Putin’s elite divides the spoils in Russia: large-scale nationalisation and re-privatisation of assets

The war against Ukraine and sweeping Western sanctions have triggered another major wave of asset redistribution in Russia – one of the largest since the collapse of the Soviet Union. The actual scale of this process is difficult to estimate, as it includes the takeover of assets held by foreign companies (not only those withdrawing from the Russian market), Ukrainian property in the occupied territories, and the nationalisation of Russian enterprises. With profits shrinking, these assets – often handed over for free or sold at artificially low prices – have been used to reward loyalty within Vladimir Putin’s inner circle. Revenue from the partial reprivatisation of seized property has also bolstered the state budget. At the same time, wartime mobilisation – which has strengthened the Kremlin’s grip over processes taking place in the country – together with escalating repression, has suppressed opposition from previous owners.

The government’s rising financial needs and the greed of Putin’s elite suggest that this process will intensify in the coming months, targeting increasingly valuable assets. In the longer term, this is likely to have a negative impact on the Russian economy and may lead to conflicts within the ruling elite.
 

Asset redistribution as a tool for consolidating power

The transfer of control over assets is nothing new in Russia and reflects how the regime operates. The Kremlin treats the state as its own property. As a result, property rights are largely symbolic, entirely dependent on the arbitrary will of the leader. They are not guaranteed by law or the courts, but by decisions taken by the leader himself.^[1]

The redistribution of assets has been under way since Vladimir Putin came to power in 2000. Members of his immediate circle played only a marginal role in the privatisation of the 1990s; they therefore built their economic base by exploiting public resources and taking over assets that had already been redistributed. This included orchestrating the bankruptcy and subsequent takeover of Yukos, the country’s largest oil company, and seizing the fortunes of Boris Yeltsin-era oligarchs such as Vladimir Gusinsky and Boris Berezovsky. At the same time, these resources were used to build powerful state-owned conglomerates such as Gazprom and Rosneft, as well as private fortunes of the ruling elite.

The war and Western restrictions have greatly accelerated this process, with the pace increasing each month of Russia’s invasion of Ukraine. Estimating the value of the ongoing asset transfers is virtually impossible. There is no central register of nationalised assets. Confiscation cases filed by the prosecutor’s office are handled by courts across various regions, and some proceedings are held behind closed doors. Valuing assets is particularly difficult in the current, rapidly changing business environment. This applies especially to foreign companies withdrawing from Russia and Ukrainian assets in the occupied territories.
 

The scale of asset redistribution

In recent months, the pace of nationalisation in Russia has intensified. According to estimates by the law firm NSP, the total value of assets seized between February 2022 and June 2025 amounted to approximately 3.9 trillion roubles (around $50 billion at the June 2025 exchange rate), or roughly 2% of Russia’s GDP, including over 1.5 trillion roubles in assets previously held by foreign entities.^[2] This represents a threefold increase in the value of seized property over the course of a single year: by mid-2024, it was estimated at 1.3 trillion roubles. A separate analysis by anti-corruption expert Ilya Shumanov, based on 100 nationalisation-related lawsuits filed by the prosecutor’s office, produced similar findings. It showed that the total value of assets seized during the first three years of the full-scale war (up to March 2025) stood at around 2.6 trillion roubles, or approximately $28 billion based on the average 2024 exchange rate. This research also indicates a marked increase in nationalisation in 2025: while in 2024 the state seized 157 companies worth 1.1 trillion roubles, in the first quarter of 2025 alone it took control of a further 50 entities with a combined value exceeding 800 billion roubles.^[3]

As previously noted, the acquisition of assets held by foreign companies exiting Russia at rock-bottom prices, or their outright nationalisation, has been a key aspect of property appropriation by individuals close to the Kremlin. However, the pace of this process has slowed considerably. According to research by the Kyiv School of Economics (KSE), more than 500 companies had fully withdrawn from Russia by July 2025,^[4] out of about 1,500 that held assets in the country when it launched its invasion of Ukraine. Some of these companies were expropriated, while most sold their assets to Russian entities at artificially low prices: for example, a new owner paid just one rouble to acquire Renault’s Moscow car plant.^[5] However, the details of many such transactions have not been made public.

