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oligarchs, Russia, Putin, sanctions

Sanctioning the Russian Rich

How can we determine if sanctions against oligarchs are effective?

Words: Jonathan J. Rusch
Pictures: Jordan Cormack

Since Russia began its brutal invasion of Ukraine in February 2022, the United States and multiple other countries have implemented unprecedented economic sanctions and trade embargoes against Russia. Those sanctions and embargoes extend well beyond President Vladimir Putin and other key Russian officials. They also target Russian state-owned enterprises, the Russian central bank and financial system, and dozens of oligarchs whom Putin made rich (or richer) during his time in power.

In the Ukraine conflict, sanctions against oligarchs have been getting a lot of press, driven by flashy and vivid images such as Italy’s seizure of a superyacht reportedly linked to Putin or the United Kingdom’s seizure of multiple mansions and country manors. One prominent oligarch, Mikhail Fridman, complained that after sanctions resulted in the blockage of his credit cards, “he cannot afford to eat at restaurants . . . and has been forced to eat at home” in the London residence that he bought in 2016 for £65 million.

While these sanctions might be considered purely punitive — cracking down on those who have benefitted from Putin’s corruption — in wartime, we think about sanctions as a tool to hopefully influence the conflict. In this case, it is worth exploring whether squeezing oligarchs impacts Putin’s decision-making and war machine. A former Putin adviser who supports US aid to Ukraine cast serious doubt on the idea that the oligarchs can be induced to pressure Putin. As one commentary’s title put it, “Putin Cares About Only One Thing, and It’s Not Oligarchs.”

Sanctions have begun to have a bad rap in certain circles. Many commentators assert that they are inhumane, affect civilians more than policies, and are politically ineffective. But how do we measure the effectiveness of sanctions?


Despite the hopes of sanctioning nations, there is little evidence that the sanctions have motivated oligarchs to urge Putin to change course. Indeed, some believe that there is no purpose in trying to do so. For example, exiled Russian oligarch Mikhail Khodorkovsky scornfully described the other oligarchs as “just Putin’s footmen” and said they “cannot influence him.”

Sanctions have begun to have a bad rap in certain circles. Many commentators assert that they are inhumane, affect civilians more than policies, and are politically ineffective. But how do we measure the effectiveness of sanctions?

In March 2022, two oligarchs hard-hit by US sanctions, Mikhail Fridman and Oleg Deripaska, made carefully couched anodyne statements about the war. Fridman proclaimed the war a “tragedy” and declared that “war can never be the answer,” while Deripaska observed that peace was needed “as soon as possible” and that “the whole world will be different after these events, and Russia will be different.” Deripaska also lamented the ”insanity” of  “this particular armed conflict,” noting that it “could have been ended three weeks ago through reasonable negotiations.” Neither oligarch’s comments, which came soon after the businessmen were heavily sanctioned, directly criticized Putin or his conduct of the war, so they may have intended to buy goodwill with the sanctioning governments rather than influence Putin himself.

However, a third sanctioned billionaire, Oleg Tinkov, learned the limits of Putin’s tolerance. After shares of his digital bank Tinkoff dropped by more than 90% since the start of the war, Tinkov, by then no longer a billionaire, called the war “insane” in an Instagram post. The next day, according to Tinkov, Putin administration officials “contacted his executives and threatened to nationalize his bank if it did not cut ties with him.” Soon after that, Tinkov sold his 35% share of Tinkoff to Vladimir Potanin, a Russian mining billionaire with ties to Putin, in what Tinkov described “as a ‘desperate sale, a fire sale’ that was forced on him by the Kremlin.”

To his credit, Tinkov continued to criticize the war even after the forced sale. But this very public de facto expropriation of his bank shares should thoroughly dissuade any oligarchs from offering even the blandest criticism of the war. If that is the case, some might argue, there is no point to these oligarch sanctions if all they do is provide the general public with momentary amusement as they read about oligarchs losing their expensive toys and playgrounds. But Schadenfreude, of course, is never a legitimate goal of statecraft and diplomacy. Therefore, we must look for another, more rational approach to identifying objectives by which we can evaluate the worth and effectiveness of the oligarch sanctions.


A critical point that is often overlooked in this debate is that the design and purposes of sanctions closely parallel those of the criminal law. Criminal law has four longstanding objectives: retribution (i.e., imposition of punishment proportional to the wrong committed); incapacitation (i.e., protection of the public from future wrongs or harms); reparation (i.e., making amends to victims to repair the harm by the wrongdoer); and deterrence (i.e., specific deterrence of the charged individual, and general deterrence of the public, from engaging in wrongdoing).

Therefore, one way to think about the Ukraine-related oligarch sanctions is to weigh their effectiveness through these criteria, considering them alongside the ways criminal law functions.

Retribution: The oligarchs the United States has targeted since the rollout of the Ukraine-related sanctions program in 2014 are those who own or control major businesses or industries that support Putin. Not every wealthy Russian acquired his wealth through theft or corruption; the sanctions target those who have been “responsible for or complicit in, or . . . engaged in, directly or indirectly, . . . [a]ctions or policies that undermine democratic processes or institutions in Ukraine”; “[a]ctions or policies that threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine; or . . . [m]isappropriation of state assets of Ukraine or an economically significant entity in Ukraine.”

