In the two months since Russia invaded Ukraine, the silence – and even acquiescence – of the Russian elite has started to fray.

Even as opinion polls report overwhelming public support for the military campaign, amid pervasive state propaganda and new laws outlawing criticism of the war, cracks are starting to show. The dividing lines among factions of the Russian economic elite are becoming more marked, and some of the tycoons – especially those who made their fortunes before President Vladimir Putin came to power – have begun, tentatively, to speak.

For many, the most immediate focus has been their own woes. Sweeping sanctions imposed by the West have brought down a new iron curtain on the Russian economy, freezing tens of billions of dollars of many of the tycoons’ assets along the way.

“In one day, they destroyed what was built over many years. It’s a catastrophe,” said one businessman who was summoned along with many of the country’s other richest men to meet Putin on the day of the invasion.

The White House further turned the screws on the oligarchs Thursday, announcing a proposal to liquidate their assets and donate the proceeds to Ukraine.

At least four oligarchs who made it big in the more liberal era of Putin’s predecessor, President Boris Yeltsin, have left Russia. At least four senior officials have resigned their posts and departed the country, the highest ranking among them being Anatoly Chubais, the Kremlin special envoy for sustainable development and Yeltsin-era privatization czar.

But those in top positions vital to the continued running of the country remain – some trapped, unable to leave even if they wanted to. Most notably, Russia’s mild-mannered and highly regarded central bank chief, Elvira Nabiullina, tendered her resignation after the imposition of Western sanctions, but Putin refused to let her step down, according to five people familiar with the situation.

In interviews, several Russian billionaires, senior bankers, a senior official and former officials, speaking on the condition of anonymity for fear of retribution, described how they and others had been blindsided by their increasingly isolated president and feel largely impotent to influence him because his inner circle is dominated by a handful of hard-line security officials.

The complaints aired in public so far are mostly muted and focused primarily on the government’s proposed economic response to the sanctions imposed on Russia by the West. No one has directly criticized Putin.

Vladimir Lisin, a steel magnate who made his fortune in the Yeltsin years, slammed a proposal in the Russian parliament to counter sanctions by forcing foreign buyers to pay in rubles for a list of commodities beyond gas. In an interview with a Moscow newspaper, he said the measure risked undermining export markets that Russia “fought for for decades,” warning that “a transfer to payments in rubles will just lead to us being thrown out of international markets.”

Vladimir Potanin, the owner of the Norilsk Nickel metals plant who was an architect of Russia’s privatizations in the 1990s, warned that proposals to confiscate the assets of foreign companies that exited Russia in the wake of the war would destroy investor confidence and throw the country back to the revolution of 1917.

Oleg Deripaska, an aluminum tycoon who also made his initial fortune during the Yeltsin era, has gone furthest, calling the war in Ukraine “insanity,” though he too has focused on the invasion’s economic toll. He has predicted that the economic crisis resulting from the sanctions would be three times worse than the 1998 financial crisis that rocked the Russian economy, and he has thrown down the gauntlet to the Putin regime, saying its state capitalism policies of the past 14 years have “led neither to economic growth nor to the growth of the population’s incomes.”

In a subsequent post on his Telegram channel, Deripaska wrote that the current “armed conflict” was “a madness for which we will long be ashamed of.” In the next sentence, however, he indicated the West was equally to blame for a “hellish ideological mobilization from all sides.”

– – –

When 37 of Russia’s wealthiest business executives were called to the Kremlin for the meeting with Putin hours after he launched the war, many of them were depressed and shocked. “Everyone was in a terrible mood,” one participant said. “Everyone was sitting there crushed.”

“I’d never seen them as stunned as they were,” another participant said. “Some of them could not even speak.”

They’d been kept waiting, as usual, for more than two hours before the president appeared in the Kremlin’s ornate Ekaterininsky Hall – ample time to consider their fate. For some of the executives, as they quietly discussed the consequences of Putin’s war, it was the moment they realized that it was all over for the business empires they’d been building since Russia’s market transition began more than 30 years ago.

“Some of them said, ‘We’ve lost everything,’ ” one of the participants said.

