Yves here. This piece is a useful addition to understanding the practical effects of the war in Ukraine, as in who gained economically. The study determined that the sanctions were a big backfire in terms of one of the expressed intents, that of punishing the politically most influential Russians, presumed to consist largely of the very rich, so the would revolt against Putin. Instead, many made out well by being able to acquire Western operations at bargain prices, such as brand name franchises, and launch Russian clones using those assets. Indeed, a few are allegedly more successful than the former enterprises. The Russian McDonald’s successor Vkusno i tochka (which per machine translation means “Delicious and that’s it”) apparently has better tasting food (and perhaps also an improved menu). It also acknowledges that demand within Russia has increased since the war started, again favoring top businessmen.
Mind you, that does not mean some high income Russians were not hurt by the sanctions. But my impression (and readers can correct me) are the ones hardest hit were professionals and small businesses that had strong ties to Europe, such as in had European clients or advised on Russia-Western business operations. This cohort would presumably be the most European-leaning of the Russian middle class. That group had long been problematic for Putin, since it was large enough for Putin to need its support. It was also generally Western-leaning (aspirational shopping, travel, and the Russian tendency to see itself as behind the West and its educated classes to see familiarity with European art and literature as a proof of being cultured). So having the most diehard Europe loyalists decamp to Europe and others witness the rabid outbreak of hostility to Russia across the US and Europe (such as barring Russian athletes and artists from performing) was another shock that worked in Putin’s favor.
By Simeon Djankov, Policy Director London School Of Economics And Political Science and Anastasiia Golovchenko, Research Assistant London School Of Economics And Political Science. Originally published at VoxEU
While tens of millions of Europeans have suffered from Russia’s war in Ukraine, a few Russian businesspeople have gotten richer from it. This column documents four distinct trends in this enrichment: through foreign asset takeovers at heavily discounted prices, via companies operating in import-substituting industries, beneficiaries of the war’s disruptive effects on European markets, and beneficiaries of increased domestic demand. Due to these trends, the number of Russian billionaires went up since the start of the war, while billionaires under Western sanctions got wealthier on average too.
According to the Forbes “200 Richest Businessmen of Russia” list, there were 123 Russian billionaires in December 2021, just before Russia invaded Ukraine. The same ranking on 15 December 2024 has 125 entries, while in the meantime a dozen billionaires renounced their Russian citizenship to protest the invasion or to avoid economic sanctions.
The war spurred scholarship on the imposition of sanctions and their initial effects (Cecchetti and Berner 2022, Lastauskas et al. 2023, Nigmatulina 2022). The central research question in these studies is whether sanctions would have a curbing effect on the economic activities of sanctioned individuals and their corporate entities. The preliminary evidence suggests this is not the case. The analysis in this column, using the comparison between the billionaires lists just before the war started and on the eve of the war’s third anniversary, seems to confirm these previous findings. Of the December 2021 billionaires, a third increased their wealth during the war, a quarter decreased it, few showed no change, while two-fifths were replaced by new entrants. Among the billionaires sanctioned after the invasion by the US, UK, or the EU, 40% increased their wealth, 40% decreased it (but stayed billionaires), and only one-fifth dropped off from the billionaires’ list. In contrast, among non-sanctioned individuals fully three-fifths dropped off the billionaires’ list and only one-fifth managed to increase their wealth. These statistics suggest that the economic sanctions have not had as much of an effect as might be expected. In an earlier study (Djankov and Golovchenko 2024) we showed that part of the explanation lies in the selection process by sanctioning authorities, which focused their punitive measures primarily on richer individuals. These individuals had further to fall in the wealth ratings when sanctioned. Still, the different rates of wealth accumulation or loss between sanctioned and non-sanctioned billionaires imply that the former have managed to adjust faster to the war and perhaps even benefit from it.
In this column, we attempt to discern patterns in wealth accumulation among super-rich Russians in the three years since Russia invaded Ukraine.
