Russian billionaires see wealth rise to three-quarters of a trillion dollars in past year

Russian billionaires see wealth rise to three-quarters of a trillion dollars in past year

22 Apr 2023 ( ABC )

Russia’s richest people added $227 billion to their wealth over the past year, buoyed by high prices for natural resources and rebounding from the huge loss of fortunes they experienced just after the Ukraine war began.

Russia has 110 official billionaires in the list, up 22 from last year, according to Forbes’s Russian edition, which applies the label based on people’s wealth in US dollars.

The magazine said Russian billionaires’ total wealth increased to $US505 billion ($755 billion) this year, up from $US353 billion ($528 billion) when the 2022 list was announced.

The list would have been longer had five billionaires — DST Global founder Yuri Milner, Revolut founder Nikolay Storonsky, Freedom Finance founder Timur Turlov, and JetBrains co-founders Sergei Dmitriev and Valentin Kipyatkov — not recently renounced their Russian citizenship, Forbes said.

“Last year’s rating results were also influenced by apocalyptic predictions about the Russian economy,” Forbes said, adding that the total wealth of Russia’s billionaires was $US606 billion ($905 billion) in 2021, before the war began.

After President Vladimir Putin ordered troops into Ukraine on February 24 last year, the West imposed what it casts as the most severe sanctions in modern history on Russia’s economy — and some of its richest people — in an attempt to punish Mr Putin for the war.

Mr Putin said the West was trying to destroy his country, and has repeatedly touted the failure of Western sanctions to destroy the Russian economy, or even stop Western luxury goods — let alone basic parts — from ending up in Russia.

Russia’s economy shrank by 2.1 per cent in 2022 under the pressure of Western sanctions, but it was able to sell oil, metals and other natural resources to global markets, in particular to China, India and countries in the Middle East.

The International Monetary Fund this month raised its forecast for Russian growth in 2023 to 0.7 per cent from 0.3 per cent, but lowered its 2024 forecast to 1.3 per cent from 2.1 per cent, saying it also expected labour shortages and the exodus of Western companies to harm the country’s economy.

The price of Urals oil, the lifeblood of the Russian economy, averaged $113.68 per barrel in 2022, up from $103.09 in 2021. Fertiliser prices were also high last year.

Andrei Melnichenko, who made a fortune in fertilisers, was listed as Russia’s richest man by Forbes with an estimated worth of $37.65 billion, more than double what he was estimated to be worth last year.

Vladimir Potanin, president and biggest shareholder of palladium and nickel producer Nornickel, was ranked as the second-richest, with a fortune of $35.4 billion, while Vladimir Lisin, who controls steelmaker NLMK, was placed third with a fortune of $33 billion, after topping the list last year.

Mr Melnichenko, Mr Potanin and Mr Lisin could not be reached for immediate comment on their Forbes rankings.

Many Russian billionaires cast Western sanctions as a clumsy, and even racist, tool.

Building fortunes as the Soviet Union crumbled, a small group of tycoons commonly referred to as oligarchs persuaded the Kremlin under late president Boris Yeltsin to give them control over some of the biggest oil and metals companies in the world.

The privatisation deals often propelled the tycoons into the league of the world’s super rich, earning them the enduring dislike of millions of impoverished Russians.

But under Mr Putin, some of the original oligarchs, such as Mikhail Khodorkovsky and Boris Berezovsky, were stripped of their assets, which eventually ended up under the sway of state companies often run by former spies.

New Russian names in the Forbes list include billionaires who made their money in snacks, supermarkets, chemicals, building and pharmaceuticals, indicating that Russian domestic demand has remained strong despite the sanctions.