Russian companies have earned some three trillion US dollars from the sale of oil and gas abroad since Vladimir Putin came to power; but instead of using this money to increase the capitalization of these firms or to transform the economy, Russians have exported more than half of that to foreign accounts and the purchase of property abroad.
That is the conclusion of analysts at the Oilstat portal in an unusually detailed article which suggests that the Putin years for Russia have been ones of missed opportunities at home although they have left the wealthiest Russians and the state with an enormous amount of money abroad that can be used for various purposes.
Between 2002 and the end of 2016, they say, “Russia received additional income of approximately three trillion US dollars from the export of fuel and other goods. These means could have changed the mono-cultural economy of Russia,” they argue. But “this didn’t happen. And so, where did all these trillions go?”
They didn’t go to the increase in the capitalization of the companies involved. In fact, these companies had to come to the Russian state for assistance, something that should not have been needed had they retained these profits. A portion went to funding the sovereign fund and hard currency reserves and for financing an increase in foreign investment in Russia.
But, Oilstat says, “the main part of the money was sent abroad on the private accounts of the constantly growing group of the wealthiest citizens of Russia who actively worked in foreign financial markets or in property markets.”
What it did not go into abroad was into investments that would send earnings back to Russia, as one might have expected. According to the Russian Central Bank, this export of money out of Russia amounted to 1.56 trillion US dollars. Independent analysts suggest that number may in fact understate the amount.
“Wealthy Russians have put billions in their own accounts in foreign banks and brokerage accounts or in property. And although a significant part of the transfers … were carried on a legal basis, analysts recognize, Oilstat says, that much of it went via uncontrolled and illegal channels.”
That means, although Oilstat’s analysts don’t say this, that there is an enormous amount of money in the hands of oligarchs — who are working with the Kremlin and on whom they depend for their standing — can deploy it for political as well as economic goals, thus creating a dangerous new challenge for the international community.
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