Sanctioning Putin's rich friends not likely to spur change, experts say

LONDON — The U.S. slapped fresh sanctions on several wealthy Russians with ties to the Kremlin on Friday, a move trumpeted as one of the most aggressive actions taken against Moscow by the Trump administration.

But some experts have warned that trying to squeeze these so-called oligarchs will do little to immediately harm Russian President Vladimir Putin — and is unlikely to bring about a significant change in his policies that have vexed the West in recent years.

Among the 24 Russians and 14 companies sanctioned by the Treasury there were seven oligarchs, people who have amassed vast fortunes in often shady circumstances thanks to their close ties with the Kremlin.

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"I'm all in favor of striking back against these corrupt oligarchs," said Mark Galeotti, a senior researcher at the Institute of International Relations in Prague. "But if we think this is going to make Putin think twice, that's a big mistake."

Among those named was Oleg Deripaska, a man known not just for the billions he accrued as an aluminum magnate but also because of his ties to former Trump campaign chairman Paul Manafort.

Another, Kirill Shamalov, is reportedly Putin's son-in-law and Russia's youngest billionaire thanks to his large stake in the petrochemical giant Sibur.

Igor Rotenberg is the son of Arkady Rotenberg, Putin's childhood friend and erstwhile judo sparring partner.

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Vladimir Putin through the years
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Vladimir Putin through the years
P362575 05: A class photo with Vladimir Putin, (fourth row, second from left) dated 1966 in St. Petersburg, Russia. (Photo by Laski Diffusion)
368975 01: (AMERICAS ONLY) FILE PHOTO: Russian President Vladimir Putin, right, poses for a photograph in this file photo with his parents Maria and Vladimir Putin in1985 just before his departure to Germany. Putin was sworn in as Russia''s second democratically elected president May 7, 2000, pledging to restore Russia as a great power. (Photo by Laski Diffusion/Newsmakers)
ITAR-TASS: LENINGRAD, USSR. Vladimir Putin seen with his wife Lyudmila and daughter Maria. File photo from family archive was taken in spring 1985. (Photo ITAR-TASS) (Photo by TASS via Getty Images)
St, petersburg mayor anatoly sobchak and austrian chancellor's wife christine vranitzky during a ceremony to name 'austria square' in downtown st, petersburg, austria has pledged to restore the square, future president of russia, vladimir putin, looks on, far left, september 1992. (Photo by: Sovfoto/UIG via Getty Images)
President George Bush meets with President Vladimir Putin at the Catherine Palace in St. Petersburg. Bush was meeting with Putin to thank him for signing the UN resolution demanding disarmament of Iraq. (Photo by ?? Brooks Kraft/CORBIS/Corbis via Getty Images)
KRASNODAR, RUSSIA: Russian acting President Vladimir Putin (L) talks to a boy (R) during his visit to the Children's regional clinic hospital in Krasnodar 11 February 2000. Putin arrived in Krasnodar for a two-day visit to take a part in the All Russia Conference on emergency measures to stabilise and develop the Russian agro-industrial complex. (ELECTRONIC IMAGE) (Photo credit should read SERGEI CHIRIKOV/AFP/Getty Images)
Uzbek president islam karimov helping rf president vladimir putin put on a traditional robe, uzbekistan, december 1999. (Photo by: Sovfoto/UIG via Getty Images)
President George W. Bush and First Lady Laura greet President Vladimir Putin and his wife Lyudmila outside of the Catherine Palace in St. Petersburg. Bush was meeting with Putin to thank him for signing the UN resolution demanding disarmament of Iraq. (Photo by ?? Brooks Kraft/CORBIS/Corbis via Getty Images)
MADRID, SPAIN - JANUARY4: Russian President Vladimir Putin (R) and Spanish Prime Minister Jose Maria Aznar (L) pose with their wives Ludmila Putin (2nd L) and Ana Botella before their lunch at Moncloa Palace June 14. Putin said he had no reason to believe the arrest of media magnate Vladimir Gusinsky was politically motivated but vowed to examine the case, which has stirred stormy protest in Moscow. (Photo credit should read SERGEI KARPUKHIN/AFP/Getty Images)
(GERMANY OUT) Vladimir Putin - Politician, Mayor St. Petersburg, Russia - signs an agreement about the marketing of inventions. Second Mayor and Senator of Economics of Hamburg Hans-Juergen Krupp (right) (Photo by Ambor/ullstein bild via Getty Images)
Moscow, russia, outgoing russian president boris yeltsin (r) shaking hands with russian prime minister and acting president vladimir putin (l) as he leaves moscow's kremlin, the seat of russian power,1999. (Photo by: Sovfoto/UIG via Getty Images)
Russian prime minister vladimir putin seen casting his vote during the elections to the state duma, at the polling station #2026 in moscow's kosygina street,moscow, russia, december 19, 1999. (Photo by: Sovfoto/UIG via Getty Images)
N362234 01: (FILE PHOTO) Russian Prime Minister Vladimir Putin visits Uzbekistan President Islam Karimov on August 16, 1999. President Boris Yeltsin announced on national television Friday, Dec. 31, 1999 that he had resigned and presidential elections will be held within 90 days to replace him. Yeltsin said he was stepping down immediately because he wanted Putin to succeed him. Putin, the country's most popular politician, immediately took control of the government and will serve as acting president until the elections. (photo by Laski Diffusion/Liaison Agency)
SEVEROMORSK, RUSSIA - APRIL 7: Russian President-elect Vladimir Putin watches the tactical exercises of Russia's Northern Fleet in the Barentsevo Sea, 06 April 2000. Vladimir Putin spent the night underwater in a nuclear submarine near the Arctic Circle. (Photo credit should read AFP/AFP/Getty Images)
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Also sanctioned were Vladimir Bogdanov, Suleiman Kerimov, Andrei Skoch and Viktor Vekselberg.

