The International Dimension of Russia’s Crony Capitalism

Since the great financial liberalization in the 1980s, an enormous offshore wealth has developed. Berkeley economist Gabriel Zucman has assessed it at 10 percent of all global financial wealth. Of this wealth, about $1 trillion is private Russian dark money, two-thirds of Russia’s GDP. It is kept in anonymous companies, largely invested in the United States and the United Kingdom. This money is kept abroad because is it is not safe in Russia, because of its absence of real property rights. The Russian assets of anybody who falls out with the ruler is likely to be confiscated. This offshore capital is not taxed by anybody. It is not productive but deployed in wealth management and conspicuous consumption. It poses major political dangers as it can buy the politics in any country. The necessary cure is complete transparency of global finances and severe penalties against the financial crimes committed. The current freezing of oligarch assets might be an important step to promote global democracy and greater equity. Anders Åslund, “Russia’s Crony Capitalism: The Path from Market Economy to Kleptocracy,” Yale UP, 2019.