Sanction enforcement gains ground while Russian oligarchs divide up a smaller pie

Oliver Bullough


Every week, I collect news articles and publications I think might be worth including in this newsletter. Normally, there aren’t very many and the theme of the week is pretty obvious. In the 82 years that have passed since last week’s newsletter, however, I have accumulated so many things that I don’t have any idea where to start. 

Many of the stories relate to the horrible situation faced by the millions of Ukrainians forced to flee their country into Moldova, Romania, Poland and elsewhere, but I am trying to talk about oligarchs, so I shall just share this link for UNICEF’s fundraising platform and try to focus on something else.

When trying to make sense of sudden crises, I find that it’s normally a good idea to turn to Adam Tooze, economist and prolific writer, and I found the latest edition of the podcast he makes with Foreign Policy really interesting. 

He puts the sanctions that have been placed against Russia in context and attempts to lay out what they will mean for ordinary Russians. I think he overstates the chance that Russia will be able to build up domestic capacity over the next few years – corruption will see to that – but not the devastating impact that Putin’s war will have on ordinary Russians for years to come. It is of course easy to discount this, since the impact on Russians is far less severe than what Putin is inflicting on the Ukrainians, but I find it hard to read pieces like this one about Russians fleeing to Istanbul, or this one about Bishkek, without thinking that some of them at least are victims of this senseless war too.

Oligarchs will still be able to use their access to Putin to divide up the diminished Russian pie, just as they did before. In fact, we may see this crisis drive even greater inequality in Russia, as the assets of the middle class are eradicated, but the dollar-denominated fortunes of the very wealthy remain largely unscathed.

But what about the impact on consumers in the West (who, lest we forget, were already worrying about soaring energy prices)? Western countries tried to carve out energy exports from the restrictions on Russia (which is a bit like carving out burger sales from restrictions on McDonald’s; on that note, McDonald’s has closed its stores in Russia), but appear to have been circumvented by events. I went on a radio phone-in this morning and, while I waited for my turn to speak I heard a remarkable spiel from host Nick Ferrari about his willingness to pay an extra five pence a liter for gasoline, if it meant helping Ukraine. I suspect an energy boycott is coming, whatever happens, driven by public fury.

  • “The flow of natural resources has been disrupted; some markets, like wheat, have completely seized up. Politically, the commodity loopholes are becoming untenable: The West is today paying more money to the Russia of Vladimir Putin than before the invasion, probably more than $1 billion a day,” according to this piece from Bloomberg. “Western leaders were facing an ugly choice. They could impose official bans on Russian oil and other commodities, and witness even higher prices, or allow the trade, disrupted as it is, to continue, thereby financing the Kremlin. They have chosen an impossible third way: Talk openly about embargos, without actually implementing them. The result is higher prices for Western consumers and higher revenues for Putin.”

The chaos was visible in the behavior of Shell Oil, which became the target of a social media pile-on after its traders bought a cargo of Russian oil, and which released a statement in response which strongly resembled the kind of thing a celebrity might say after being photographed acting inappropriately with someone else’s wife.

  • “We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel – despite being made with security of supplies at the forefront of our thinking – was not the right one and we are sorry,” it said.

Shell will no longer buy Russian oil, will shut its operations in Russia, and will basically no longer have anything to do with the place. I have strong memories of the effort required for Shell to get its Sakhalin-2 operation going, which involved significant expenditure of sweat and treasure. It is an incredible demonstration of the severity of this crisis, that a super-major is prepared to walk away from that, rather than risk the anger of Western customers.

There is no doubt that the immediate impact of the sanctions will hit Russia far harder than Western countries and a long term move away from buying Russian exports would have a long term effect on the Russian economy. European governments have ambitious plans to replace Russian gas, which would be geopolitical (and environmental) game-changers. It will, however, require a massive investment in renewable energy and that will not bear fruit for years. My concern is that – once this crisis is over — the anger over Russian aggression will flip pretty soon to anger over the high prices we will end up paying for fuel, electricity and gas. Nigel Farage, the man who helped bring about Brexit, has already started campaigning against the U.K.’s Net Zero commitment, and I suspect we will see more of the same from other populist politicians/shameless charlatans who spot an earning opportunity.

Oligarchs always find a way to bounce back and won’t surrender their earnings from oil and gas without a fight. That’s my prediction.


There is a degree in anguish in the U.K. this week that the European Union’s sanctions list is longer than Britain’s, but I think this is missing the point. It isn’t how long a list is, it’s what you do with it that counts, and Europe and Britain alike have a pretty dire record of enforcing sanctions, or even maintaining them against the most high-profile of targets.