They were punished because of what the Treasury called Russia's "malign activity around the globe," namely its actions in Ukraine, Syria, and its attempts to meddle in Western elections, including in the U.S.

"The Russian government operates for the disproportionate benefit of oligarchs and government elites," the Treasury said, adding that these people "who profit from this corrupt system will no longer be insulated from the consequences of their government's destabilizing activities."

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Pressuring Putin's rich friends equates to pressuring Putin — at least that's the theory.

"The guys we're talking about now, they are very, very rich, but they do not have power over the Kremlin."

However, according to experts like Galeotti, this thinking is based on an outdated understanding of the role oligarchs play in Putin's Russia.

"No one gets to be rich in Russia and not have a relationship of some sort with the Kremlin," Galeotti said. "The guys we're talking about now, they are very, very rich, but they do not have power over the Kremlin."

It's certainly true that in the years after the fall of the Soviet Union, people who made lots of money from the carve-up of state resources held considerable sway. That all changed under Putin, however, with the Russian president making it clear that he wouldn't tolerate such behavior.

This shift severely weakened the role of the oligarchs in Russian political life, according to Jonathan Eyal, international director at the Royal United Services Institute, a London think tank known as RUSI.

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Vladimir Putin and Donald Trump meet at G20
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Vladimir Putin and Donald Trump meet at G20
US President Donald Trump and Russia's President Vladimir Putin shake hands during a meeting on the sidelines of the G20 Summit in Hamburg, Germany, on July 7, 2017. / AFP PHOTO / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)

Leaders Donald Trump and Vladimir Putin meet at the G-20 in Hamburg. 

(Image: Reuters video)

US President Donald Trump and Russia's President Vladimir Putin hold a meeting on the sidelines of the G20 Summit in Hamburg, Germany, on July 7, 2017. / AFP PHOTO / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)

Leaders Donald Trump and Vladimir Putin meet at the G-20 in Hamburg. 