Foreign Asset Takeovers
As many foreign companies left Russia under threat of sanctions, some Russian businessmen profited handsomely by acquiring such assets at steep discounts. For example, the Kismet Capital Group bought Avito, a logistics and real estate company, from a Dutch investor. Kismet’s owner, Ivan Tavrin, ranks #55 on the December 2024 Forbes list, with an estimated wealth of $2.4 billion. In mining, Vladislav Sviblov (#116) acquired the Russian assets of Canada’s Kinross Gold and features in the billionaires’ list with an estimated wealth of $1.1 billion. In pulp and paper, Zakhar Smushkin (#64) and Boris Zingarevich (#62) doubled their wealth after buying out their American partner International Paper’s 50% stake. In banking, Vladimir Potanin (#5) purchased Societe Generale’s subsidiary Rosbank, acquiring not only its business in financial services, but also minority stakes in Rosneft, Gazprom, Norilsk Nickel, and Severstal. Victor Kharitonin’s (#20) Pharmstandard bought Henkel’s Russian cosmetics and household chemicals business when the German company exited Russia. Another beneficiary is Vadim Yakunin (#94). His company Protek acquired the Cypriot-owned Bion, a manufacturer of pharmaceutical ingredients. Vagit Alekperov (majority owner of Lukoil) became Russia’s third-richest businessperson in 2024, after the acquisition of assets left behind by exiting Western companies, including Shell’s gas station network and lubricant plant, Eni’s gas stations, and Enel’s power generation sites.
Major foreign technology companies like Microsoft, IBM, Intel, Google, and Apple suspended their Russian operations and sold off their subsidiaries. This void was filled primarily by two Russian companies: Kaspersky Lab, whose founder Eugene Kaspersky rose from #101 to #66 (+70% estimated wealth) on the back of government contracts, and Astra Group, whose founder Denis Frolov entered the list at #121 by taking over software infrastructure development for major Russian corporations and state entities.
The same replacement process occurred in consumer products. Vladimir Melnikov, owner of Gloria Jeans, jumped to #75 (+143%), expanding to 700 stores by taking over prime locations vacated by H&M, Uniqlo, and Inditex (Zara). Arsen Kanokov demonstrated the most aggressive takeover strategy, rising from #160 to #106 (+60%) by acquiring former Starbucks, OBI hypermarkets, and McDonald’s franchises.
Import-Substituting Industries
Businesses in several industries benefited from the war when Russia imposed import sanctions or foreign companies withdrew voluntarily from the market either as investors or importers. For example, Russian pharmaceutical companies secured significant government contracts. The pharmaceutical industry showed remarkable growth, with the aforementioned Viktor Kharitonin (owner of Pharmstandard) doubling his estimated wealth (#20) and his business partner Egor Kulkov entering the Forbes list for the first time (#29) with estimated wealth of $4.2 billion. Among other newcomers to the list are Eduard Netylko (#122), whose company Pulse became Russia’s leading pharmaceutical distributor, and Alexey Repik (#49) of R-Pharm, who bought an Israeli-owned plant in Yaroslav and opened the Research Lab medical centre in Moscow in 2023 for testing generics.
Another import-substituting sector is agriculture. The government responded to sanctions with subsidy programmes for import substitution. Alexander Lutsenko (#53) more than doubled his estimated wealth, purchasing Sodrugestvo Group’s Russian and Belarusian assets from a Luxembourg company. Prodimex Group’s owner Igor Khudokormov (#76) entered the list with an estimated wealth of $1.7 billion, after becoming the main producer and trader of sugar. Pavel Demidov of Dominant Group, managing sugar factories, grain elevators, and dairy plants across seven regions, entered at #115. Vadim Moshkovich (#50), the chairman of RusAgro, a major manufacturer of pork and sugar, saw his wealth increase despite being under Western sanctions.
Yet another subsidised sector is transport. The Russian government allocated subsidies to help airlines purchase leased planes. This support helped the airline S7’s owner Vladislav Filev enter the December 2024 list at #68 (estimated wealth $1.9 billion). The sector’s growth was further demonstrated by Roman Trotsenko (AEON Corporation) who moved from #63 to #48 (+17%). His transport business expanded into aircraft servicing, signing an agreement with Rostec to build maintenance bases for Sukhoi Superjet aircraft. Dmitry Kamenshchik’s DME Ltd., controlling Moscow’s Domodedovo Airport, rose in estimated wealth from #77 to #60 (+22%). Michel Litvak entered the billionaires list at #95 (estimated wealth at $1.3 billion) as OTEKO, the largest private investor in Southern Russia’s port infrastructure, operating both bulk and oil terminals at the Taman port on the Black Sea coast, received large government contracts. Sergey Shishkarev of Delo Group climbed to #119 (+25% wealth accumulation), managing Russia’s container terminals across the Azov-Black Sea, Baltic and Far East basins, along with a network of railway container terminals.
