The West Sanctioned Russia’s Billionaires. Now They Are Fighting Back.

LONDON—Over a year ago the West launched a new foreign-policy weapon to pressure the Kremlin to halt its war in Ukraine: It sanctioned more than a hundred leading Russian businessmen and their families, hoping that they would prod Russian President Vladimir Putin to give up his expansionist plans. 

So far the strategy hasn’t worked. The war still rages and very few Russian billionaires have publicly denounced Putin or sold off their Russian assets. Meanwhile, a handful of deep-pocketed oligarchs are pushing back, intensifying their legal challenges in U.K. and European Union courts in a long-shot attempt to remove restrictions that include travel bans and asset freezes. 

The legal battles will prove a test of whether Russian businessmen can use the West’s attachment to the rule of law to undermine its own foreign-policy aims. It will also lay bare their key criticism of the sanctions; that many of those targeted have no sway over Putin and the sanctions, far from applying pressure on the Russian president, may be pushing disaffected Westernized oligarchs back into his arms. 

“Never before have we seen so many billionaires with such large international footprints so massively sanctioned all at the same time,” says George Voloshin, a sanctions expert at the Association of Certified Anti-Money Laundering Specialists, an association that shares best practices on fighting money laundering. Given that most of these oligarchs aren’t in Putin’s inner circle, “sanctions are painful for them and their families, but they’re not really effective from the point of view of policy.” 

Western government officials say that the mass sanctioning should be viewed as part of a wider crackdown on Russia, which includes bans of key exports to the country aimed at crippling its economy, moves that have also had a limited effect. They also argue that Russian business people and politicians shouldn’t be allowed to continue with their normal lives while the Kremlin, whose patronage allowed them to grow rich, presses on with an illegal invasion. 

The aim is “to start to peel away the support [for Putin] because oligarchs have an outsize political and economic influence,” said John Smith, the former director of the U.S. Treasury Department’s Office of Foreign Assets Control and a partner at the law firm Morrison Foerster. “We are not at that tipping point yet. But it doesn’t mean that we won’t get to that tipping point.” 

Roman Abramovich’s lawyers recently appeared in a Luxembourg courtroom to appeal European Union sanctions against their Russian client, arguing the designation prevented him from “intervening effectively” as a conduit for peace talks between Russia and Ukraine, according to court documents.  

The billionaire former owner of English soccer team Chelsea F.C., also made an argument that several other oligarchs have put before the court; that he is being unfairly targeted for simply being a Russian businessman and that his ties to Putin are overstated. The court will rule in the coming months.

Meanwhile, Eugene Shvidler

In its defense, the U.K. government said Shvidler should remain sanctioned in part so that he can apply pressure on Abramovich who in turn could pressure Putin.

Now that they can’t access their wealth in the West, some sanctioned oligarchs may become more dependent on their assets in Russia and Putin’s patronage. Many are legally barred from traveling to the West. Abramovich, who based his operations in London for years until the U.K. government didn’t renew his visa in 2018, is now shuttling between Russia, Turkey and Israel. Andrei Guryev, who is sanctioned by the U.S., redomiciled his holding company that owns shares in Russian fertilizer giant PhosAgro to a low-tax zone in Russia from Switzerland.  

Putin has called on the businessmen to come back home to Russia.

“Running around with cap in hand, begging for your own money, makes no sense and most importantly, it accomplishes nothing,” he said during his state-of-the-nation speech in February. “Stop clinging to the past, resorting to the courts to get at least something back.” 

In recent decades sanctions have become a key tool in the West’s armory against rogue nations. They are relatively low cost, avoid full military intervention and can be targeted to inflict maximum pain with little collateral economic damage. Regimes in Iran, North Korea, Venezuela and Syria have all been targeted by the U.S. and its allies over the years. 

The coordinated sanctioning of a business elite connected to a country’s government is the latest evolution of this tool. In 2022, shortly after the invasion, the EU and the U.K. amended their own sanctions rules to ensure they could be applied to as many Russians as possible.

So far sanctions have a mixed record. Wholesale regime change or pressuring a country to abandon a key foreign-policy objective is seldom achieved through sanctions alone, analysts say. Furthermore, they can stoke anger within a sanctioned population that a regime can redirect back against the West. 

Sanctions may, however, accomplish more limited or less visible goals, such as discouraging others who might want to help Russia. China, for instance, has largely held off handing weapons to Russia for fear of being hit with retaliatory sanctions, Western officials say.

While high-profile oligarchs are pushing back on their sanctions in European courts, so far they haven’t challenged their U.S. sanctions “for the simple reason that they don’t think they are going to win,” says Voloshin. The Office of Foreign Assets Control has a long record of winning legal challenges brought by sanctioned individuals. In 2021, Russian industrial tycoon Oleg Deripaska sued the U.S. Treasury to overturn his sanctions, imposed after the 2014 annexation of Crimea by Russia, and lost, setting a precedent for other cases. 

Some Russians have successfully argued they were unfairly caught up in the sweep. The EU recently removed sanctions on the mother of Wagner mercenary leader Yevgeny Prigozhin, after admitting it had erroneously stated that Violetta Prigozhina still controlled companies linked to her son. Nikita Mazepin, a Formula One driver whose father Dimtry is the former owner of fertilizer giant Uralchem, was granted interim relief from sanctions in the EU on the grounds that it stopped him from pursuing his racing career and he had no role in the war. The U.K., however, rejected a similar appeal. 

For oligarchs, there has been little incentive so far to openly criticize the Russian government or the war in the hopes of getting access to their assets. Deripaska became one of the first oligarchs to criticize the war shortly after the invasion. Last December, a Russian court ordered the seizure of a luxury hotel complex he owned in Sochi. He remains sanctioned by the U.S., U.K. and Europe. 

There are signs of change, however. Oleg Tinkov, a billionaire who after the war’s start renounced his Russian citizenship and repeatedly criticized Putin’s actions in Ukraine, was sanctioned by the U.K. government anyway. But this summer the U.K. took him off their list. The U.K. Foreign Office said in a statement that it had removed him “having considered all of the factors in this case, including the actions Mr. Tinkov has taken following his sanctions designation.”

The U.K. also delisted Lev Khasis, who quit a senior role at Russian lender Sberbank and fled Russia just before the war. He declined to comment. 

Write to Max Colchester at [email protected]