(Image: Reuters video)

HAMBURG, GERMANY - JULY 7, 2017: Melania Trump (L), First Lady of the United States, and Russia's President Vladimir Putin shake hands as they meet on the sidelines of a G20 summit. Mikhail Klimentyev/Russian Presidential Press and Information Office/TASS (Photo by Mikhail Klimentyev\TASS via Getty Images)
HAMBURG, GERMANY - JULY 07: In this photo provided by the German Government Press Office (BPA), Donald Trump, President of the USA (C) meets Vladimir Putin, President of Russia and President of the EU Commission Jean-Claude Juncker (L) during the G20 Summit on July 7, 2017 in Hamburg, Germany. The G20 group of nations are meeting July 7-8 and major topics will include climate change and migration. (Photo by BPA via Getty Images)
HAMBURG, GERMANY - JULY 07: In this photo provided by the German Government Press Office (BPA) Donald Trump, President of the USA (left), meets Vladimir Putin, President of Russia (right), at the opening of the G20 summit on July 7, 2017 in Hamburg, Germany. The G20 group of nations are meeting July 7-8 and major topics will include climate change and migration. (Photo by Steffen Kugler /BPA via Getty Images)
HAMBURG, GERMANY - JULY 07: International leaders attend the group photo on the first day of the G20 economic summit on July 7, 2017 in Hamburg, Germany. The G20 group of nations are meeting July 7-8 and major topics will include climate change and migration. (Photo by Sean Gallup/Getty Images)
HAMBURG, GERMANY - JULY 07: Russian President Vladimir Putin (L) talks to the US first lady Melania Trump (R) as they attend a state banquet in the Elbphilarmonie concert Hall on the first day of the G20 economic summit on July 7, 2017 in Hamburg, Germany. The G20 group of nations are meeting July 7-8 and major topics will include climate change and migration. . (Photo by Felipe Trueba - Pool / Getty Images)
HAMBURG, GERMANY - JULY 07: World leaders pose for a family photo during the G20 summit on July 7, 2017 in Hamburg, Germany. Leaders of the G20 group of nations are meeting for the July 7-8 summit. Topics high on the agenda for the summit include climate policy and development programs for African economies. (Photo by Matt Cardy/Getty Images)
Russia's President Vladimir Putin talks to U.S. President Donald Trump during their bilateral meeting at the G20 summit in Hamburg, Germany July 7, 2017. REUTERS/Carlos Barria
German Chancellor Angela Merkel takes part in a family photo along with French President Emmanuel Macron, U.S.President Donald Trump, Indonesia's President Joko Widodo, Mexico's President Enrique Pena Nieto, South African President Jacob Zuma, Argentina's President Mauricio Macri, Chinese President Xi Jinping, Russian President Vladimir Putin, Turkish President Recep Tayyip Erdogan, Brazilian President Michel Temer, South Korea's President Moon Jae-in, Italian Prime Minister Paolo Gentiloni, Canadian Prime Minister Justin Trudeau, India's Prime Minister Narendra Modi, Japanese Prime Minister Shinzo Abe, Australian Prime Minister Malcolm Turnbull, Britain's Prime Minister Theresa May, European Council President Donald Tusk, European Commission Jean-Claude Juncker, U.N. Secretary-general Antonio Guterres, Norway's Prime Minister Erna Solberg, Netherlands' Prime Minister Mark Rutte, Senegal's President Macky Sall, Singapore's Prime Minister Lee Hsien Loong, Spanish Prime Minister Mariano Rajoy, Vietnamese Prime Minister Nguyen Xuan Phuc, Saudi Arabia Minister of State Ibrahim Abdulaziz Al-Assaf, Economic Cooperation Organization (ECO) Secretary Jose Angel Gurria, World Trade Organization (WTO) Director Roberto Azevedo, International Monetary Fund (IMF) Managing Director Christine Lagarde, International Labour Organization (ILO) Director Guy Ryder, World Bank President Jim Yong Kim, Financial Stability Board (FSB) President Mark Carney and other leaders at the G20 leaders summit in Hamburg, Germany July 7, 2017. REUTERS/Wolfgang Rattay
US President Donald Trump (R) and Russia's President Vladimir Putin shake hands during a meeting on the sidelines of the G20 Summit in Hamburg, Germany, on July 7, 2017. / AFP PHOTO / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
French President Emmanuel Macron, U.S. President Donald Trump, Indonesia's President Joko Widodo, Mexico's President Enrique Pena Nieto, South African President Jacob Zuma, Argentina's President Mauricio Macri, German Chancellor Angela Merkel, Chinese President Xi Jinping, Russian President Vladimir Putin, Turkish President Recep Tayyip Erdogan, Britain's Prime Minister Theresa May, Australian Prime Minister Malcolm Turnbull, Japanese Prime Minister Shinzo Abe, India's Prime Minister Narendra Modi, Canadian Prime Minister Justin Trudeau, Italian Prime Minister Paolo Gentiloni and other leaders pose for a family photo at the G20 leaders summit in Hamburg, Germany July 7, 2017. REUTERS/Wolfgang Rattay
US President Donald Trump and Russia's President Vladimir Putin hold a meeting on the sidelines of the G20 Summit in Hamburg, Germany, on July 7, 2017. / AFP PHOTO / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
Russia's President Vladimir Putin talks to Melania Trump during the official dinner at the Elbphilharmonie Concert Hall during the G20 summit in Hamburg, Germany July 7, 2017. REUTERS/Kay Nietfeld,Pool
US President Donald Trump and Russia's President Vladimir Putin hold a meeting on the sidelines of the G20 Summit in Hamburg, Germany, on July 7, 2017. / AFP PHOTO / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
US President Donald Trump (C-R) and Russia's President Vladimir Putin (C-L) hold a meeting on the sidelines of the G20 Summit in Hamburg, Germany, on July 7, 2017. / AFP PHOTO / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
US President Donald Trump (R) and Russia's President Vladimir Putin shake hands during a meeting on the sidelines of the G20 Summit in Hamburg, Germany, on July 7, 2017. / AFP PHOTO / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
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"Today, it is not like the Yeltsin period, where the oligarchs told the president what to do," Eyal said, referring to Boris Yeltsin, who was Russian president between 1991 and 1999. "These oligarchs are not likely to sway Putin's hand about the major things that he wants to do."

