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In accordance with European sanctions against Russia, French authorities seized a 280-foot luxury yacht linked to Russian oligarch Igor Sechin, head of the oil giant Rosneft.
Along with millions across the globe, I have watched with horror as the Russian military invaded Ukraine. It’s clear that Russia’s intervention in Syria on behalf of Bashar al-Assad, with its lack of restraint against civilians and bombing of medical facilities, was a dry run for the Ukraine operation. The difference is that in Syria, Russian troops act at the invitation of Assad, so their presence there is not considered illegal under international law, even if some of their actions have been.
Ukraine, however, is a sovereign country, and with this invasion, Vladimir Putin is now directly contesting the legitimacy of any post-WWII “rules-based international order.” When the U.S. launched its illegal invasion of Iraq, it recognized that its infringement of Iraqi domestic sovereignty would at least require some semblance of international legitimacy; that’s what brought us Colin Powell’s shameful appearance at the U.N. falsely claiming “evidence” of Saddam Hussein’s possession of weapons of mass destruction. This was a pretense for imperialist invasion, one accompanied by a worldwide program of secret detentions, torture, massive civilian casualties, and immense war-profiteering. Putin has certainly recognized American hypocrisy when it comes to the defense of human rights and the rule of law, and so no amount of moral outrage or argument is likely to have any effect upon his actions in Ukraine, even if the principle of sovereignty is constantly invoked.
It also clearly underscores the present limitations of sovereignty, too, when it comes to protecting people. Imposing sanctions on the wealth of Russia’s so-called “oligarchs,” presumably in order that they might exert pressure on Putin to back down, is symptomatic of a very serious weakness within the present international order: the increasing “sovereignty” of private wealth and private interests at the expense of people everywhere. If such wealth is effectively sovereign, operating at the root of decisions about states’ domestic and foreign policies, then most people are left without real representation.
In the U.S., neither political party has done anything about the immense influence of private money upon our domestic affairs. We have nurtured an anti-democratic oligarchic class of our own, one that now has far more influence over the conditions of citizens’ lives than those citizens themselves.
In the U.K., private finance dedicated around two-thirds of its political spending in support of Brexit. Within the alternative investment industry like private equity and hedge funds—a strong presence in Boris Johnson’s government—support was even higher, as much as 94 percent. Marlène Benquet and Théo Bourgeron have written that these Brexiteer financiers sought to “transform the City [of London] into a kind of offshore investment platform,” free from EU rules and operating as a “fiscal asylum zone,” akin to “Singapore-on-Thames.”
Thanks to our current global financial system, heads of state and their close associates can easily operate like private, for-profit corporations.
Within this widely shared libertarian vision, unregulated wealth generation is the highest value against which all others shrink. “Freedom” is for markets, not people; in classic Friedmanesque neoliberal fashion, the citizen is a mere consumer, and all are subordinate to the hierarchical governance of private corporate power.
But protests across the world against Russia’s brutal incursion, including within Russia itself, are proof of the absurdity of such a view. Ukrainians are not fighting for such a distorted and impoverished view of freedom. And while watching oligarch yachts being seized may be satisfying, it in a sense upholds a separate order that values private wealth and its “sovereignty” over democracy. Breaking this power and distributing it back to the people will require us to come to terms with the distorting lens of financialization.
THESE DAYS, THE U.S. can hardly be said to “export” democracy (arguably it does not have one to export). Our chief export is a highly financialized neoliberal ideology. Our culture continues to worship the “business acumen” of the wealthy even as income inequality has reached unprecedented heights. In practice, this means that the talents of most working Americans are considered inferior to those for whom wealth accumulation is the highest individual moral achievement.
The secretive world of alternative investments like private equity and hedge funds is perhaps the epitome of this worldview. That the head of Blackstone, Steve Schwarzman, can make over a billion dollars in a single year is not proof of his “elect” status or of some crazed libertarian notion of “natural hierarchy”; rather, it reflects a dysfunctional, deeply anti-democratic system designed to serve and protect the interests and preferences of its biggest beneficiaries.
Privacy and secrecy are at the center of this ideology of finance, and are an important part of its power.
The scale of Russian oligarchic wealth is similarly astonishing. According to benchmark estimates by the National Bureau of Economic Research, the oligarchs’ offshore wealth held in assets and private bank accounts abroad is three times larger than Russia’s net foreign reserves, and roughly equal in size to the total assets of the entire domestic Russian population.
