Moving Russian Business Out Of Europe

At the Eighth Eastern Economic Forum in Vladivostok on September 12, President Vladimir Putin invited Russian “businesses” to return money from abroad and invest it at home. After the outbreak of the armed conflict in Ukraine, the West froze many hundreds of billions of dollars of state foreign exchange reserves and funds of private Russian companies. Putin has repeatedly said that arbitrary decisions by the USA and its European allies have made it clear to the world that in the West, respect for private property is an empty concept.

“I guarantee you, I know this is happening. Of course, everyone will think about it. As to the fact that our gold and foreign exchange reserves were frozen, we have already earned twice as much. It’s not about these 300 billion, it’s about undermining trust in those who do this: they destroy trust in themselves,” said the Russian president, suggesting that businesses “not shoot themselves in the foot” and return money from abroad, from offshore accounts and instead invest them in Russia, where there are “many interesting projects with high financial returns.”

It seems that Russian billionaires, caught in the grip of international sanctions, listened to their president and began to move their wealth to their homeland or to so-called “friendly” countries, primarily Kazakhstan and the United Arab Emirates. Now these latter are looking in Russia for “very experienced private banking managers” who will serve VIP clients in Dubai.

According to a Bloomberg analysis, over the past 12 months, the outflow of Russian capital from Europe has reached tens of billions of dollars. One of the most significant facts of the flight of Russian capital is associated with the decision of billionaires Igor Shilov and Mark Kurtser, owners of medical companies United Medical Group CY and MD Medical Group Investments, to transfer their companies from Cyprus to Russia. After the repatriation of the Shilov-Kurtser tandem’s medical business, Bloomberg writes, “the outflow of Russian capital from Europe will exceed $50 billion.”

In fact, the process began immediately after the outbreak of the Russian-Ukrainian conflict on February 22, 2022. Billionaire Andrei Guryev and steel magnate Victor Rashnikov were among the first to transfer their funds from Switzerland and Cyprus to Russia. Others, like Igor Altushkin, followed this example a little later.

The Kremlin is gradually taking steps to speed up the repatriation of assets of the richest Russians from what the Kremlin calls “unfriendly countries” (which includes Italy). For example, double tax treaties were suspended, making registering Russian businesses in European countries useless, while paying dividends and selling assets to companies registered in “hostile” jurisdictions became significantly more difficult.