This is the same point made by Kremlin spokesman Dmitry Peskov this week.

"The phrase 'Russian oligarchs' is considered inappropriate," Peskov told reporters. "The time when there were oligarchs in Russia passed long ago. There are no oligarchs in Russia."

Not everyone agrees that the latest U.S. sanctions won't hurt Putin.

On Twitter, financier and longtime Putin critic Bill Browder called the news "huge" and commended the government for "finally hitting Putin and his cronies where it counts."

And while analysts like Eyal and Galeotti caution that the sanctions may not change Russian policy more broadly, that doesn't mean the moves are useless, they add.

"The last thing that the oligarchs appreciate is being put on lists that make it very difficult for them to travel abroad, buy property abroad, have their girlfriends abroad or send their children for education abroad, all the things that makes them enjoy the finer things in life," Eyal said.

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Despite their reduced importance, Eyal still sees the oligarchs as one of the "pillars of the regime," adding that "if the pillars start suffering themselves, then there is a cumulative impact" that could have some influence on Putin if combined with other measures.

"The sanctions are not what's going to change Russia's behavior," he added, "but they are intended to increase the costs of the defiance of Putin of international norms."

"The sanctions are not what's going to change Russia's behavior, but they are intended to increase the costs of the defiance of Putin of international norms."

Galeotti also stressed that the sanctions should be welcomed as a means to clean out dirty money in the West — just not as a way to curb Putin's foreign policy.

Part of the reason for this, according to many analysts, is that the Russian president is a man who is not so much interested in wealth but in power.