When considering sanctions as punishment, the current sanctions against oligarchs can be regarded as highly effective, as the numerous stories of financial catastrophe attest. For example, one of the most prominent oligarchs, Roman Abramovich, faces a punitive financial squeeze. He has reportedly been reduced to asking well-to-do friends for $1 million each to maintain his $750,000-a-week staff payroll.

Incapacitation: To think about the ability of sanctions to “protect the public from future harm,” we have to consider how we define the public. In the case of war, the idea would be for sanctions to cripple the war machine, so sanctions would ideally protect both Ukrainians and other countries that indirectly bear the current costs of the war or that are concerned that Russia may target them later if it wins the war (or if it is losing and lashes out) to achieve its geopolitical objectives.

Measured by this objective, the oligarch sanctions appear to be effective, both now and in the immediate future. The seizure of foreign-based oligarch assets has the immediate and continuing effect of preventing those oligarchs from using those assets to maintain their businesses and support the Russian war effort. Moreover, freezing those assets now deprives Putin of the option to demand that those oligarchs repatriate their foreign-based assets to Russia should Russia need additional funding for the war effort.

To be sure, sanctions imposed on assets located outside Russia do not cover business interests or personal assets that oligarchs have retained in Russia. Similarly, there is no calculus by which Western observers can meaningfully calculate the effects of the current sanctions on the Russian military and its industrial capacity to continue the war over the long haul. If, however, Western nations impose additional sanctions that affect key Russian sectors — such as the European Union’s planned imposition of a Russian oil import ban — those sanctions could have more drastic and measurable effects on oligarchs’ business activities inside Russia.

On the other hand, the real threat of sanctions is that the Russian public will be punished, along with political and business leaders. Even when sanctions target the rich and the influential, the intentional squeeze on the country’s broader economy almost always harms civilians who don’t have the safety net the rich do. Those who argue for sanctions suggest that this is part of their purpose: if people suffer enough, they will advocate for a shift in policy. However, whether that is even possible in Russia is open to serious question, given Putin’s repression of civil society, campaigns of disinformation, and the history of sanctions and social responses globally.

Reparation: Russia’s war on Ukraine indisputably has had, and continues to have, a devastating effect on the Ukrainian economy. The Ukrainian Ministry of Economy and the Kyiv School of Economics estimated that Ukraine’s current economic losses are between $564 billion and $600 billion (nearly four times its annual Gross Domestic Product). For Ukrainian reconstruction, multiple countries will need to spend between $220 billion and $540 billion, according to the Centre for Economic Policy Research, with the proviso that “the cost of reconstruction increases with every additional day of the war and at an increasing rate, as people spend more time away from their homes, children become more traumatized, and private sector companies disintegrate.” Measured by this objective, the current oligarch sanctions should be deemed ineffective. They do nothing to provide reparations to Ukraine because they involve seizures and blocking of assets rather than converting those assets by Western nations for Ukraine’s economic recovery.

But that state of affairs could be changing soon. As the criminal law recognizes, it is a legitimate task of the government to provide financial compensation to victims when a law violator is unwilling or unable to do so. To fund such reparations and humanitarian assistance, the US House of Representatives has already passed legislation to authorize the US government to confiscate and sell assets of oligarchs and companies that the government has already sanctioned for their involvement in the invasion and human rights violations in Ukraine. Similar action could also be undertaken with respect to Russian foreign exchange reserves that are held in central banks outside Russia and that Western governments have frozen. In addition, another US bill would authorize Ukrainians who suffered losses due to the Russian invasion to seek damages in US federal courts.

Enactment of such legislation in the United States and other countries certainly would not be a quick fix for Ukrainian reparations. Oligarchs and Russian businesses would undoubtedly seek to challenge such confiscations and damage actions in the courts, and the ultimate resolution of those challenges could easily take several years. But so, regrettably, will the war in all likelihood. Therefore, reparation could become a relevant objective for the oligarch sanctions over the long term.

Deterrence: As a general matter, the overall Ukraine-related sanctions could promote both specific and general deterrence — specific deterrence of the sanctioned individuals and entities from further support of Russia’s prosecution of the war and general deterrence of others as yet unsanctioned parties from such support. Some have argued that the sanctions imposed after Russia’s 2014 invasion of Ukraine were “a major success in terms of deterrence.” Because those sanctions targeted people and entities involved in the annexation of Crimea and those wanting to do business in or with Crimea, they created “significant barriers for doing business in Crimea that imposed financial costs for the Russian government.” But in this case, there is no evidence that the current Ukraine sanctions in general, or the oligarch sanctions in particular, have had any observable deterrent effect on Putin, his inner circle, or the oligarchs. Measured by this objective, the oligarch sanctions should be rated ineffective at present.


The objectives-based approach outlined here is a highly imprecise measure of the oligarch sanctions’ effectiveness. It provides no scale by which observers can measure the degree of effectiveness of those sanctions. Nor does it weigh any objective more heavily than any other so that analysts could calculate a grade of effectiveness.

Instead, it provides a starting point for a more detailed analysis of the sanctions and a context and framework for the legal structures embedded within the idea of sanctions. This can help deepen our understanding of these sanctions’ continuing value, cost, and effectiveness.

Jonathan J. Rusch is adjunct professor at Georgetown University Law Center and American University Washington College of Law, and a former Deputy Chief with the US Department of Justice’s Fraud Section. He teaches courses on anti-corruption law and anti-money laundering law.

Jonathan J. Rusch

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