Lake Como, Italy, home to Hollywood movie stars—and Russian oligarchs. Image courtesy Angelika/Pixabay

Sanctioning Russia’s oligarchs—with shame

By Brooke Harrington, November 9, 2022

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Lake Como, Italy, home to Hollywood movie stars—and Russian oligarchs. Image courtesy Angelika/Pixabay

Social death stalks the Russian elites. The regime of international sanctions imposed in the wake of Russia’s February 2022 invasion of Ukraine has involved not only the seizing and freezing of overseas assets belonging to Putin’s cronies, but their naming and shaming.

This matters in ways many policy analysts fail to appreciate. The past few months have offered the opportunity to observe how the under-researched and under-utilized tools that pioneering sociologist Erving Goffman called stigma and social death can have a significant impact on international relations.

We are seeing this impact now, in the way that stigmatization is slowly but steadily stripping away the elite support that strongmen like Putin require in order to maintain their image of invincibility—and their grip on power. Russian mega-celebrity Alla Pugacheva, who fled Russia shortly after the invasion of Ukraine, announced publicly to her 3.4 million Instagram followers her impassioned opposition to the invasion (Troianovski 2022). A few weeks earlier, the elites of Saint Petersburg and Moscow were up in arms at the prospect of being denied tourist visas to European Union countries. In a stable democracy, such expressions of dissent or elite unrest might be passing curiosities. But in autocracies, they represent profound threats to brittle power structures. For Putin, the problems began with the sanctions on his closest allies and overseas representatives: the oligarchs he allowed to become fabulously wealthy, in exchange for doing his bidding abroad and keeping silent on matters of Kremlin policy. But the stigma is spreading to and being felt by Russian elites more generally.

How these sanctions could bring about change has been misunderstood by policy analysts accustomed to economic and political punishments meted out at the state level. Russia has been targeted in that way, as well, such as by expulsion from the SWIFT banking system. But the material aspect of sanctions represent only one part of their impact: they also impose an unavoidable burden of shame, destabilizing targets’ ability to exert power and influence. Even while many Western observers have missed or underestimated this aspect of sanction power, Putin and his associates understand and fear it, as their behavior in the past few months has illustrated. This article is intended to shed some light on the overlooked social processes at work.

Sanctions and the aftermath of invasion

Russia’s invasion of Ukraine on February 24 was met with a collective response. Within hours, the United States, the European Union, the United Kingdom, and Japan imposed an unprecedented set of economic sanctions on Russia’s key financial institutions along with export controls on advanced technologies. In addition, they imposed individual sanctions on Russian oligarchs residing overseas. As of March, the United States had imposed sanctions on 852 individuals, the UK on 982 and the EU on 775; the three lists shared only 294 individuals in common (Baker and Maloney 2022).

Western governments framed these actions in a way that was maximally stigmatizing to the oligarchs, as part of a merged anti-kleptocracy and national security agenda. For example, within a week of the invasion, the US Justice Department announced that US sanctions would be implemented through the formation of an interagency task force dubbed KleptoCapture, designed to “hold accountable corrupt Russian oligarchs” (Department of Justice Press Release 2022). Deputy Attorney General Lisa Monaco underscored how this positioned the targeted individuals: “Oligarchs be warned: we will use every tool to freeze and seize your criminal proceeds.” These remarks instantly recast Russians who had formerly been treated with some deference and respect—Senate Minority Leader Mitch McConnell famously worked with Russian billionaire aluminum magnate Oleg Deripaska to bring aluminum-processing plants to Kentucky, even after the latter was sanctioned by the US in 2016—as criminal untouchables with the Kremlin’s war aims (Shuster and Bergengruen 2019).

Russian television host and Putin apologist Vladimir Solovyov went into a tearful rage on the air over EU sanctions hitting his pair of luxury villas in Italy’s Lake Como. Screenshot

Adding to the stigmatization effect, the seizing and freezing of Russian oligarch assets itself became a media obsession, producing a steady diet of coverage for an era of extreme schadenfreude. The media fixated on the sudden sale of the Chelsea football club by Roman Abramovich (who made his money from obtaining Soviet Russia state assets at prices far below market value in a controversial loans-for-shares privatization program), and on the confiscation of luxury yachts owned by high-flying oligarchs like Igor Sechin (CEO of the state-owned oil company Rosneft, referred to as the “Darth Vader of the Kremlin” by Forbes) and Alisher Usmanov of iron and steel fame (Tognini 2022). This meant that the same assets that oligarchs once used to consume conspicuously and compete for status were now reframed as evidence of crime—and complicity in a human rights catastrophe.

