There's all this rhetoric about freezing the assets of certain Russians. What I'm asking is, aren't governments issuing these threats simply giving people warning in time to move their money out of the country?

Like if I was a super rich Russian with assets in the UK, knowing I may be hit, couldn't I just sell all of my assets now before the sanctions hit?

2 Answers 2


Yes, in principle. Particularly for liquid cash accounts. But it's still punitive and may still reach a number of Russian assets that are not liquid.

First, because not all Russians who might be targeted are clearly known. It's not necessarily safe or remunerative to keep money in Russia (especially if its pedigree is less than fully legal) and there are lots of good investment opportunities in the Western countries that want sanctions on Russia and its citizens. So not all Russians will necessarily know they will be targeted.

Second, it's expensive to sell under the threat of the gun. It was a common principle that expelled peoples (Jews expelled in Tsarist pogroms, Jews expelled by Nazi race laws, Indians expelled from Uganda, other groups forced to leave communities en masse) that you have a very poor bargaining position.

In negotiations lingo, an expellee has poor alternatives to negotiating an agreement (i.e. poor BATNA). Especially if the time horizon is short or uncertain, the seller needs to find a buyer WAY more than the buyer needs to buy. So the buyers are not raring to buy and the seller is desperate to get SOMETHING now before the property is seized anyway. The seller's BATNA is sell today for way below market value or see the property seized tomorrow and get nothing. The buyer's BATNA is buy today at a low price, or keep your money and buy something else.

The problem is compounded by modern M&A practices, so a Russian who owns hotels or ski resorts or bakeries may have to find somebody who is willing to buy without proper diligence, disclosure, and without the chance of later indemnities. The deal needs to close without full knowledge and discussion of the business and its weaknesses. And the deal needs to close without the option of going back to the Russian sellers for indemnities. So that means the Russian seller must offer a big discount up front based on the risk that there are a bunch of defects (even if proper diligence would disprove those defects). The seller must also pre-indemnify the buyer, which may require either escrow or just a big cut in purchase price.

That said, it may be possible to find partial partners or foreign country dummies who will sit in as owners to either reduce the percentage of Russian ownership or source the ownership to another country. This trick is easy to see and is not hard for countries to plan around. But some sanction regimes will allow a portion of embargo-target control (e.g. companies with <50% Russian ownership are not subject to the rules).

So it's expensive to sell foreign investments and you may not know you have to sell. It might be easier to hope it blows over or hope that your home country government will make you whole in a fit of jingoism or cronyism.

  • I would add that any potential buyers would also be taking on the risk of having their own assets frozen for being an accessory.
    – Ryathal
    Apr 17, 2014 at 12:25

There's all this rhetoric about freezing the assets of certain Russians. What I'm asking is, aren't governments issuing these threats simply giving people warning in time to move their money out of the country?

Technically, yes, but there's the second signal sent there, namely, "it's not safe for you anymore to come with your money here".

Those people put their assets there, where they can get more gain. That move will limit their options, therefore reducing their gain.

There's also the signal to the western companies investing in Russia, that such investment is very risky. First, because of possible future retaliation from the side of Russia. Second, because of the risk, that the future sanctions could touch also the companies that invest in Russia.

In fact, it's imposing sanctions without imposing sanctions. Significant reduction of the debt ranking by the ranking agencies will not be without implications.

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