According to KSE’s estimates, over the first three years of the full-scale war, foreign companies exiting Russia sustained losses totalling $167 billion, largely due to write-downs resulting from falling asset values, loss of ownership, or exchange rate differences.^[6] Roughly half of these write-downs occurred in 2022, while a further 38% were recorded in 2023. The slower pace of foreign exits from Russia stems primarily from company strategies and their continued willingness to profit from the Russian market. However, it is also a result of barriers introduced by the Russian government, notably the requirement for government commission approval for the disposal of assets and the reported valuation of such transactions.

Under regulations in force this year, the sale of foreign-owned assets in Russia is subject to a mandatory 60% discount on the agreed price. Additionally, depending on the agreement, either the buyer or the seller must pay a tax amounting to 35% of the transaction value, referred to as a ‘voluntary contribution’.^[7] According to KSE’s calculations, Russia’s federal budget generated approximately $3 billion in revenue on this account between 2022 and 2024. This means that a foreign owner exiting the country this year may receive as little as 5% of the actual value of their assets. Moreover, transferring those funds abroad also requires separate government approval.

The value of assets seized by Russia in the occupied Ukrainian territories is the most difficult to assess. According to Ukrainian statistics, in 2021 the nominal gross regional product of the four formally annexed regions, which the Russian military does not fully control, totalled around $24 billion. An analysis conducted in August 2022 for The Washington Post by SecDev, a Canadian risk consultancy, estimated that Ukrainian natural resources captured by Russian forces – including coal, gas, oil, and metal deposits – were worth at least $12.4 trillion. This represented nearly half the combined value of all 2,209 sites the company assessed across Ukraine.^[8] However, Russia had already established partial control over the most industrialised parts of Donetsk and Luhansk oblasts in 2014. It is also important to note that the invasion has caused extensive damage to the economic potential of these areas, particularly cities that saw heavy fighting, such as Mariupol. Moreover, the destruction of the Nova Kakhovka dam by Russian forces inflicted lasting damage on agriculture in the Kherson and Zaporizhzhia oblasts.^[9]
 

Opaque rules for asset seizures

In Russia, asset seizures are a chaotic and abrupt process. The government rarely signals its intentions in advance; and asset owners are often caught off guard by sudden decisions from the prosecutor’s office (see below). The criteria for selecting entities targeted for nationalisation remain unclear, as their value varies significantly: for example, the Domodedovo holding, which controls one of Moscow’s airports, is worth an estimated $12.5 billion, while the Rolf car dealership is valued at around $700 million. Nationalisation has affected nearly every sector of the economy, including transport (airports, ports, logistics companies), metallurgy (Chelyabinsk Electrometallurgical Plant), machinery (companies cooperating with the shipyard in St Petersburg), defence (optical-mechanical plants, a tin and lead manufacturer), chemicals (methanol production), agri-food (pasta production, agricultural holdings), and the energy sector, where seizures have mainly targeted foreign-owned assets. The process has also extended to high-value land (both agricultural and for construction), real estate (such as the Four Seasons Hotel on Red Square), and intellectual property, including patents for radar systems and communications technologies.

It is also difficult to identify a clear pattern in asset seizures by examining the profile of previous owners. The prosecutor’s office has targeted properties belonging to local billionaires ranked in Forbes’ top 100 – such as Oleg Deripaska (land and real estate in Krasnodar Krai), Seyfeddin Rustamov (chemical companies), and Konstantin Strukov (gold mines and ore processing plants) – as well as former officials, mainly at the regional level (governors and deputies), and a broad group of financially successful entrepreneurs, including those still residing in Russia. The vast majority of these individuals have demonstrated loyalty to the Kremlin and refrained from publicly criticising the regime or the war.^[10] Moreover, given the nature of the system, they must have benefitted from protection (so-called krysha) provided by state-run agencies such as the FSB’s security services, or by figures within the ruling elite.^[11] However, this protection ultimately proved too weak when confronted with the prosecutor’s office.
 

Seizing property

Despite the lack of clarity over how assets are selected for nationalisation, the procedure for transferring them to state ownership has been defined in considerable detail. The main actor in this process is the prosecutor’s office, whose lawsuits are approved by the courts in the overwhelming majority of cases – often with remarkable speed. In cases of legal ambiguity, the law is interpreted to suit the needs of the investigative authorities. For example, in May 2025 the Constitutional Court ruled that in cases challenging the outcomes of privatisations from the 1990s, the statute of limitations essentially does not apply, as the passage of time is calculated from the moment the prosecutor’s office conducts an inspection revealing legal violations, rather than from the date of the original transaction.