When the president arrived, no one dared issue a whimper of protest. Stone-faced, they listened as Putin assured everyone Russia would remain part of global markets – a promise soon made hollow by the series of Western sanctions – and told them he’d had no other choice than to launch his “special military operation.”

Since then, Putin has ratcheted up threats against anyone criticizing the war, hastily issuing new laws that include a potential 15-year prison sentence for anyone saying anything the Kremlin deems false about the Russian military. His administration has proposed instituting a new system of deputies in Russia’s ministries to report back to the Kremlin on the “emotional climate and mood.” One tycoon said he expected the coming crackdown to be “cannibalistic” compared with the “vegetarian period” of previous years.

Putin’s decision to launch a full-scale invasion appears to have stunned not just the billionaires but the breadth of the Russian elite, including senior technocratic officials and some members of the security services, according to two of the Russian billionaires and a well-connected Moscow-based former state official.

“Apart from those directly involved in the preparations, [Defense Minister Sergei] Shoigu, [chief of the army’s general staff Valery] Gerasimov, and some from the FSB, no one knew,” said one of the billionaires.

Despite the escalating warnings by U.S. intelligence, many in the Moscow elite had believed Putin was limiting his aims to the separatist areas of eastern Ukraine. Economic and financial officials “thought it would be limited to action in Donetsk and Luhansk and this is what they had prepared for,” the senior official said. They had prepared for Western sanctions, including a suspension from Swift, the international financial messaging system, he said, “but they hadn’t prepared for this.”

With casualties mounting and Russian troops forced to turn back from Kyiv, the war is now being viewed with increasing dismay not just by billionaires sanctioned by the West but even by some members of the security establishment, according to two people with knowledge of the situation.

One referred specifically to Shoigu, who took part in the war preparations. “They all want to have a normal life. They have homes, children, grandchildren. They don’t need war,” this person said. “They’re all not suicidal. They all want to have a good life. They want their children to have everything and be able to travel to the most beautiful places.”

The mounting pressure on their foreign bank accounts is a source of particular chagrin for the elite. Even officials who tried to protect themselves by moving their money into accounts belonging to business partners now find that these accounts are blocked, one of the Moscow executives said.

– – –

Western sanctions to freeze $300 billion – or nearly half – of the Central Bank of Russia’s hard currency reserves left Moscow reeling, including central bank governor Nabiullina, whose resignation attempt was rejected by Putin, according to the five people familiar with the situation. (Bloomberg News first reported her attempt to resign.)

Nabiullina “understands very well she can’t just leave. Otherwise, it will end very badly for her,” one of these people said.

“No one can say ‘That’s it’ and then slam the door,” said Vadim Belyaev, the exiled former main owner of Otkritie, Russia’s biggest private bank until its takeover by the state in 2017. “Everyone will continue working right up to the next Hague tribunal,” he said, referring to a possible war crimes trial. The central bank has denied that Nabiullina tried to resign.

Only those officials who are superfluous to the running of the state – and are relative outsiders – have been allowed to leave, economists said. “No minister is allowed to step down,” said Maxim Mironov, an associate professor at IE University in Spain. “It is like a mafia.”

If Nabiullina epitomizes Moscow’s senior technocratic officials, then Alexei Kudrin is the one closest to Putin. Kudrin – a former member of Putin’s inner circle from St. Petersburg who served as finance minister for the first two terms of his presidency – also appears to be among those unable to step down.

One person close to Kudrin said he met with Putin a month before the invasion. Although it was clear that preparations for war were underway, Kudrin had believed the plans would not be carried out, one person familiar with his thinking said. “He counted on things not reaching such a head,” the person said.

Kudrin – who now heads the Audit Chamber, Russia’s financial watchdog – has told allies it would be a betrayal by him to leave for good. He’d appeared in Tel Aviv the weekend of April 9 but took to social media to telegraph to all that he intended to return to Moscow to speak at Russia’s upper chamber the following week. He gave his address according to plan, warning that Western sanctions were confronting Russia with the worst economic downturn in 30 years.

