Stephanie Baker | Oligarchs, Sanctions & The Global Economic War With Russia
Oct 22, 2024
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In this conversation with journalist Stephanie Baker, who has spent nearly three decades covering business and politics, she shares insights from her book, *Punishing Putin*. Stephanie recounts her early experiences in 90s Moscow, including a chilling encounter at a murder scene. She discusses the chaotic rise of Russian oligarchs, the complexities of sanctions post-Ukraine invasion, and how Western businesses have navigated these turbulent waters. A deep dive into capital flight and the fascinating role of crypto in hiding wealth adds further intrigue to this gripping analysis of global economic warfare.
Stephanie Baker recounts her early experiences in 1990s Moscow, illustrating the chaotic dynamics of post-Soviet Russia through a chilling murder scene encounter.
Baker analyzes the mixed effectiveness of Western sanctions on Russia's economy, highlighting how loopholes, particularly in the energy sector, allowed Russia to stabilize financially.
The emergence of oligarchs in Russia is traced back to flawed privatization schemes in the 1990s, illustrating the deep-rooted corruption that underpins economic inequity.
Deep dives
Stephanie Baker's Background and Insights on Russia
Stephanie Baker has spent nearly three decades covering the complex intersection of business and politics, particularly focusing on Russia. She recounts her early experiences in Moscow during the 1990s, including a chilling encounter with a murder scene, which highlighted the tumultuous environment of the city post-Soviet Union. Her tenure included fact-checking for Christopher Hitchens, which provided her with valuable journalistic training as she transitioned into covering significant financial crises and the rapid privatization occurring in Russia. This background ultimately equipped her with the necessary insights to pen her book, which delves into the economic impacts of Western sanctions and the systemic corruption within Russia that facilitated the rise of oligarchs.
The Impact of Sanctions on the Russian Economy
Baker's analysis focuses on the effectiveness of sanctions levied against Russia following the Ukrainian invasion, exploring why they have not entirely crippled its economy as intended. She discusses the chaotic aftermath of immediately immobilizing nearly $300 billion of Russia's central bank reserves and the subsequent measures taken by Russian authorities to stabilize the economy, such as interest rate hikes and capital controls. Furthermore, the sanctions initially prompted panic in the financial markets, but the uptick in global oil prices paradoxically allowed the Kremlin to replenish its financial resources. Baker asserts that while some sanctions achieved their goals, many loopholes remain, particularly in the energy sector where countries like India and China have increased their purchases of Russian commodities.
The Evolution of Oligarchs and Money Laundering
The book delves into the emergence of oligarchs in Russia, tracing how the loans-for-shares scheme during the 1990s led to enormous wealth consolidation among a select few individuals. Baker elaborates on how the privatization auctions, often rigged and riddled with corruption, allowed powerful figures to gain control of critical industries like oil and metals. Additionally, she highlights the ongoing issue of financial opacity, particularly in jurisdictions like Dubai, where many wealthy Russians have moved their assets post-sanction. The illicit movement of capital, often facilitated by complex networks of offshore entities and art transactions, raises critical questions about the efficacy of current regulations and enforcement mechanisms in curbing money laundering.
Western Businesses' Responses to the Russian Market
The responses from major Western corporations to the Russian invasion reveal a spectrum of moral and financial dilemmas faced by multinational companies. Baker contrasts firms like McDonald's, which swiftly exited the Russian market, with others such as Unilever, which chose to remain operational while suspending new investments. Renault's situation illustrates the drastic consequences of market dependence on Russian supply chains, as the collapse of the automotive industry led to significant losses. This analysis provides a nuanced look at how companies navigate the thin line between ethical considerations and financial viability in politically volatile environments.
The Future of Russia in a Changing Global Landscape
Baker contends that the ramifications of the ongoing conflict in Ukraine, along with Western economic policies, will significantly shape Russia's future as it grapples with both demographic declines and capital flight. The mass exodus of skilled workers, exacerbated by mobilization orders, is painting a grim picture for Russia's economy, straining its labor market and technological advancement. Additionally, she underscores the importance of global alliances, especially with China, which may not endure as the two powers face increasing challenges. The complex interplay of sanctions, international relations, and internal political maneuvers will determine not only Russia's immediate economic conditions but also its long-term strategic position on the world stage.
Stephanie Baker is a journalist whose been writing between the intersection of business and politics for almost 30 years with Bloomberg.
Stephanie's just published her first book and it is just amazing and the consequence of covering these topics for a lifetime. The network, the knowledge, the weird language of sanctions of financial opacity.
It’s a book about the global economic war with Russia post Ukrainian invasion. The fallout of the sanctions, why it has and hasn’t crippled the Russian economy as intended, and everything in and around Russian capital flight, Russian sanctions and the global economic war underwriting Russia's physical threat.
We start with Stephanies experience covering Russia from Moscow in the 90s, her stumbling across a murder scene and then between that and the book, Stephanie working as Christopher Hitchens fact checker at The Nation, the details behind putting a book like this together then the details about western businesses who withdrew substantial Russian operations, the oil markets chicanery to skirt sanctions, Oligarchs, Minigarchs, Euroclear and frozen Russian capital, what the sanctions did where they've been effective and where they haven’t and a whole lot more.
- Bill Browder - Oliver Bullough - Nicholas Shaxson
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00:00 - Who Is Stephanie Baker 03:21 - Moscow In The 90s & Fact Checking Christopher Hitchens 09:01 - How Oligarchs Were Created 17:07 - Hermitage Capital & Bill Browder 19:00 - Debut Book After 30 Years Of Journalism 27:46 - Economic Chaos From Sanctions 31:21 - Commodity Markets & Oil Chicanery 36:26 - Cannibalising Goods For Repurposing As Weapons 38:45 - McDonalds, Renault & Unilever Huge Russian Operations 54:50 - Euroclear's Role 1:00:11 - Capital Flight, Offshore Plumbing & Financial Opacity 1:20:16 - Liquid wealth of Putin 1:21:36 - The Role Of Serendipity In Stephanies Life