Here’s a statement from 2019 explaining how even sanctions against Viktor Yanukovich ended up being successfully challenged in court. European authorities have a 40% failure rate on sanctions, according to some estimates, and have to do a lot better at rebuffing legal challenges if they want these latest measures to really put pressure on Putin.


While enforcement in the EU and U.K. is pathetically weak, and shows no signs of getting better, the U.S. administration has announced the creation of KleptoCapture, which is a frankly awful name for a great concept.

  • “To those bolstering the Russian regime through corruption and sanctions evasion: we will deprive you of safe haven and hold you accountable,” said Deputy Attorney General Lisa O. Monaco, in a statement. “Oligarchs be warned: we will use every tool to freeze and seize your criminal proceeds.”

This appears to be the first concrete development after the G7’s announcement of a “Transatlantic Taskforce” to tackle kleptocracy and, for me, watching the Department of Justice ride into battle against the baddies has the heartening effect of seeing the Riders of Rohan appear when you’re heavily outnumbered by Orcs.

If there have been other announcements with anything like the significance of this one, then I have missed them. The U.K.’s Economic Crime Bill is a weak mishmash of measures. In the words of the financial crime expert Tom Keatinge, it’s “all icing and no cake”. Fatally undermined by the same flaws as the U.K.’s Companies House, as well as by the U.K.’s traditional failure to enforce the laws it passes anyway, this new register of offshore-owned property is reliant on oligarchs obeying the spirit rather than the letter of a law which is full of loopholes.

  • “Imagine if criminal trials relied on good faith, with no way of checking a defendant’s claims and no consequences if they lied. This is why verifying data is so important. Any system will remain easy to game if the real owners can hide still behind proxies, the authorities are not set up to check what they are told, or there is no meaningful punishment for breaking the rules,” Thom Townsend of Open Ownership told me.

I’ll be looking out for responses to the demand for a transnational effort against kleptocracy from other G7 members, but as yet I haven’t seen any. I hope when they do come, they’re closer to the U.S. efforts than the British ones.

There is a good list of possible policies from Transparency International here.

  • “The recently established Transatlantic Task Force is a step in the right direction. The Task Force should consider broadening its membership to include other key financial centers, map networks of nominees, proxies and family members and utilize and share available data on company and asset ownership, suspicious transactions reports, among others to trace assets. In the future, the task force should evolve into an effective model to deal with cross-border corruption and hold kleptocrats to account everywhere,” TI said.

Of course, quite a number of EU countries have close connections to Russia, if not always quite as close as those of the U.K., and I was interested by this presentation about how Ireland has helped the oligarchs get their money out of Russia over the years. It is not just Cyprus and Malta where the professionals have made good fees out of Russian cash over the years. It is pretty easy for US politicians to promise ever-tougher restrictions on Russian trade, since that trade is just a tiny proportion of the U.S. economy. The lobbies for trading with Russia are far more powerful in the EU, so some governments may need a bit of persuading.

An example of this was Italy demanding that its luxury goods be removed from the sanctions list against Russia. Though it’s notable that most luxury brands have since voluntarily suspended sales anyway.


What a difference eight months make. In June, I wrote a newsletter about how alarming I found the squabbling between Western countries – over Brexit, of AUKUS, over Nordstream, etc – at a time when kleptocratic regimes appeared to be congealing into a new anti-democratic bloc. I expanded the argument for the National Endowment for Democracy, into a paper laying out the argument for opposing kleptocracy as communism was opposed during the Cold War.

Right now, there is remarkably little squabbling between Western countries, and Putin is so isolated that the only countries prepared to vote with him at the United Nations were Syria, Belarus, Eritrea and North Korea, which is hardly a coalition to be proud of. I still think, however, that the arguments I made are valid, and I think they could provide glue to keep this alliance together when the inevitable disagreements come.

  • “A willingness to strike a blow for democracy and against kleptocracy by shining light into the dark corners of the world’s financial systems, giving dirty money no place to hide, should be the price of entry for a new alliance of democratic nations that extends well beyond the historical boundaries of the anticommunist West. If we continue to overlook the flow of questionable wealth into advanced economies, and the massive theft of such wealth from the citizens of origin states, we will be complicit in the ultimate demise of open societies everywhere,” I wrote.

If you’d like to see us discussing these concepts in the light of what’s happening in Ukraine, here is a video in which I debate them with Heather Conley, President of the German Marshall Fund of the United States, and Damon Wilson, President and CEO of the National Endowment for Democracy.


I wish I were reading more to be honest, but I’m mostly doomscrolling. However, I did enjoy this profile of Roman Abramovich.