The EU Court explained how Russian businessmen can free themselves from European sanctions. There are two ways: one is to unequivocally condemn the war waged by Russia against Ukraine. The second way is to change their lives and activities in such a way that they do not meet the formal criteria for sanctions, i.e. to no longer be among the “leading“ businessmen. This became clear at a public hearing at the Court of Justice of the EU on the appeals of five Russians against previous court decisions confirming their inclusion in the sanctions lists.
Which businessman is "leading"?
Everything is clear about the first method, but as practice shows, it is not applicable to all those who appear on the lists. However, what are their chances of proving that they are no longer among the major Russian businessmen? During the hearing, it became clear that the decision to recognize a businessman as "leading" is made on a case-by-case basis. However, there is only one way for him to cease to be considered such - by "fully and truly" giving up his assets in Russia. Therefore, it is not enough to simply give up a management position, change the ownership structure or sell one business and buy another - this will be seen as an attempt to circumvent sanctions.
The EU's highest court is considering complaints from Dmitry Pumpyansky, a former shareholder in the Russian investment company “Sinara Group“ and “Pipe Metallurgical Company (TMK), Viktor Rashnikov, head of the board of directors of the Magnitogorsk Metallurgical Combine (MMK), Dmitry Mazepin, former owner of “Uralchem“, German Khan, co-founder of “Alfa Group“, and Tigran Khudaverdyan, former CEO of the “Yandex“ browser.
The court's decision will become a precedent, as other similar cases have been filed. But it will not be issued soon. The conclusion should be ready by June 5.
Which businessmen have already managed to get rid of the sanctions?
Russian businessmen who want to be removed from the sanctions lists can refer to previous successful similar procedures. Since the beginning of the war against Ukraine, there have been over 20 such examples in the EU.
By condemning the war against Ukraine and severing ties with the Russian economy, the founder of „Yandex“ Arkady Volozh, who is now building a new business in the West, secured the lifting of the sanctions. In a similar way, but in the UK, Oleg Tinkov, founder of T-Bank („Tinkoff Bank“), also achieved the lifting of the sanctions.
The former head of „Eurochim“ Vladimir Rashevsky, the former top manager of the Russian conglomerate “Sistema“ Sergey Mndoyants, the former head of “Ozon“ Alexander Shulgin and others managed to achieve the lifting of the sanctions through EU courts. In addition, a number of relatives of large businessmen were also removed from the sanctions. The most famous of them is the former “Formula 1“ pilot Nikita Mazepin. But his father, the co-owner of “Uralchim“ Dmitry Mazepin, never managed to achieve the same. The fact that he handed over control of the company to its managers simply turned out to be insufficient.
How the sanctions affected the fortunes of the richest Russians
The sanctions caused the richest Russians obvious inconveniences, some of them suffered financial damage, but not too great. But overall, they have not become poorer. During the war, the number of dollar billionaires in Russia has not decreased. The number of Russian participants in the “Forbes“ list, whose fortune is equal to or exceeds $ 1 billion, has remained almost the same: in 2021 there were 123, and in 2024 - 125.
The total fortune of Russian dollar billionaires has decreased compared to 2021, but only by a few percent - to $ 573.1 billion. Considering that the ruble has depreciated by a quarter during this time, we can conclude that the richest entrepreneurs have rather prospered - their total fortune in rubles has even increased.
Why are they still getting richer?
At the same time, if we look closely at the dynamics of the largest fortunes, it will turn out that over the past three years things have been better not for those who have avoided US, EU or UK sanctions, but for those who have fallen under them. Among the new additions to the Forbes list are also people from the sanctions lists. Of those who appeared in the 2021 billionaires ranking, 55 people have sanctions imposed on them. Of these, 22 have become richer, another 22 have lost some of their wealth, and 11 people have been removed from the lists, according to experts from the London School of Economics. Among those who were not subject to sanctions, only 20% have managed to increase their capital, and 60% have ceased to be dollar billionaires.
There are several factors that allow businessmen under sanctions to continue to get rich or create new fortunes, experts from London note. The first factor is the acquisition of foreign assets, as Ivan Tavrin did when he bought out foreign investors' shares in “Avito“ and hh.ru. The second factor is import substitution. For example, Vadim Moshkovich, head of “RUSAGRO“, doubled his fortune. The third factor is the growth in world prices for a number of goods. For example, the rise in fertilizer prices in 2023 brought Andrey Melnichenko (“Eurochim“) to first place among the richest people in the country. The fourth factor is the consumer boom, thanks to which, for example, the owners of the “Sportmaster“ stores and DNS made it to the Forbes list.
Could the sanctions have been more effective?
If the goal of the sanctions was to make influential businessmen turn against the authorities, it can be admitted that they failed. With the exception of Volozh and Tinkov, no one condemned the war. At the same time, the companies that these entrepreneurs created and developed continue to work with new owners. In other words, since their separation from Russia, they have not suffered economic damage.
To give meaning to personal sanctions, restrictions should be monetized, suggests the “Bloomberg“ columnist Lionel Laurent: "Make them pay to be removed from the blacklists or to have their assets unfrozen, and give the money to Ukraine," he writes.
However, the moment for such a change in sanctions policy may have already been missed, as the US has decided to force the end of the war, without taking into account the opinion of Europe.
Author: Oleg Khokhlov