The European Union and Britain followed the United States’ lead by announcing on Tuesday a ban on the export of luxury goods to Russia, a measure that should not disrupt the lifestyle of oligarchs but carries a political message. to the entire Russian population. Explanations.
Between the fall of the ruble and the fall in purchasing power, sanctions against Russia after the invasion of Ukraine on February 24 have already had very concrete consequences for the Russian population. But Westerners primarily seek to make life difficult for a handful of individuals close to Vladimir Putin.
Property seizures, asset freezes, sanctions are now directly targeting the Russian elite’s taste for luxury. The European Union did indeed ban on Tuesday, March 15, the export to Russia of its expensive sedans, champagne, jewelry and other items that the oligarchs hold dear.
However, we are only talking about goods with a value above a certain threshold, set, for example, in the amount of 50,000 euros for cars.
“Those who support Putin’s war machine should no longer enjoy their lavish lifestyle while bombs are falling on innocent people in Ukraine,” said European Commission President Ursula von der Leyen. The UK has taken a similar decision by imposing an embargo on fashion and art.
A similar decision was made a few days earlier in the US. This measure is exceptional, since until now restrictions on the export of luxury goods have only been applied to North Korea.
“The message here is to the elites and is to let them know that there is still time to break away from Vladimir Putin,” explains France 24 Jean Vercuy, professor at the National Institute of Oriental Languages and Civilizations (Inalco), noting the “schizophrenic” attitude oligarchs to European or American luxury. “The West is a model of conspicuous consumption in everything, but in their discourse the elites are forced to shout over this decadent West. Because these are not the values of Vladimir Putin, ”analyzes this expert on the economy of the post-Soviet states.
“Outstanding” lifestyle
However, these new sanctions are unlikely to affect the lavish lifestyles of those senior officials, business leaders and politicians who gravitate towards the Kremlin.
“It remains difficult to track down these people with excessive financial power because they travel or sometimes have dual citizenship,” notes Bruno Lavagna, author of Gépolitique du luxe (ed. Eyrolles), joined by France 24.
As Courrier International explains, “Wealthy Russian oligarchs leave their country to settle and invest in the United Arab Emirates or Turkey. It’s a way to protect your financial assets as well as lead an “outstanding lifestyle,” writes Emirati daily. Al Bayan.
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Among them is Roman Abramovich, the owner of the British football club Chelsea, whose plane has already landed several times in Istanbul since the beginning of March. Unlike its European neighbors, Turkey is not imposing restrictions on Russian jets or luxury yachts that have anchored in its ports in recent weeks.
Finally, to stock up on champagne, clothes and luxury watches, Kazakhstan seems like the perfect place for the richest Russians. “There is the Eurasian Economic Union, which will allow the Russian elites to buy these goods without additional customs duties,” says Jean Versey.
Russia, the golden palm of inequality in Europe
But the message sent by these new sanctions, which specifically target luxury goods, is not just for the oligarchs. It is also a matter of emphasizing divorce between these super-rich and the rest of the population.
“Most Russians are shocked by the inequality they see around them and how these fortunes were made,” says Jean Versey.
Russia is the most unequal country in Europe. According to a Credit Suisse report, 1% of Russia’s population accounts for 74.5% of national wealth, and 10% accounts for 89% of goods.
This disparity is the result of a sky-high rise in high incomes in the 1990s, associated with the monopolization of the economic system by a handful of businessmen. The spread continued to widen as commodity prices continued to rise.
Russians who can spend a few thousand euros on a Chanel or Prada bag make up only a tiny fraction of the population. Contrary to the cliché propagated by the billionaire Rolex watch lover and Dom Pérignon champagne lover, the Russian market is not essential for the giants of the industry.
Russia accounts for just 2% of its turnover, according to LVMH, the world leader with brands like Christian Dior, Kenzo or even Moët and Chandon. As for champagne, Russia annually buys about 1.5 million bottles, or 0.5% of the market. A drop of water compared to 34 million bottles sold in 2021 in the US.
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“Russian buyers make up about 5% of the global market. In this way, the world of luxury will be able to recover, because it is extremely resilient, as the health crisis has shown,” sums up Bruno Lavagna. “It should also be noted that he stands in solidarity with the international community,” adds the specialist in the world of luxury.
Since early March, several major groups have shown their support for Ukraine by temporarily closing their stores in Russia. Some, such as LVMH, have announced that they will continue to pay their employees in the country.