As the Governmental Accounting Standards Board (GASB) put it in an important white paper, governments in theory do not operate according to principles of profitability and the maximization of “shareholder value.” Rather, they ensure the maintenance of public goods for citizens via taxpayer revenues. They must also handle their affairs in a manner that is amenable to public scrutiny and accountability, not least because taxation is a form of involuntary contribution that we cannot simply withdraw at will, as a shareholder in an investment could, except by moving to another local, national, or international jurisdiction. Sovereignty, especially in its liberal democratic and representational forms, has long been understood as something quite different from a private corporation that exists to benefit its investors.
And yet, thanks to our current global financial system, heads of state and their close associates can easily operate far more like private, for-profit corporations. The recent Credit Suisse leaks along with ICIJ investigations like the Pandora Papers, Luxembourg Leaks, Paradise Papers, the FinCEN Files, and the Panama Papers have exposed how many government leaders and their associates have stashed away enormous wealth outside of public scrutiny and often at the expense of their own citizens. The secrecy and lack of regulations both at home and abroad have made it nearly impossible to “follow the money.” Even the FBI has trouble obtaining information from the secretive private investment fund industry when investigating global money-laundering schemes. This does not bode well for the confiscation of Russian assets.
With the invasion of Ukraine, Putin has confronted the world with a clear vision of privatized, unapologetic sovereignty, one that is not conjured into being via constitutions, but rather emanates from the royalist control central to his personalized, neo-monarchical conception of power. In Syria, he helped Assad brutally maintain power as if the Syrian state and its people were merely a private company. With Ukraine, which he seems to view as his personal property, he’s taken that model of governance global.
With the invasion of Ukraine, Putin has confronted the world with a clear vision of privatized, unapologetic sovereignty.
In this context, sanctions against oligarchs have emerged as a key avenue for pressuring Putin to reverse course and stop his illegal invasion. As Sen. Bernie Sanders put it, “Incredibly, the 500 richest people in Russia with a net worth of at least $100 million now own more wealth than the bottom 99.8% of Russia’s population—145 million people. This is the type of inequality that exists not just in Russia, but throughout the world.” He is correct. This is an enormous global problem, no less relevant in the U.S. than in Russia.
Offshore vehicles used by corporations and the wealthy have (often quite legally) siphoned billions in revenue from jurisdictions all across the globe, rendering the matter of taxation as an “involuntary contribution” moot. The Tax Justice Network estimated in 2014 that the amount stashed abroad could easily total between $21 trillion and $32 trillion. Banks, financiers, accounting and consulting firms, and lawyers have been and remain complicit in these efforts, operating with a transnational ease and efficacy that you’d think would be the envy of the U.N., which has been largely ineffective in resolving global conflicts because of continual clashes within the Security Council.
Sovereignty remains important for the agents of our financialized global system, but not chiefly as protection from outside interferences and the rights of citizens. Rather, sovereignty carries significance chiefly as a means of tax evasion and regulatory arbitrage. Should a global tycoon park assets in a U.S. jurisdiction, like Delaware, Wyoming, or South Dakota, or one offshore, like Cayman, Jersey, or Cyprus? At which country’s banks and financial institutions can the most secrecy and the most advantageous terms be found, and which armies of lawyers, accountants and consultants can best help keep money out of sight, or launder criminally gotten gains?
Contrast this with Ukraine today, where it is clear that sovereignty is something many of its citizens are willing to risk death to preserve. It could well be that the invasion has potentially disrupted the mystique of private finance and the hold it has on us.
Perhaps putting pressure and sanctions on Russia’s oligarchs will provide a path forward for de-escalation of Putin’s war. It sounds like a good idea, certainly in comparison with a third world war, and it also has a populist appeal. But without acknowledging and dealing with the underlying problems presented by financialization and its entrenched regimes of secrecy all across the world, I fear that the model of power now presented by Putin will continue to hold peace hostage, something especially dangerous because of the global need for cooperation in confronting climate change. Factually speaking, power today rests disproportionately upon the side of anti-democratic, oligarchically concentrated money and power, aided and abetted by the secretive world of finance. Do we have the will to stand with Ukraine and change course?
