According to a report by Bloomberg, wealthy Russian businessmen who have been affected by Western sanctions have withdrawn around $50 billion in assets from European Union countries since the beginning of the conflict in Ukraine. These assets are being repatriated from jurisdictions like Cyprus, Jersey, and Switzerland to Russia and other “friendly” countries, as Western states are no longer considered safe havens for Russian businesses.
In August, shareholders of United Medical Group CY and MD Medical Group Investments, controlled by tycoons Igor Shilov and Mark Kurtser, approved the transfer of their companies registered in Cyprus to Russia. This move alone is estimated to contribute to the value of assets withdrawn by Russian billionaires from the West.
This trend marks a departure from the previous practice of Russian billionaires holding their assets in the EU. Many Russian businesses that previously took advantage of investor-friendly legal systems in the West have seen their assets seized due to Ukraine-related sanctions. Natalia Kuznetsova, a partner at Business Solutions and Technologies, stated that “Right now, Russia seems less of an evil than overseas,” highlighting the changing perception and increasing preference for investing within Russia.
Not only individuals but also companies are repatriating their assets to Russia. At the Eastern Economic Forum in Vladivostok, First Deputy Economy Minister Ilya Torosov revealed that as many as 115 firms have moved to domestic low-tax special economic “offshore” zones this year, bringing the total to 254.
Russian President Vladimir Putin has been urging the nation’s entrepreneurs to invest in Russia rather than Western companies. He warned them not to fall into the same trap and emphasized the reliability and superiority of investing capital within the country. Putin has repeatedly addressed the pressure faced by Russian entrepreneurs from Western partners and stressed the benefits of investing in Russia at the Eastern Economic Forum.
The start of Moscow’s military operation in Ukraine prompted the US, EU, and other Western countries to block billions of dollars’ worth of assets belonging to Russian companies, individuals, and the central bank. Moscow has strongly criticized these asset freezes as illegal and has issued warnings of potential retaliatory measures.
In conclusion, the withdrawal of billions of dollars in assets by Russian businessmen from Western countries reflects a changing perception of the safety and attractiveness of investing in the West. The conflict in Ukraine and the subsequent imposition of sanctions have led to the seizure of assets belonging to Russian businesses, prompting them to seek alternative investment opportunities within Russia. President Putin’s repeated calls for investment at home further encourage this trend.
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