In providing the formal basis for expropriation, the prosecutor’s office is supported by institutions such as the Federal Security Service (FSB) and the Investigative Committee, which supply information on issues including foreign ownership, dual citizenship, and alleged corrupt practices. In addition, the Federal Antimonopoly Service has the authority to classify any asset as strategically important for the state. Nationalisation is often accompanied by the arrest of former owners and the initiation of criminal proceedings, leading in many cases to confiscation of their property without compensation.

In most cases, when stripping Russian businessmen of their fortunes, courts cite one or more of the following grounds:

• illegal acquisition of assets – typically after the legitimacy of privatisations carried out in the late 1990s has been challenged
• involvement in corrupt practices
• foreign citizenship, including dual nationality or permanent residence status, or registration of the company abroad; this argument is used particularly in cases involving companies deemed by the Federal Antimonopoly Service to be of significant (strategic) importance for the state.

The most common formal justifications for seizing foreign-owned assets include:

• national security concerns and hostile actions by the United States and its partners^[12] – in such cases, expropriation is typically carried out under special decrees issued by Putin,^[13]
• extremist activity – a charge primarily used to deprive Ukrainian nationals of their assets,
• failure to comply with the laws of the occupying authorities, such as not registering a company under Russian legislation – this applies to assets in the occupied regions of Ukraine.

In practice, these reasons are purely formal, as Russia’s legal system is politically compliant; those targeted by lawsuits have little chance of avoiding nationalisation, even when the evidence is questionable. As a result, by 2025, courts had reduced the average time for handling such cases to just one or two months; they often issued rulings at the very first hearing. In some cases, such as that of the Yuzhuralzoloto gold holding, a verdict was delivered within days (eight in this instance) of the prosecutor’s claim being filed. Crucially, the actions of the prosecutor’s office are almost certainly guided by individuals within Putin’s inner circle, as shown by what later happens to the seized assets and who ultimately gains control of them. In some cases the identity of the initiator is not even concealed, as illustrated by the example detailed below.
 

Exceptional cases of avoiding nationalisation

So far, only a handful of entrepreneurs targeted by expropriation proceedings have managed to keep their assets. In Russia, it is extremely rare for court rulings to be overturned; this typically requires intervention from powerful patrons within the narrow elite. Against this background, the attempted nationalisation of the Ivanovo Heavy Machine Tool Plant is particularly noteworthy. In March 2024 a first-instance court ruled that the plant be expropriated from its private owner. The prosecutor’s office argued that the enterprise had been privatised illegally in the 1990s and that its assets should therefore be transferred to state ownership. Rostec, a state-owned giant controlling around 70% of Russia’s defence sector, was party to this case, seeking to acquire these assets.^[14] By July 2024 the plant had already been included in the government’s privatisation plan for 2024–26. However, six months later, the enterprise’s former owners, Vladimir Bezhanov,^[15]and his son, won their appeal. The verdict was upheld by a second appellate arbitration court,[16] meaning the company should be returned to the family, although the prosecutor’s office and Rostec have so far refused to accept the ruling. This successful defence against nationalisation may indicate growing dissatisfaction within Putin’s elite with the increasingly aggressive expansion of the corporation long led by Sergei Chemezov.

In several cases, assets have been protected through settlements with the prosecutor’s office. In 2023, Andrey Melnichenko reached such an agreement with the state, which had been seeking to confiscate his Siberian Energy Company (SIBEKO). As a result, the claim was withdrawn in exchange for a donation to a charitable foundation. Neither the size of the donation nor the name of the foundation was disclosed.

A similar case that year involved a lawsuit seeking the nationalisation of assets belonging to the German-based HeidelbergCement, whose alleged offence was simply foreign ownership. The reasons behind the prosecutor’s decision to abandon expropriation remain unknown. It merely stated that it was capable of ‘protecting the interests of the state through other legal means’.
 

