Thomas Piketty: “To win the political and moral battle against autocracies, we must punish the oligarchs, not the people”

The Ukrainian crisis has revived an old debate: how to effectively sanction a state like Russia? Let’s say it right away: it’s time to imagine a new type of sanctions centered on the oligarchs who have prospered thanks to the regime in question.

This requires the establishment of an international financial cadastre, which will not be to the liking of Western fortunes, whose interests are much more closely linked to those of the Russian and Chinese oligarchs than is sometimes claimed. Yet it is at this price that Western countries will succeed in winning the political and moral battle against autocracies and in demonstrating to world opinion that the grand speeches on democracy and justice are not empty words.

Let us first recall that the freezing of assets held by Putin and his associates has already been part of the arsenal of sanctions tested for several years. The problem is that the freezes practiced so far remain largely symbolic. They only relate to a few dozen people and can be circumvented by using nominees, especially since we have never given ourselves the means to systematically measure and cross-reference the real estate and financial portfolios held by the each other.

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The United States and its allies are now considering disconnecting Russia from the Swift financial network, which would deprive Russian banks of access to the international system of financial transactions and money transfers.

The problem is that such a measure is very poorly targeted. As with traditional trade sanctions, which after the 2014 crisis had been largely instrumentalized by the government to strengthen its grip, the risk would be to impose considerable costs on ordinary Russian and Western companies, with harmful consequences for employees concerned. The measure would also affect a large number of dual nationals and mixed couples, while sparing the wealthiest (who would have recourse to alternative financial intermediaries).

0.02% of the Russian adult population

To make the Russian state bend, it is urgent to concentrate the sanctions on the thin social stratum of multimillionaires on which the regime relies: a group clearly larger than a few dozen people, but much narrower than the Russian population in general. To fix ideas, we could target people holding more than 10 million euros in real estate and financial assets, i.e. approximately 20,000 people according to the latest available data. This represents 0.02% of the Russian adult population (currently 110 million). By setting the threshold at 5 million we would hit 50,000 people ; by lowering it to 2 million we would get some 100,000 (0.1% of population).

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