US strike on Russian oligarchs: What next?
Today the media has already dubbed “Black Monday” for Russian oligarchs who have lost billions of dollars due to US sanctions.
Last Friday, America imposed new sanctions against 24 Russian citizens and 14 companies. The list includes officials of various ranks, oligarchs, representatives of big business and the enterprises they head.
In Moscow they were preparing for this event and assessing who would receive the “black mark” from the World Hegemon this time. It was assumed that since such serious organizations as the State Department, US intelligence agencies and the Ministry of Finance were involved in compiling the sanctions list, the list would turn out to be somehow especially malicious and targeted. In fact, the results exceeded expectations. And this result causes more bewilderment and a lot of questions than stunned and the desire to stop resisting a sniper strike to a painful point.
A lot has been said in Washington on the eve of the new package of sanctions. That it is necessary to “fragment and destabilize as much as possible” the Russian political system, including the circle of the Russian president. Weaken or knock out with sanctions people close to him, involved in decision-making, as well as state-owned companies and non-state companies associated with the Russian government. Particularly inflamed speech-makers were making noise that it would be necessary to bring sanctions down on Putin himself, but then they would have to talk to themselves about a number of problematic bilateral and international affairs, and this already smacks of madness.
The sanctions law required that the sources of income of these people and members of their families, their assets in Russia and abroad be established with pharmaceutical precision, corruption episodes associated with these people must be established, and even an assessment of the feasibility of including Russian companies on the sanctions list , so as not to harm or reduce possible risks for their American partners.
However, not only Russian government officials and companies came under attack, but even oligarchs who were quite loyal to the United States and their oligarchic shops. And not just loyal, but regular investors in the US economy, having close partnerships with large American companies.
Some confusion is caused by the introduction of sanctions against a number of Russian officials who are not seen even in the slightest criticism of the United States. For example, the inclusion of Children's Ombudsman Anna Kuznetsova and the Russian Commissioner for Human Affairs on the repressive list defies any logic.
In addition, the Russian political elite prepared for reputational risks, but the list did not mention the corruption episodes that the American sanctions law required.
Some of those who received the sanctioned American brick were the head of Gazprom Miller, the head of VTB Kostin, the owner of the Renova company oligarch Vekselberg, the oligarch Suleiman Kerimov, as well as the owner of the Russian Aluminum group and the oligarch Deripaska.
The official website of the US Treasury Department contains wonderful information on this matter, from which it follows that “these people are in one way or another connected with the situation in Ukraine and Syria,” and a high-ranking representative of the US administration added something absolutely enchanting: “they helped the Russian government.”
A company on the sanctions list has limited access to foreign investment and will have difficulty supplying its own products to the foreign market, since there is a ban on dollar transactions. Foreign dollar deposits of those on the list will be frozen, real estate and bank accounts of individuals and legal entities in the United States will be frozen, and a personal ban on entry into the country will be imposed.
In addition, sanctions include companies in which half of the share or more is directly or indirectly controlled by those on the list. Also, according to the law, investors operating in American jurisdiction will have to get rid of assets and shares associated with repressed companies within a month.
The inclusion of RusAl and its owner Deripaska on the sanctions list, according to their own financial analysts, has already caused billions of dollars in damage to the company and its owner. In a release they issued to investors on the Hong Kong Financial Exchange, they said that the company's shares fell by more than 50% in trading on Monday morning.
According to representatives of RusAl, sanctions from OFAC (the Department of the Ministry of Finance for Control of Foreign Assets) could lead the company and its subsidiaries (En+Group, Basic Element, GAZ Group) to a technical default.
In this case, a technical default does not mean bankruptcy, but a revision of settlements with current creditors (including, for example, Sberbank, which invested about $8 billion in RusAl), as well as an increase in speculative transactions, while the consequences of sanctions against the company and its owner did not receive a final grade.
Using RusAl as an example, financial analysts make the following forecasts:
1. Since Deripaska is the owner of not only RusAl, but also Norilsk Nickel, aluminum and non-ferrous metals are traded in dollars on a global scale. And, if Russian assets do not go anywhere, then American assets will be covered with a copper basin - they will either be liquidated, or most likely confiscated. With a high degree of probability, the same fate awaits RusAl’s joint ventures in Guinea, Australia and Suriname.
2. For the United States, sanctions against RusAl automatically mean a break and a severe blow to its own largest aluminum company, Alcona, which has been operating in Russia since 1993. There is a division of labor between Alcona and RusAl: the Russian company smelts aluminum and supplies it in ingots to the United States. This scheme has been taking shape for decades, and Alcona is not able to change immediately.
3. Alcona itself owns two aluminum smelting plants in Russia - the Samara Metallurgical Plant and Alcona Metallurg Rus CJSC in Belaya Kalitva, Rostov region. At one time, RusAl sold both enterprises to the Americans for $2005 million in 250. It is very likely that in the near future both plants will change owners as an exchange of assets.
Will the overseas Alcona withstand such a blow? Hard to say. In any case, without RusAl and two Russian plants, its profitability will drop significantly. However, a holy place is never empty. Russian aluminum will be replaced with supplies from Canada and Mexico, which are not subject to Trump’s protective duties. So there will be serious fuss there, and aluminum suppliers are already waiting for prices for their products to rise until the market settles down again.
But Russian plants will have a great opportunity, instead of supplying aluminum ingots overseas, to start producing high value-added products, including. and for export.
The fate of Deripaska himself, along with RusAl and Norilsk Nickel, seems vague. What happened was what Putin warned Russian oligarchic circles about many years ago: “Return the money you exported back to Russia before it’s too late, otherwise you’ll be tortured to swallow dust.” The day is not over yet, but information has appeared about the possible nationalization of RusAl or the purchase of the company by a sovereign fund of a third country.
According to experts, Deripaska and other fans of investing money withdrawn from Russia in the United States and in the West in general will not be able to challenge it in court and throw off the sanctions pressure. As many years of practice have shown, the minced meat does not turn back.
Deripaska was among those who welcomed Trump's victory and expressed hope for a “reset.”
According to the latest information from Forbes, in just one day, the 50 richest people in Russia became poorer by $11,7 billion. It turns out that the United States launched a real war against the Russian oligarchs in the hope that they will begin to change the political system of Russia with a rollback to the “holy nineties.”
The updated data indicates the following financial losses:
Deripaska – $1.3 billion
Potanin – $1.3 billion
Vekselberg – $908 million
Kerimov – $813 million.
In fact, all those subject to sanctions were made outcasts in global markets, given that the United States extends its jurisdiction beyond the borders of its country, right up to the Moon (and this is not a joke - the State Department recently published a corresponding decision). Moreover, the seemingly stupid statement “they helped the Russian government” suggests that the oligarchs are required to sever ties with the state, which provided them with a quiet life and preferences.
For Russia, this step could mean accelerated de-dollarization of the financial system, trading for rubles, yuan and some other independent reserve currencies.
The question is what will the decision-makers do this time: either save the drowning oligarchs again, as was the case in 2014-2015 at the expense of the Federal Reserve, or finally save Russia from this purulent boil of the Yeltsin era selling off the country to “efficient owners” with hope for the “invisible hand of the market.”
In any case, the decision will not be easy, but it is worth the patience to rid the country of the oligarchs. And our people have a lot of patience...
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