Stigmatization and shame

As Goffman wrote 70 years ago, stigma works to change behavior by imposing a “spoiled identity” on targets. It not only shames individuals and groups, but strips them of their social status. What has been done through sanctions to the Russian oligarchs and other Russian elites operates on the same principle as the scarlet letter in Nathaniel Hawthorne’s eponymous novel: It marks the bearer as morally polluted and to be avoided at all costs by respectable people. The capacity of sanctions to impose this social stigmatization on targets—including anyone who associates with them—is suggested by the otherwise inexplicable efforts that international leaders and diplomats have made to be seen, preferably on camera, snubbing or rejecting Russian officials. Examples include the highly-publicized refusals of multiple Western government ministers to meet with their Russian counterparts—and the walk-out organized by members of the United Nations Human Rights Council when Russian foreign minister Sergey Lavrov began his address (Staten 2022).

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Corporations have been quick to distance themselves as well. During the week following the invasion, hundreds of Western companies abruptly announced that they were suspending operations in Russia or withdrawing permanently from Russian markets. These included not only global consumer giants like IKEA and McDonald’s, but also energy companies like BP and ExxonMobil, which had weathered almost every imaginable political risk over their decades-long involvement in Russia. As of this writing, more than six months since the invasion, nearly 1,000 Western firms have publicized the closure of their offices in Russia. During this period, cultural and sporting organizations have also jumped on the stigma bandwagon: Western orchestras have issued proclamations that they would stop performing the works of Russian composers like Tchaikovsky (Weaver 2022), and Russian athletes have been excluded from participation in everything from the World Cup soccer to Formula One car racing.

The Scarlet Letter film still
Silent film actor Stuart Holmes in 1917 version of The Scarlet Letter. Public domain image via Wikimedia Commons/J. Willis Sayre Collection of Theatrical Photographs

The very public nature of these repudiations was necessary because stigmatization is a ritualized collective act (Smith 2011). Consequently, it requires a performance for an audience; contemporary mass media plays an essential role in this process, achieving a far more effective and wide-reaching punishment than the words on paper that constitute a sanctions order. The focus on the social and emotional effects of sanctions does not detract from their economic impact; rather, the argument is that sanctions operate through a dual action, half of which—the socio-emotional part—is overlooked in both academic and policy analyses. This dual action is also suggested by the responses of the Russian oligarchs themselves.

The Russian response

Sanctions on overseas Russian wealth had barely been announced when the targeted oligarchs began to whine and protest. This response alone suggested that the policy was working as intended: peeling away from Putin the support of Russia’s oligarchs by punishing them where they were most vulnerable—their social status as jetsetters who hobnobbed with Western elites. Immediately upon being sanctioned, Russian state television host and Putin apologist Vladimir Solovyov—one of the country’s most powerful oligarchs, according to anti-corruption activist Alexey Navalny—was on camera during the Russian prime time news hour raging at the loss of access to his two Italian luxury villas in Lake Como, near the home of George Clooney (Maiden 2022).

Shortly thereafter, with sanctions driving the ruble’s value to its lowest level in history—less than one US cent—four of Russia’s most famous oligarchs were publicly issuing statements opposing the invasion. Billionaire industrialist Oleg Deripaska and fellow oligarch Mikhail Fridman—chairman of Russia’s largest private bank, which has also been sanctioned—mildly but clearly suggested an end to Putin’s war: an extraordinary break in ranks among the country’s elites (Riley 2022). Oleg Deripaska, a high-profile ally of Putin’s who had already been sanctioned for his role in supporting Russian interference in the 2016 US Presidential Election, tweeted: “We need peace as soon as possible, as we have already passed the point of no return… The entire world will be different, Russia will be different as well” (Radio Free Europe 2022a).

Another billionaire businessman and close associate of Putin’s, Roman Abramovich, was involved in peace talks with Ukraine over the weekend of September 17. Oleg Tinkov, founder of the London Stock Exchange-listed Tinkov Bank, usually uses his Instagram account to post photos of his private island in the Seychelles; but on September 19, he used his platform to post the anti-war message: “Innocent people are dying in Ukraine now, every day, this is unthinkable and unacceptable.”

Efforts to escape the reach of sanctions have been underway almost continuously since February. Just days after the invasion, when sanctions were only being discussed in the EU, UK, and US, Russian-owned private jets and mega-yachts were already on the move to safe havens, where they could not be seized (Stupples and Maloney 2022). News reports suggested an exodus of oligarchs and their families to areas of the world where the moral authority of the West is waning or less influential. The United Arab Emirates, Turkey, and Israel have become favored destinations, in part because they offer the oligarchs access to Russian banks, which have in most other jurisdictions been cut off from the SWIFT international banking system (Bloomberg News 2022).

