Revealed: Russia’s Offshore Accounts

August 24, 2017

A research paper published by the Paris School of Economics and UC Berkeley has revealed the true level of economic inequality in Russia in 2017, as well as some startling facts about Russia’s offshore wealth. 

According to the paper, the total volume of offshore capital kept by Russians exceeds over three times the level of the country’s foreign exchange reserves.  This number is somewhere around 75% of Russia’s GDP, and it is growing.

Many in Russia will be unsurprised by such figures, corruption being a particularly poignant motive for political protest in 2017 after Alexey Navalny’s Anti-Corruption Fund took to exposing the enormous hidden wealth of some of Russia’s most recognisable public figures.

However, the report lays bare some shocking realities: “As much money is kept abroad in Britain, Switzerland, Cyprus and other such offshore centres, as is kept inside Russia by the entire Russian population.”

The Panama Papers leak in 2015 surprised many when among the millions of leaked documents was a paper trail that connected Vladimir Putin with billions of dollars of concealed wealth that had been syphoned through some of his closest associates.

According to Rosstat, Russia’s state statistics organisation, Russia’s GDP was valued in 2015 at 81 trillion rubles.  If we work by the calculations of the research paper’s authors, it turns out that the total offshore wealth of Russians is around 60,75 trillion rubles, a little over one trillion US dollars.

The paper also shows that financial inequality in Russia has risen since the 1990s, despite the average Russian’s yearly expenses having risen by approximately 40% from around 16,000 euros in the early 1990s, to 24,000 in 2016.  Just 1% of the wealthiest Russians control 20-25% of the country’s GDP.

“We have established that inequality has increased significantly more in Russia than in China and the former Communist countries of Eastern Europe, and we attribute this to the particular transitional strategy that Russia employed.”

The authors of the report suggest that Russia’s current economic situation and the current levels of financial inequality are far from ideal circumstances for normal development in the country.  They also claim that the data on inequality is “significantly underestimated”, the consequences of which may come to light in a very unpleasant form under Vladimir Putin’s next term in office.

Experts, dissidents and politicians alike agree that endemic corruption is one of, if not the most, pressing issue in today’s Russia.  The path towards a more democratic Russia, with more power and autonomy vested in local government, is obstructed by those who wish to keep this system alive for their own personal gain.

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