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Why Offshore Finance Limits U.S. Sanctions Against Russia

April 27, 2022
Menevis Cilizoglu and Chelsea Estancona


In analysis for Political Violence At A Glance, an IGCC-supported blog dedicated to political violence and its alternatives, Menevis Cilizoglu, Assistant Professor of Political Science at St. Olaf College, and Chelsea Estancona, Assistant Professor in Political Science at the University of South Carolina, analyze sanctions against Russia, and how offshore financial services might get in the way of sanctions as a policy tool.

More than 1,000 individuals and entities have now been targeted with sanctions since Russia’s invasion of Ukraine, including more than 50 oligarchs close to Putin and their families. These measures include the freezing of assets in international banks, seizure of yachts, private jets, and luxury real estate, and travel bans. Western policymakers hope that targeting a wide network of Russian political and economic elites, including oil executives, steel tycoons, media moguls and high-level intelligence officers will isolate Putin and pressure him to reverse course. The million-dollar question is, can these targeted measures actually hurt Russian oligarchs, let alone pressure Putin?

Sanctions are the foremost policy tool available to Western leaders short of entering the war alongside Ukraine. However, sanctions on individuals, especially asset freezes, are only effective when there is complete transparency over where the assets are. The sheer amount of assets that are held anonymously or concealed through hard-to-trace shell and front companies present significant challenges for freezing assets as a coercive measure. It is estimated that over $1.3 trillion of assets from Russia are held in offshore accounts. As long as the assets of oligarchs remain untouched, sanctions cannot hurt them.

Read the full blog post at Political Violence At A Glance