Beneficiaries of asset redistribution

The primary beneficiary of nationalisation is the Kremlin, which has used the process to strengthen its control over the economy by expanding state control across a range of sectors. Private property has effectively been confiscated without any compensation from the state budget. Most of the seized assets have been transferred either to Russia’s Federal Agency for State Property Management (Rosimushchestvo) or to state-owned conglomerates controlled by figures from Vladimir Putin’s inner circle, including Rostec (headed by Sergei Chemezov), Rosatom (under the influence of Yuri and Mikhail Kovalchuk), Rosneft (led by Igor Sechin) and Rosselkhozbank (managed by Dmitry Patrushev, son of the former Security Council secretary). Some entities have been reprivatised and sold at preferential prices to members of the elite, including companies linked to the president’s close associates, such as Arkady Rotenberg and Yuri Kovalchuk.

As a result, the Russian state has increased revenues from privatisation over the past two years. In 2024 they soared to around 130 billion roubles (c. $1.5 billion), compared with 27 billion roubles ($300 million at that year’s exchange rate) in 2023 and just 1 billion roubles in 2022. In 2024, Rosimushchestvo transferred a total of 473 billion roubles ($5.1 billion) to the state budget from privatisation proceeds and profits generated by managing state-owned enterprises, primarily through dividends. However, these sums remain modest compared with the value of the seized assets and the overall needs of Russia’s budget, whose revenues totalled 36.6 trillion roubles in 2024.
 

Consequences: shift towards a centrally managed economy

The ongoing wave of asset redistribution has enabled the Kremlin to advance its economic and political objectives. The sweeping Western sanctions, including Russia’s exclusion from international capital markets, have severely limited the financial and material resources available for distribution among the elite. As a result, nationalised assets have become an increasingly important source of wealth accumulation for Putin’s narrow inner circle. Partial reprivatisation has contributed only marginally to the state budget: while revenues have risen over the past two years, they remain relatively modest.

This redistribution process has also reinforced pro-war sentiment within the elite by offering continuing opportunities to profit from the invasion. Both the financing of the war effort from the state budget and the nationalisation of assets have provided avenues for Putin’s closest associates to expand their wealth. By rewarding loyalty, Putin has shifted part of the responsibility for the invasion of Ukraine onto his associates and increased their vested interest in preserving the regime.

At the same time, shrinking resources are steadily narrowing the circle able to profit from state-controlled assets. This is demonstrated by the course of nationalisation, in which the prosecutor’s office has also begun targeting assets of individuals loyal to the Kremlin but considered insufficiently important to the regime. Expropriation has become a threat to almost anyone, serving as an effective tool for consolidating state control over the business sector. Facing this danger, many have quietly accepted the government’s less severe measures, such as higher taxes and tighter regulatory controls. For now, intimidated private entrepreneurs remain unwilling to act against the regime, even though these developments entail growing risks to their property and personal freedom.

Given the closed nature of Russia’s power system, it is difficult to assess the prevailing mood among the country’s elite. So far, there have been no open conflicts over assets within its ranks, though signs of tension have begun to emerge. One such sign is the halted transfer of the Ivanovo Heavy Machine Tool Plant to Rostec, whose head, Sergei Chemezov has been one of the war’s main beneficiaries. Reports have also emerged of growing competition over nationalised corporate assets. For example, Arkady Rotenberg is reportedly interested in acquiring Kuban-Vino, currently controlled by Rosselkhozbank, which in turn has sought to gain control of assets formerly held by the French company Danone that were awarded to Ramzan Kadyrov. These developments suggest intensifying competition within the upper echelons of the elite. Until now, Putin has acted as arbiter in an effective manner, settling conflicts and distributing assets to satisfy his inner circle. However, the ruling elite’s growing greed, fuelled by steady accumulation of new wealth, and an uncertain economic outlook amid the war in Ukraine are accelerating the pace of asset redistribution.

Large-scale nationalisation has already weakened Russia’s economic performance and is likely to weigh even more heavily on it in the longer run. In the early months of the full-scale invasion of Ukraine, private entrepreneurs played a key role in adapting the Russian economy to sanctions, benefiting from flexibility and relative freedom of operation, as the state refrained from obstructing business activity. The private sector is now once again subject to heavy regulation, which has hampered its performance. Past experience also demonstrates that state ownership is significantly less efficient than private ownership. Therefore, the continued takeover of corporate assets merely expands the list of entities whose primary purpose is to meet the financial needs of their managers rather than pursue growth and generate profit.
 

Table. Selected cases of asset nationalisation in Russia