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Ruble Rout
Russia’s Money Runs Away

With the ruble tanking and the Russian economy teetering on the brink of collapse, Moscow’s oligarchs and their fortunes are getting out of Dodge while they still can. The FT reports:

The number of Russians who were granted investor visas this year has soared by 69 per cent, according to Home Office statistics. The visas gave foreigners from outside the EU a fast track to residence and citizenship in return for buying gilts worth £1m to £10m.

In the first nine months of the year, 162 investor visas were granted to Russians, compared with 96 in the same period of 2013, the figures show. The whole of 2013 saw only 118 investor visas granted to Russians, according to the data, which were first reported by The Sunday Times.

Vladimir Putin is clearly concerned about this trend, since at his big annual presser last week he promised that oligarchs who have already spirited their money away will be allowed to bring it home with no questions asked. The quickening pace of capital flight, though, suggests that it may not stop any time soon.

For its parts, the UK is doubling the minimum amount required for an “investment visa” to £2m and reducing the proportion of the money that can be put into real estate. That may do a little bit to disincentivize some, but given the political and financial instability in Russia, it’s “move it or lose it” for a lot of people.

It’s very interesting that today the two countries where rich people are trying hardest to get out are Russia and China. Capital, like water, takes the path of least resistance.

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  • Jacksonian_Libertarian

    This is what happens when the “Rule of Law” is trumped by political clout. Everyone including those with political clout, move the largest portion of their wealth to where the government and political enemies can’t get it. They put in place escape routes and get family members located in foreign safe countries. I’ve read estimates that wealthy Chinese have moved over $1 Trillion out of China, despite the fact that it is illegal to take foreign currency out of the country.

    • Andrew Allison

      It’s a bit more complicated than that. It’s questionable whether there has ever been a “rule of law” in Russia; the ruler’s law might be a more accurate description its judicial system. In post-Soviet Russia the oli- and mini-garchs have been above the latter as long as they didn’t criticize the government or threaten vested interests. What we are seeing here is rats fleeing what appears to them to be a sinking ship. Speaking of the trumping of the rule of law for political purposes, might I offer for consideration the Justice Department’s second-guessing of Grand Jury decisions and the incitement of lawless behavior by the President, the AG and the Mayor of NYC. As ye sow, so shall ye reap comes to mind.

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