Another former senior state official said he felt a responsibility to remain in Moscow, even though he was taken aback and horrified by the war. “If everyone leaves, then who is going to be here to pick up the pieces,” he said. “It’s like working at a nuclear power station. Who is going to run it if you leave? If you leave, then there is a chance it can explode.”

– – –

Among the billionaires who left Russia in the immediate aftermath of the invasion are several who grew wealthy during the Yeltsin era, including Alexander Mamut and Alexander Nesis, who own the Russian gold company Polymetal, and Mikhail Fridman and Petr Aven of Alfa Group.

But many other tycoons high-tailed it to Moscow as soon as they were hit with sanctions, which have barred them from travel in the West. Other business executives fear that if they leave Russia, their companies will be seized by the government, one of the Moscow business executives said.

Some of the billionaires now stuck in Moscow are seeking only to emerge unscathed. “You may not support the war but you have to keep quiet and be with your countrymen because some of your soldiers are dying,” said one person close to one of the billionaires present at the Feb. 24 Kremlin meeting. “If you are living in the country, you may not be happy – nobody is happy about what’s going on – but don’t voice your opinion.”

Those billionaires who have been willing to speak out publicly are those who remember a different era; they made their first fortunes in the Yeltsin years, before Putin became president.

Sergei Pugachev, a Kremlin insider until he left Russia in 2012, pointed out that these tycoons were still careful in their public comments not to directly criticize Putin for going to war. “What they say is subtle: The context is that the West, NATO is to blame. . . . They are talking about this as though it is a conspiracy against Russia,” he said.

By contrast, those closest to Putin – who are from St. Petersburg and became fabulously wealthy after his rise to the presidency – such as Gennady Timchenko, Yury Kovalchuk and Arkady Rotenburg, are resolutely silent. They “would never go against Putin. They started with Putin, and he made them gazillionaires. Why would you bite the hand that feeds you?” said a former senior western banker who worked with Russian oligarchs.

Apart from these tycoons, there is an army of officials and business executives in Moscow who are not troubled by Russia’s increasing economic isolation as a result of the invasion, Pugachev said, and many of the contacts he retains in Moscow have not faulted Putin for going to war. They had complained instead that the army should have been better prepared.

He said many members of the current elite are mid-level government ministers who have stashed millions of dollars in private accounts and maintain homes elsewhere in Europe. If sanctions prevent them from traveling to these countries, they’ll still be fine. “He’s still a minister in Russia, and instead of going to Austria, he’ll go to [the Russian resort] Sochi. They don’t suffer very much,” Pugachev said.

On the surface, moreover, the Russian economy has appeared to stabilize since the initial salvo of sanctions, buoyed by an estimated more than $800 million a day in revenue from the sale of oil and gas to Europe. The central bank’s policy to force exporters to sell 80 percent of their hard currency earnings has prevented a ruble implosion, while Putin has declared that the “economic blitzkrieg” against Russia has failed.

But earlier this month, Nabiullina warned the impact of sanctions was yet to be fully felt and said the worst was still to come. The manufacturing plants, where “practically every product” depended on imported components, were beginning to run out of supplies, while reserves of imported consumer goods were dwindling, too. “We are entering a difficult period of structural changes,” she told parliamentary deputies. “The period during which the economy can live on reserves is finite.”

In these conditions, Putin’s position is precarious, Pugachev said. The population has so far been lulled by the state propaganda machine, which has covered up the level of deaths in the Russian military, as well as by the sanctions’ lack of immediate bite. “But in three months, the shops and factories will run out of stocks, and the scale of deaths in the Russian military will become clear,” he said.

Despite the near-fatal blow to their interests, for now, the Russian business elite appears to be still frozen in fear. “I don’t know who has the balls to fight back,” said one of the business executives.

“But if the war is long, and they begin to lose, then the chances will be greater,” he said. “There will be a serious battle for Donbas and, if it is not successful, then there will be a big battle inside Russia” among elites.

« Previous

Second Oath Keepers member pleads guilty to seditious conspiracy

Next »

Judge won’t lift $10,000-a-day fine against Trump, who says he doesn’t have records