So what?

As to whether these sanctions can be said to have “worked,” clearly these punishments have not provoked a withdrawal from Ukraine. There is no reason to suppose that the oligarchs have Putin’s ear, or that he would listen to their advice even if they attempted to give it. If anything, the invasion has only ramped up in intensity since the oligarchs’ public statements.

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However, the oligarchs’ abandonment of the party line is already having an indirect, but nonetheless important, influence on Russian policy. This seems to be occurring indirectly through socio-emotional mechanisms distinctive to authoritarian regimes. As historian Ruth Ben-Ghiat has detailed, authoritarians’ grip on power is largely a matter of showmanship: their specific presentation of self requires uninterrupted displays of control over powerful others, both within and outside the boundaries of the state (Ben-Ghiat 2020). For a strongman like Putin, the public expression of dissent by oligarchs who formerly marched in lockstep with his policies is a devastating blow. It makes him look weak, unable to control the apparatus and agents of his power.

Such cracks in the façade of absolute power have historically seeded palace coups and revolutions. We see early evidence of this in the recent demands for Putin’s resignation by lawmakers from Russia’s richest cities—an unprecedented show of dissent, and an extraordinarily bold one given the devastating punishments with which Putin has historically met such opposition ” (Radio Free Europe 2022b).

The willingness of the lawmakers and the overseas oligarchs to speak out in even the smallest way against the invasion of Ukraine is significant because of what happened to the last oligarch who publicly questioned Putin’s policies: Mikhail Khodorkovsky. Formerly the wealthiest man in Russia, Khodorkovsky was CEO of Yukos Oil, one of the largest fossil fuels firms in the post-Soviet era. In 2003, not long after Putin’s rise to the presidency of Russia, Khodorkovsky publicly aired his concerns about widespread corruption in government. He was subsequently arrested on what were widely viewed as trumped-up charges of tax fraud, stripped of most of his $15 billion fortune, and sentenced to a decade in prison. After giving interviews to journalists while at the labor camp to which he had been sent, Khodorkovsky was punished with additional charges. Having completed his prison term, he is now living in exile.

So successfully did Putin make an example of Khodorkovsky that none of the remaining oligarchs have dared to dissent publicly from Kremlin policy ever since. It is in this context that seemingly mild statements of regret about the 2022 invasion of Ukraine should be understood as so remarkable, and the domestic lawmakers’ demands for Putin’s resignation even more extraordinary; while oligarchs living overseas are difficult to imprison, politicians within Russia can be arrested and their assets seized by the Kremlin at any moment. Putin established a cost-benefit calculus in which elites knew that speaking out might cost them their fortunes and their freedom. That they went ahead and issued their statements anyway suggests that they now believe if they do not speak out, they run the same risk from a different source: that is, if Putin doesn’t strip them of their freedom and their fortunes, the rest of the world—seemingly united in disgust and outrage—might impose those costs on them as Kremlin allies.

Harbingers of change

While the most important reason for optimism is the success of the Ukrainian forces in driving back the Russian invasion, there are also indications that the stigmatizing effect of sanctions is loosening Putin’s grip on power. It may also be altering the strategies of other autocrats observing the destabilizing effects of social stigmatization on Putin’s inner circle. Two data points bear mentioning in this respect.

First is Putin’s extraordinary and unprecedented decision to respond publicly to the individual sanctions regime directed at Russian elites. He chose the format of a televised response that could be disseminated to the global media, in which he denied that the sanctions had any effect on him or the oligarchs—and contradicting the oligarchs’ own statements (Sauer 2022). This is remarkable given his years of not responding to previous rounds of sanctions imposed on those close to his regime.

The second data point is the response of China. After observing the vulnerability of Russian oligarchs and government officials to Western sanctions and global stigma, the Chinese government announced that all senior cabinet officials (i.e., from the level of deputy minister upwards), along with their family members, would be forbidden from maintaining overseas bank accounts, holdings in foreign companies, or foreign real estate. Some have argued that any Chinese designs on Taiwan have been indefinitely postponed as a result of the global stigmatization that Russia and its oligarchs have suffered, along with their resulting loss of influence over the West. In that sense, stigmatization appears to have worked as intended.

