Why stop at Russian oligarchs?

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By YANIS VAROUFAKIS*

Western democracies further protect foreign wealth from oversight

As soon as Roman Abramovich, recently targeted by UK sanctions against Russian oligarchs, announced that he was selling the Chelsea Football Club, the feeding frenzy began. An icon of athletics, bigwigs of the financial world and even a respected columnist for Times, each representing different American multibillionaires, landed in London in a race to buy the club. Meanwhile, a series of properties London companies owned by Russian oligarchs entered a long-awaited liquidation process. Why did it take so long?

To put it bluntly: the legal foundations of the West.

True, Western leaders encouraged the influxes. David Cameron, then Prime Minister of the United Kingdom, appealed in 2011 to an audience in Moscow to “invest” in Britain. But it wasn't difficult to convince the oligarchs to flood London with their money. The legislation of Western countries prevents governments and people not only from disturbing the wealth deposited in their jurisdictions, but also from even knowing where and how much of it exists. Why else do countless companies would register in the US state of Delaware, using mailboxes that guarantee the anonymity of their owners?

Indeed, Western democracies afford foreign wealth even more protection from oversight. In a 2021 report appropriately titled “The UK's Kleptocracy Problem", Or think tanks London's Chatham House revealed that the golden visas for sale to oligarchs around the world were granted after “verifications … [which] were the sole responsibility of the law firms and wealth managers representing them”. In my country, Greece, following the effective bankruptcy of our state in 2010, an oligarch could buy a golden visa no questions asked, which also came with a visa Schengen (and the opportunity to live and travel anywhere in the European Union), for a measly 250.000 euros (276.000 dollars). Similar visas are sold by other eurozone countries that find themselves under fiscal pressure, fostering a race to the bottom that the world's oligarchs enjoy immensely.

While there are good reasons to focus on Russian money, now that Russian bombs are destroying Ukrainian cities, it is puzzling that only Russian billionaires are called oligarchs. Why oligarchy, which means government (arks) of few (oligos), is considered an exclusively Russian phenomenon? Are not Saudi or UAE princes oligarchic? Do American billionaires, like those now flocking to buy Chelsea FC, smuggle less money out of their country than their Russian counterparts, or do they have less political clout? Do they use such power better than the Russians?

Russia's richest 0,01% (the top 1% of the top 1%) took away about half of their wealth, about 200 billions of dollars, from Russia and hid it in the UK and other havens. At the same time, America's richest 0,01% withdrew about 1,2 trillion of US dollars, mainly to avoid paying taxes. Thus, in terms of magnitude, every dollar that Russian plutocrats hide abroad to escape inspection corresponds to 10 dollars hidden by American plutocrats.

As for the relative political influence of Russian and American billionaires, it is by no means clear who has more. While there is no doubt that many Russian oligarchs are close to President Vladimir Putin, he has more control over them than the US government has over its billionaires. Since decision 2010 Supreme Court Act, which gives corporations the right to donate to politicians as if they were people, America's richest 0,01% were responsible for 40% of all campaign contributions. This has proven to be an excellent investment in wealth preservation.

Is it an accident that in the years following the “deregulation” of campaign finance, American billionaires have the lowest tax rate in more than a generation, and the lowest among all rich countries? Is it an accident that the federal tax agency (Internal Revenue Service) of the US being resource hungry? according to a authorized empirical study about US legislative records, none of this is an accident: the correlation between what Congress passes and what most Americans prefer is not significantly greater than zero.

So if non-Russian billionaires are also oligarchs, does the West's exclusive emphasis on Russians mean that “our” oligarchs, and those nurtured by our allies, are somehow better? Here we are treading on treacherous ethical ground.

Arguing that the Saudi billionaires behind a decade of devastation in Yemen are “better” than Abramovich invites derision. Vladimir Putin would be pleased if we dared to claim that the US oil magnates, who reaped an unexpected result from the illegal US and UK invasion of Iraq, were morally superior to the owners of Rosneft and Gazprom. To be sure, Putin's oligarchs turn a blind eye whenever a courageous journalist is murdered in Russia.

But meanwhile, WikiLeaks founder Julian Assange is languishing in a high-security prison in the UK, in conditions that border on torture, for exposing Western countries' war crimes after his illegal invasion of Iraq. And how did Western oligarchs and governments react when their Saudi trading partners dismembered the The Washington Post, jamal khashoggi?

In the wake of Vladimir Putin's invasion of Ukraine, the British government declared its determination to tear back the veil of secrecy and deception surrounding money held in Britain to escape law enforcement and tax authorities. It remains to be seen whether reality matches the rhetoric. Already exist signs of tension between the ambition to seize the money of the oligarchs and the imperative to keep Britain “open for business”.

Perhaps the only silver lining to the Ukrainian tragedy is that it created an opportunity to check not only oligarchs with Russian passports, but also their American, Saudi, Chinese, Indian, Nigerian, and, yes, Greek counterparts. An excellent place to start would be with the London mansions that Transparency International tell us that are empty. How about giving them to refugees from Ukraine and Yemen? And while we're at it, why not deliver Chelsea FC to its fans.

*Yanis Varoufakis is a former finance minister of Greece. Author, among other books, of the global minotaur (Literary Autonomy).

Translation: Fernando Lima das Neves.

 

Originally published on the portal Project syndicate.

 

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