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US consulate in St. Petersburg, Russia
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ST PETERSBURG, RUSSIA - MARCH 29, 2018: A view of the US Consulate General at Furstatskaya Street in St Petersburg. Peter Kovalev/TASS (Photo by Peter Kovalev\TASS via Getty Images)
A view through a fence shows the building of the consulate-general of the U.S. in St. Petersburg, Russia March 29, 2018. REUTERS/Anton Vaganov
A man walks near the building of the consulate-general of the U.S. in St. Petersburg, Russia March 29, 2018. REUTERS/Anton Vaganov
A view through a fence shows the building of the consulate-general of the U.S. in St. Petersburg, Russia March 29, 2018. REUTERS/Anton Vaganov
Policemen stand guard outside the building of the consulate-general of the U.S. in St. Petersburg, Russia March 29, 2018. REUTERS/Anton Vaganov
The state flag of the U.S. flies outside the building of the country's consulate-general in St. Petersburg, Russia March 29, 2018. REUTERS/Anton Vaganov
The flag of the U.S. flies outside the U.S. consulate in St. Petersburg, Russia, July 31, 2017. REUTERS/Anton Vaganov
Security officers watch a consulate car entering the U.S. consulate in St. Petersburg, Russia, July 31, 2017. REUTERS/Anton Vaganov
A security officer speaks with a driver near the U.S. consulate in St. Petersburg, Russia, July 31, 2017. REUTERS/Anton Vaganov
A police officer walks outside the US Consulate building in St.Petersburg on March 29, 2018. Russian Foreign Minister Sergei Lavrov said on March 29, 2018 Moscow would expel 60 US diplomats and close its consulate in Saint Petersburg in a tit-for-tat expulsion over the poisoning of ex-double agent Sergei Skripal. / AFP PHOTO / OLGA MALTSEVA (Photo credit should read OLGA MALTSEVA/AFP/Getty Images)
A security officer stands guard outside the U.S. consulate in St. Petersburg, Russia, July 31, 2017. REUTERS/Anton Vaganov
A photo taken on March 29, 2018 shows the US Consulate building in St.Petersburg. Russian Foreign Minister Sergei Lavrov said on March 29, 2018 Moscow would expel 60 US diplomats and close its consulate in Saint Petersburg in a tit-for-tat expulsion over the poisoning of ex-double agent Sergei Skripal. / AFP PHOTO / OLGA MALTSEVA (Photo credit should read OLGA MALTSEVA/AFP/Getty Images)
ST PETERSBURG, RUSSIA - MARCH 29, 2018: A view of the US Consulate General at Furstatskaya Street in St Petersburg. Peter Kovalev/TASS (Photo by Peter Kovalev\TASS via Getty Images)
ST PETERSBURG, RUSSIA - MARCH 29, 2018: A view of the US Consulate General at Furstatskaya Street in St Petersburg. Peter Kovalev/TASS (Photo by Peter Kovalev\TASS via Getty Images)
ST PETERSBURG, RUSSIA - MARCH 29, 2018: A view of the US Consulate General at Furstatskaya Street in St Petersburg. Peter Kovalev/TASS (Photo by Peter Kovalev\TASS via Getty Images)
ST PETERSBURG, RUSSIA - MARCH 29, 2018: A view of the US Consulate General at Furstatskaya Street in St Petersburg. Peter Kovalev/TASS (Photo by Peter Kovalev\TASS via Getty Images)
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"The thought that Putin is going to be bothered, to the point of actually reversing what is a clearly not just a pragmatic policy but one that he genuinely believes in, because there's a few hundred million in stake in condos in Florida or whatever, I think that's misunderstanding the man," Galeotti said.

Another problem that some critics have identified with Friday's sanctions is that the people targeted will have likely seen this coming a mile away.

All of the oligarchs named had already been mentioned on a much larger list of Russian billionaires released by the Treasury in January.

This list was widely mocked because it was cribbed from Forbes' ranking of the "200 richest businessmen in Russia 2017."

And what it effectively did was give oligarchs time to hollow out investments in the U.S. that will be impacted by the new restrictions, according to some experts and U.S. officials.

See AlsoUS sanctions Russian oligarchs over 'malign activity'

"Those people have a thousand different ways to channel money that will go unchallenged by any sanctions," according to Mathieu Boulègue, a research fellow at the London think tank Chatham House. "It's a headache but it's not a problem for Russia."

He added that "sanctions do not affect the Russian leadership the way we would want them to. They are not a magic wand we can agitate in front of the Kremlin and hope to curb Putin's cost-benefit calculus."

This echoed what one U.S. official told NBC News ahead of Friday's sanctions. "They had to know these were coming," the official said, referring to the oligarchs.

Nor will the sanctions cause the Russian public to turn against their strongman leader, or foment a debate inside the country about the direction of its foreign policy, according to Boulègue.

"Sanctions have been in place since 2014 and the Russian state has transformed them into a show of force in their propaganda," he said. "Russia has learned to live with them. They are a new normal in relations with the West."

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