‘Sanctions on oligarchs won’t turn them vs Putin’

AT GROUND LEVEL - Satur C. Ocampo - The Philippine Star

Into its third week, Russia’s invasion of Ukraine hasn’t made any significant advance, as Ukrainian resistance led by its president continued to hold fast. A foreign ministry-level meeting held in Turkey Thursday failed to reach an agreement on a temporary ceasefire.

Moreover, the world is outraged by the devastation caused by sustained Russian shelling on residential areas, parklands, shopping malls and grocery stores in key cities – and most recently a children’s hospital and maternity ward in Mariupol city.

Ukraine’s President Volodymyr Zelensky denounced the hospital attack as “the ultimate evidence of genocide,” saying children were buried under the rubble, and called Russia a “terrorist state”. The International Red Cross described the Mariupol humanitarian situation as “increasingly dire and desperate.”

United Nations Secretary General Antonio Guterres said on Twitter March 9: “Today’s attack on a hospital in Mariupol … is horrific. Civilians are paying the price for a war that has nothing to do with them. This senseless violence must stop. End the bloodshed now.” The World Health Organization has confirmed 18 attacks on medical facilities, health workers and ambulances, citing 10 deaths and 16 injured. “These attacks deprive whole communities of health care,” the WHO added.

Apparently addressing both Russia and the NATO on Monday, President Zelensky told ABC News he was no longer pressing for Ukraine’s membership in NATO. “I have cooled down regarding this question a long time ago after we understood that … NATO is not prepared to accept Ukraine. The alliance is afraid of controversial things and confrontation with Russia,” he said, adding that he doesn’t want to be president of a “country which is begging something on its knees.”

On Wednesday, the US House of Representatives – voting 414-17 -- banned imports of Russian oil and other energy products, a day after such a ban was ordered by President Joseph Biden. When Biden publicly proposed the ban to Britain, France and Germany on Monday, Russia threatened to shut down the Nord Stream 1 gas pipeline to Germany.

The House also approved $13.6 billion in US aid to Ukraine and its European allies. The legislation provides for two allocations: $6.5 billion for sending American troops and weapons to Eastern Europe and equipping allied forces there; and $6.8 billion for the care of Ukrainian refugees, economic aid to allies and to help US federal agencies enforce economic sanctions against Russia.

Along with the European Union and Britain, the US has imposed a package of sanctions against Russia’s Central Bank, financial institutions and enterprises, and the freezing of assets held abroad and travel ban against 40 economically powerful oligarchs and warlords in President Vladimir Putin’s inner circle. All these were aimed at putting pressure on Putin to call off the invasion of Ukraine.

Interestingly, a University of Toronto professor, who researches on political violence and repressive regimes, described the sanctions’ strategy as “flawed” in an opinion piece in the Guardian on March 8. Olga Chyzh, the author, said “the West misunderstands the Russian concept of oligarchy.”

“What the West calls Russian oligarchs are not a homogenous group in terms of their interests, functions within the State, or political influence,” Chyzh wrote. “Those who have direct access to (President Putin) fall into two broad categories: the economic oligarchs and the strongmen.”

The economic oligarchs are essentially trustees who manage day-to-day operations of various industries within the Russian economy, such as banking and oil extraction, she pointed out. Two factors that characterize them: “their dependence on the status quo, and a total mismatch between their wealth and political influence.”

“Precarious” is how Chyzh saw the group’s position in Russian society, since it is “entirely predicated on their relationship with President Putin.” Practically, she stressed, “all assets the oligarchs manage ultimately belongs to the state, with Putin as the final arbiter.” They lack ways to legitimize their positions beyond the current regime. “Their biggest asset – their personal connection to Putin – is not something they can pass on to their children or carry over past Putin’s regime.”

“Their domain is strictly economic; they are expected to stay out of politics. This is the well-understood price for gallivanting across Europe, buying football clubs and working with Western business partners,” noted Chyzh.

“Putin’s continued support, and his continuation in power, guarantees their wealth and safety,” she explained. “As long as they fulfil their part of the deal and stay out of politics, they get to keep their remaining assets in Russia.” Should they speak up against the invasion of Ukraine, they risk losing not only their remaining wealth, but also face criminal charges and prosecution.

“However sad they are to let go of their western assets, the economic oligarchs have even more to lose by speaking out against the war. So they stay quiet.”

On the other hand, the strongmen group consists of Putin’s political connections. “Originally middle managers, low-level administrators, special ops, scientists, athletes and criminal thugs, these individuals are now holding key government and other power positions, Chyzh narrated.

“These are Putin’s most loyal followers, who also hold the most political influence.” Ideologically conservative and hostile towards the West, they are not troubled by Russia’s looming global isolation. “Autarky and isolation facilitate repression, and further strengthen their status,” she explained.

If the premise of the sanctions is to put economic pressure on Putin’s inner circle to demand that he change strategy, it won’t happen, “not now and not anytime soon,” Chyzh emphasized.

“What the sanctions do achieve is to weaken the Russian economy, and with that, its military capacity,” she wrote.

It is only a matter of time before the state can no longer support the government’s payroll and fund its military-industrial complex, Chyzh surmised, concluding: “Whether it’s going to be weeks or months depends on how Russia plays its remaining cards, such as cooperation with China, and how effective it exploits its existing resource monopolies. In the meantime, Putin’s war will continue unchecked.”

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