This article originally ran on Forbes.com on December 20, 2024. All rights reserved.
The collapse of the Assad Regime in Syria is the latest in a series of political and military defeats that have staggered the Kremlin. In just two short weeks, the 54-year-old Assad family dynasty fell to a collection of rebel fighters who were mostly untested, relatively poorly equipped, and often distrustful of one another. However, Assad’s army withered away with hardly a shot being fired in anger, or in Assad’s defense. (Source).
Aside from the military significance of Russia's all but imminent pullback from the region, (Source), the financial blow to Russia is massive. The sheer amount of investment Russia made in Syria has now evaporated.
Following Putin’s invasion of Ukraine in February 2022, Moscow became more dependent on its energy exports for income. International sanctions hit hard at the wealth of Russia’s elite. By the first anniversary of the invasion in February 2023, Bloomberg estimated that the 23 Russian billionaires among the world’s 500 wealthiest people had collectively lost $67 billion, or approximately 20% of their pre-war net worth of $339 billion. (Source).
By late 2024, however, these oligarchs had recovered much of their wealth. This was partially due to stabilizing oil prices at around $75 per barrel. While that figure was down from the pre-invasion highs, that price was nevertheless sufficient to balance the market. Russia was also assisted by its ability to continue exporting energy to Europe and other places despite the sanctions. These factors allowed the top Russian billionaires to increase their collective net worth to an estimated $360 billion this year. (Source).
However, the cumulative toll of three years of attritional warfare, amplified by the recent geopolitical setbacks, makes it more difficult for Russia to hold the line on outside pressure.
Russia’s national budget deficit is ballooning. In addition, Ukraine likely will not renew the agreement to allow Russia to continue to pump energy through Ukrainian pipelines to countries such as Austria and Hungary, resulting in additional losses for Russia of up to $ 6.5 billion a year. (Source).
Already the Russian Central Bank, struggling to curb climbing inflation, has increased interest rates to a whopping 21%. (Source). By the end of the year, it is expected to further hike it to an unprecedented rate of 23%. (Source). Russian wages are rising because, with so many soldiers at the front and others involved in the war, there is a shortage of workers. However, productivity is falling, meaning profitability is dropping and with it, tax revenues greatly needed by a warring state like Russia is. Without many other options, Putin likely will look to his wealthiest people to pay more, meaning the oligarchs who have provided him with much of his support in the past will now be asked to shoulder an ever-larger part of the economic burden.
That leaves the wealthiest Russians with an obvious dilemma. Do they stay and potentially take advantage of future fire sales of assets that could add to their respective investment portfolios, or do they leave Putin and the country as a whole and avoid the political and economic risks? Over the past two years, several prominent Russian billionaires have renounced their citizenship and exited the country’s economic landscape. In 2024, developer and real-estate magnate Vasily Anisimov surrendered his Russian passport and relinquished control over his former companies. (Source).
In 2023, Arkady Volozh, founder of Yandex, Russia’s most prominent tech giant, publicly condemned the “barbaric” invasion of Ukraine and distanced himself from Russia, describing himself instead as a “Kazakhstan-born, Israeli tech entrepreneur.” (Source).
He was removed from the Eu Russian sanctions list, (Source). and subsequently established Nebius Group using Yandex’s international assets; the new venture is now raising hundreds of millions of dollars in the United States, backed by investors including NVIDIA, the world’s largest company by market capitalization.
The most recent to leave was Roman Avdeev, who previously controlled the Rossium Group, a diversified business conglomerate built around one of Russia’s largest private banks and spanning across insurance, agriculture, real estate, and pharmaceuticals. He sold all his Russian assets to Sergie Sudarikov, a fellow billionaire with whom he had formed a strategic partnership in 2019. Avdeev, who has adopted 19 of his 23 children, posted a statement on Facebook saying he wanted to concentrate now on his family instead of his businesses.
For those that remain, much of their future might depend on Donald Trump. Russian energy exports already fell by 100,000 barrels per day in November. (Source). This resulted in a revenue loss of $1.1 billion. Should Trump tighten the price cap on Russian oil, or crack down on its shadow tanker fleet, (Source), and thereby raise the pressure on Europeans to cut off Russian energy exports completely, some believe that this would remove one billion barrels a day of Russian crude oil from the market almost entirely, again balancing the market but constraining global supply.
Thus, the Trump Administration’s early energy decisions may be a key driver of foreign events in 2025, especially for Russia. By tightening the energy screws on Russia, Trump may cause a break between Putin and his oligarchs. With even more pressure now bearing down on the Russian President from another source, this one close to home via its oligarchs, Mr. Putin will have to move very deftly to deflect the difficulties threatening his continued rule.
