West plans to get Russian oligarchs to buy a way out of sanctions | Government and politics

Canadian Deputy Prime Minister and Finance Minister Chrystia Freeland proposed the idea at a meeting of G-7 finance ministers in Germany last week.

Freeland raised the issue after oligarchs told him about it, an official said. The Canadian minister knows Russian oligarchs from her time as a journalist in Moscow.

The official said the Ukrainians were aware of the talks. The official said it was also in the West’s interest for prominent oligarchs to disassociate themselves from Russian President Vladimir Putin while providing funds to Ukraine.

“We wouldn’t be talking about it if there wasn’t some reassurance from Ukrainians,” the official said. “We need to know that it works for them too.”

The officials spoke on condition of anonymity because they were not authorized to speak publicly about internal G-7 discussions.

The proposal was raised in the context of providing additional funds to Ukraine and how the frozen funds and assets of the oligarchs could be a source of funds.

At this point, it’s just an idea, the official said, but Western allies have shown interest. European Union officials have spoken of the need to look at different and new ways to confiscate assets and prove money to Ukraine.

The proposal could help remove a legal hurdle for authorities in countries like Germany, where the bar for confiscating frozen assets is very high. By voluntarily giving up a portion of their fortunes overseas, the oligarchs would spare Western governments the potential embarrassment of being rebuffed by their own courts.

Western countries imposed a series of sanctions on the oligarchs in response to the Russian invasion of Ukraine. Many of their multi-billion dollar fortunes are closely tied to the West, from investments in Silicon Valley startups to British Premier League soccer teams.

Former Chelsea owner Roman Abramovich, who was sanctioned for his links to Putin, said the net proceeds from the sale of the football team would be donated to war victims in Ukraine. A deal to sell the football club has dragged on as the UK government ensures Abramovich does not profit from the forced sale.

The British government this week approved the sale of Chelsea to a consortium led by a co-owner of the Los Angeles Dodgers. Chelsea have been operating under a government license which expires on May 31 since Abramovich’s assets were frozen in March.

The EU imposed asset freezes and travel bans on more than 1,000 people, including more than 30 oligarchs, in response to the Russian invasion of Ukraine on February 24.

Nearly 10 billion euros ($10.7 billion) in assets have so far been frozen by EU countries, according to the European Commission. He set up a “freeze and seize” task force to coordinate the application of unprecedented EU sanctions against Russia.

A 2017 study of Russian oligarchs published by the US-based National Economic Office estimated that up to $800 billion is held by wealthy Russians in the UK, Switzerland, Cyprus and other offshore banking centers.

This immense fortune, held by a few hundred ultra-rich individuals, is roughly equal to the wealth of the rest of Russia’s 144 million people.

Some oligarchs have also obtained dual citizenship in Britain and other Western countries.

The family fortunes of many Russian billionaires date back to the 1990s, the turbulent decade following the fall of the Soviet Union. Under Boris Yeltsin’s notoriously corrupt presidency, state-controlled assets such as oil refineries, steel mills, aluminum smelters and tractor factories were gobbled up by politically influential figures, often bought off government guaranteed loan assistance.

Freeland, Minister of Finance of Canada, is of Ukrainian origin and wrote a book on this subject.

Hitting the oligarchs also has a financial impact on Putin, and not just because it may diminish the support of Russia’s financially privileged for Putin, said Alex Finley, a former CIA officer who tracks the impact of sanctions on Russian oligarchs.

Putin is too wary to keep his considerable wealth in bank accounts or even family bank accounts, according to Russian experts.

“A lot of these guys are his portfolio,” Finley said of Russian oligarchs. “They help launder his money, launder their own money, and yachts and other assets are places to keep that money.”

Gillies reported from Toronto. Ellen Knickmeyer contributed from Washington.

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