-war comments and peacemaking efforts of Russia’s elites, after just a few days of sanctions pressure. They’re behaving exactly as sociologists would expect when status is threatened among a group accustomed to impunity: They’re angry, and they’re anxious. Their discomfort has not yet persuaded Putin to stop his aggression in Ukraine, but it’s a reminder that the U.S., U.K., and EU can and should confront a kleptocratic system that allowed Russia’s president to amass so much power in the first place.