Oligarchs Receive Billions in Dividends Capitalizing on Russia’s War Economy

Despite ongoing sanctions and the Russian war against Ukraine in its third year, a dozen of Russian business oligarchs, some with close ties to Vladimir Putin, have accumulated “at least a dozen business people gained more than 1 trillion rubles ($11.3 billion) for 2023 and in the first quarter of this year,” according to a recent investigation by Bloomberg, using a publicly disclosed information.

Despite the Western sanctions following Russia’s illegal invasion of Ukraine in February 2022, the Russian economy has shown signs of resilience, adjusting to new realities and finding alternative markets for its exports.

Leading the list of oligarchs is Vagit Alekperov, sanctioned by the UK and Australia but not the US or EU, who received $2.1 billion in dividends from oil giant Lukoil PJSC.

Other beneficiaries include Alexey Mordashov (Severstal PJSC, Russia’s largest steel company), who earned 148 billion rubles ($1.7 billion), and Vladimir Lisin earned 121 billion rubles (1.4 billion) from another top steel company Novolipetsk Steel PJSC. Both are under Western sanctions for their support of the war.

The list also extends to figures with personal connections to Putin, including his billionaire ally Gennady Timchenko and Tatyana Litvinenko, wife of the president’s former campaign manager. Notably, state-controlled companies like Gazprom Neft PJSC and state-owned bank Sberbank PJSC never stopped distributing dividends, with Sberbank recently approving a record payout.

The list of wealthy Russians profiting from dividends also includes Alisher Usmanov, an Uzbek-born oligarch who built his fortune in mining and metals. Sanctioned by the US, UK, and EU, Usmanov has been labeled a close ally of President Putin. His attempt to have these sanctions lifted earlier this year was rejected by the European Union.

Also benefiting from the dividend payouts is Leonid Mikhelson, a Russian-Israeli businessman who leads Novatek, Russia’s second-largest natural gas company after Gazprom. While the US and UK have imposed sanctions on him, the EU has not.

Data from Russia’s central bank shows a surge in domestic investment. In May, private investors poured a record-breaking 116.3 billion rubles into the Moscow Exchange. Similarly, investment in Russian industries jumped by 14.5% year-on-year in the first quarter, reaching a new high of nearly 6 trillion rubles.

Analysts caution that the recent surge in profits for oligarchs may not be sustainable. Russia’s economic outlook remains uncertain, with potential tax hikes and future business challenges. Weakening international ties and limited domestic investment opportunities further complicate the situation.

Previously, on June 27, President of Ukraine Volodymyr Zelenskyy warned Western partners at the sidelines of the European Council summit in Brussels against lifting sanctions on Russian oligarchs.