The war’s disruptive effects on European markets
A third set of beneficiaries of the war includes the fertilizer industry, due to the volatility of European markets in products where Russia is a major supplier. Dmitry Mazepin (Uralchem) jumped from #150 to #57, tripling his estimated wealth. Vyacheslav Kantor (Acron Group) jumped from #33 to #13, more than doubling his estimated wealth. PhosAgro’s Andrey Guryev (#16) and his business partner Vladimir Litvinenko (#42) doubled their estimated wealth. Andrey Melnichenko (EuroChem) – while under Western sanctions – maintained his standing at #7. In addition, some of these fertilizer companies produce materials for military needs, where demand has boomed. For example, Uralchem and EuroChem supply concentrated nitric acid and various nitrates to multiple defence enterprises that produce explosives, ammunition for missile systems, anti-tank missiles, aerial bombs, and artillery shells.
Another beneficiary of the disruption in European markets during the war is the energy industry. Despite Western sanctions, Russian oil and gas companies achieved bumper profits in 2022 and 2023. For example, Leonid Mikhelson (owner of Novatekand Sibur) moved to #1, while Gennady Timchenko (Novatek/Sibur/Stroytransgaz/Transoil) became #6 on the Forbes list. Other businesspeople in the energy industry showed even more impressive wealth growth: Andrey Bokarev (Ust-Luga Oil) jumped from #59 to #33 (+56% wealth increase), Mikhail Gutseriev (Safmar) from #60 to #34 (+48% wealth increase), and Nikolai Buinov (Irkutsk Oil) from #66 to #39 (+50% wealth increase). The TAIF Group’s merger with Sibur in 2022 provided access to advanced technologies and broader markets. As a result, its owners demonstrated strong wealth gains: Airat Shaimiev (#91 to #56, +71%), Rustem Sulteev (#109 to #61, +83%), Radik Shaimiev (#98 to #58, +69%), and Albert Shigabutdinov (#111 to #59, +83%).
Increased domestic demand
Spending behaviour during the war shifted towards local consumption due to travel restrictions, limited import options, and Russian banks being cut off from the SWIFT payment system. Sergey Schneider (#93, $1.4 billion) entered the Forbes 2024 list as his discount supermarket Svetofor proved successful amid declining real incomes. Sergey Studennikov of Red&White, jumped from #78 to #38 (+78%, $3.2 billion), capitalising on alcohol consumption in Russia which reached a nine-year high in 2023. Igor Kesaev and Sergey Katsiev, controlling 70% of Russia’s cigarette market through Megapolis, moved from up to #25 (+38%) and #65 (+18%), respectively. Electronics retail DNS Group founders Yuri Karptsov and Dmitry Alekseev rose to #99 and #101, respectively. The Fartushnyak brothers and their partner Alexander Mikhalsky entered the list (at #71, #82, and #100 respectively) through their retail empire including Sportmaster sports stores, clothing chains O’stin, Funday, and Zolla, as well as agriprocessing holding Prodimex Agro (the former Swedish Agrokultura).
Conclusions
The publicly available Forbes billionaire list provides a snapshot of how Russia’s superrich have adjusted their economic activity after the war in Ukraine started and Western democracies imposed individual and corporate sanctions to freeze their assets and ban international travel and business partnerships. The analysis on this limited set of businesspeople shows several ways in which they pivoted to enrich themselves from the war and how the war has provided opportunities for enrichment in some sectors of the economy that were previously dependent on Western investors, imports, or technology.
One open question is whether profiting from the war is a legitimate reason for the imposition of individual and corporate sanctions. This motivation seems to be absent from current sanctions policy.
See original post for references