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THE SANCTIONS GAME

How can the EU freeze assets that Putin doesn’t officially own?

Vladimir Putin members of the Delovaya Rossiya All-Russian Public Organization in Moscow
Reuters
On paper, Vladimir Putin is a man of modest means.
  • Samanth Subramanian
By Samanth Subramanian

Looking into the Future of Capitalism

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The European Union is planning to freeze Vladimir Putin’s overseas assets, as part of a larger slab of sanctions designed to punish Russia over its invasion of Ukraine.

On paper, though, Putin has no overseas assets at all. Anything he owns overseas is held, officially, by his associates or relatives, according to a 2016 report by the International Consortium of Investigative Journalists. The absence of a genuine paper trail testifying to Putin’s ownership of assets is very likely to render this new sanction toothless.

No one knows Putin’s net worth

Every year, the Kremlin purports to disclose Putin’s assets. In 2020, the page-long document showed that Putin owns an 830-square-foot apartment and a 193-square-foot garage. In this garage, presumably, he parks the vehicles he owns: two Volga GAZ M21 cars, a Lada SUV, and a Skif tent trailer. The disclosure also mentions that Putin has the use of another 1,650-square-foot apartment, although it doesn’t specify who owns it. Putin’s annual income is about $119,000, according to this statement.

Almost absurdly, these assets in Putin’s disclosure form have remained nearly the same for years. If anything, he has shed assets, if the forms are to be believed. In 2012, he owned the same cars, SUV, and trailer, as well as the same apartment and garage. But he also owned a 16,000-square-foot piece of land, which isn’t listed on his disclosure any more.

Still, given how Putin’s closest friends and associates have enriched themselves during his tenure, it’s difficult to believe Putin hasn’t done the same. In 2017, Bill Browder, the CEO of Hermitage Capital Management, who had once been denied entry to Russia in 2005, told the Senate Judiciary Committee: “I estimate that [Putin] has accumulated $200 billion of ill-gotten gains from these types of operations over his 17 years in power.”

Where is Vladimir Putin’s money?

Where this money is, and how much of it is overseas in bank accounts, property, or investments, is a total mystery—which makes freezing these assets impossible. Certainly the West could take aim at assets held by his relatives and associates, hoping that they end up freezing Putin’s indirectly owned assets as well. But the list of names thus far announced as sanctions targets is far smaller than Putin’s network is likely to be. Even determining the assets of these associates is often a problem.

In the UK, for instance, the government has already been under pressure to render the ownership of companies and property more transparent. Even if Russian oligarchs hold such assets, their identities are frequently hidden in a labyrinth of shell companies and proxies. Boris Johnson, the UK’s prime minister, said on Feb. 24 that his government would bring more transparency to these ownership structures—but only by April.

The proposed freeze of Putin’s assets joins a list of other Russian sanctions that are either insufficient or tailored to the West’s own priorities. The EU has been reluctant to kick Russia out of the SWIFT banking system, for instance, because European creditors will have difficulty getting paid back by Russian companies. In the UK, many wealthy Russian donors to Johnson’s Tory party have not been sanctioned. The US, for its part, will exempt companies conducting energy-related transactions with any sanctioned Russian banks.

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