Only time will tell how effective this strategy has been in loosening Putin’s grip on power. But it seems clear that sanctions need to be understood as effective destabilizing agents, particularly against state actors most eager to be validated and accepted as peers of Western powers. Stigmatizing sanctions directed at elites won’t work in every case, but will likely be most effective against the rogue states that otherwise have least to lose—making shame and social death a particularly valuable tool in international relations.

References

Baker, S., and Maloney, T. 2022. “Half of Russia’s 20 Richest Billionaires Are Not Sanctioned.”

Bloomberg, March 30. https://www.bloomberg.com/graphics/2022-russian-billionaires-sanctioned-ukraine-war/.

Ben-Ghiat, R. 2020. Strongmen: Mussolini to the Present. New York: Norton.

Bloomberg News. 2022. “Russian Yachts and Money are Going to Where US Influence has Waned.” Bloomberg News, May 31. https://www.bnnbloomberg.ca/russian-yachts-and-money-are-going-where-us-influence-has-waned-1.1772980.

Department of Justice Press Release. 2022. “Attorney General Merrick B. Garland Announces Launch of Task Force KleptoCapture,” March 2. https://www.justice.gov/opa/pr/attorney-general-merrick-b-garland-announces-launch-task-force-kleptocapture.

Goffman, E. 1963. Stigma: Notes on the Management of Spoiled Identity. New York: Simon & Schuster.

Shuster, S. and Bergengruen, V. 2019. “A Kremlin-Linked Firm Invested Millions in Kentucky. Were They After More Than Money?” Time, August 13. https://time.com/5651345/rusal-investment-braidy-kentucky/.

Maiden, S. “Vladimir Putin’s supporters furious over sanctions including impact on Italian villas.” News Corp Australia, February 28. https://www.news.com.au/world/europe/vladimir-putins-supporters-furious-over-sanctions-including-impact-on-italian-villas/news-story/9ff3df5259e0febaf14a4c56d129be6d.

Radio Free Europe. 2022a. “Russian Oligarchs Express Concerns Over War In Ukraine, Call For It To End.” Radio Free Europe, March 7. https://www.rferl.org/a/russian-oligarchs-war-ukraine-concerns/31741543.html.

Radio Free Europe. 2022b. “In Rare Rebuke, Municipal Lawmakers In Several Districts Demand Putin’s Resignation.” Radio Free Europe, September 12. https://www.rferl.org/a/russia-lawmakers-putin-resignation-petition/32029958.html.

Riley, C. “Two Russian oligarchs call for an end to Putin’s war.” CNN Business, March 1.

Sauer, P. 2022. “Putin says west treating Russian culture like ‘cancelled’ JK Rowling.” The Guardian, March 25. https://www.theguardian.com/world/2022/mar/25/putin-says-west-treating-russian-culture-like-cancelled-jk-rowling.

Smith, R.J. 2011. “Goffman’s Interaction Order at the Margins: Stigma, Role, and Normalization in the Outreach Encounter.” Symbolic Interaction 34(3): 357-376. See also, Erving Goffman. 1967. Interaction Ritual: Essays on Face to Face Behavior. New York: Pantheon Books.

Staten, A. 2022. “U.N. Members Walk Out of Human Rights Council as Russian Official Joins.” Newsweek, March 1. https://www.newsweek.com/un-members-walk-out-human-rights-council-russian-official-joins-1683794.

Tognini, G. 2022. “How Rich Is Putin’s Right-Hand Man? Inside The Murky Fortune Of Igor Sechin, The Darth Vader Of The Kremlin.” Forbes, May 2. https://www.forbes.com/sites/giacomotognini/2022/05/02/how-rich-is-putins-right-hand-man-inside-the-murky-fortune-of-igor-sechin-the-darth-vader-of-the-kremlin/?sh=46bacb225ddc.

Troianovski, A. 2022. “Russian Pop Music Icon Comes Out Against the War in Ukraine.” New York Times. September 18. https://www.nytimes.com/2022/09/18/world/europe/alla-pugacheva-ukraine.html.

Weaver, M. 2022. “Cardiff Philharmonic Removes Tchaikovsky Performance Over Ukraine Conflict.” The Guardian, March 9. https://www.theguardian.com/uk-news/2022/mar/09/cardiff-philharmonic-orchestra-removes-tchaikovsky-over-ukraine-conflict.

Wong, C.H. 2022, “China Insists Party Elites Shed overseas Assets, Eyeing Western Sanctions on Russia,” Wall Street Journal, May 19. https://www.wsj.com/articles/china-insists-party-elites-shed-overseas-assets-eyeing-western-sanctions-on-russia-11652956787

As the Russian invasion of Ukraine shows, nuclear threats are real, present, and dangerous

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