Putin's elite divides Russia: massive nationalisation and reprivatization of assets

The war against Ukraine and the massive Western sanctions imposed on Russia became a catalyst for another wave of ownership division in that country, 1 of the largest since the dissolution of the USSR. The actual scale of the phenomenon is hard to estimate, due to the fact that it consists of both the acquisition of assets of abroad companies (not only those withdrawing from the country) and Ukrainian property in occupied territories and the nationalization of Russian entities. Due to the shrinking profits, loyalty of the people in the immediate vicinity of Vladimir Putin is paid for the above assets (transmitted for free or at low prices). In addition, the gross from the partial reprivatisation of their assets is supported by the budget. At the same time, the wartime mobilization, which strengthened Kremlin's control over all processes taking place in the country, and the raging spiral of repression let to pacify possible opposition to existing owners.

The expanding financial needs of the authorities and the greed of Putin's elite members make it expected that the process will increase in the coming months and include increasingly attractive assets. In the long term, this will have a negative impact on Russia's economy, and possibly make conflicts among the ruling.

Distribution of ownership as an instrument for strengthening power

The change in entities controlling assets is nothing fresh in Russia and is in line with the regime. The Kremlin treats the state as its property. Consequently, ownership rights are a contractual category and full dependent on the arbitrary decision of the leader. They are guaranteed not by law and judgment, but by his decision^[1].

The division of ownership progresses in rule from Putin's reaching power in 2000. People from his immediate surroundings only took a tiny part in privatization of the 1990s, so economical facilities were built on parasitising public property and collecting assets already distributed. It served, among others, to bankrupt and take over assets of the largest oil company in the country – Jukos – as well as the fortunes of the oligarchs from the times of Boris Jelcin: Vladimir Gusinski or Boris Bieriezowski. At the same time, strong state-owned companies specified as Gazprom and Rosnieft were built on the basis of them, as well as private assets of members of the governing team.

War and Western restrictions have intensified this process strongly, with its pace expanding with each consecutive period of aggression against Ukraine. It is virtually impossible to estimation the value of ownership changes. First of all, there is no single registry of nationalised assets. The lawsuits concerning property confiscation brought by the prosecution are dealt with by courts in different regions and any cases are not public. The property is peculiarly hard to value in current, rapidly changing business conditions. This is peculiarly actual of the withdrawals from the FR of abroad companies or Ukrainian assets in the occupied territories.

The scale of the ownership process

In fresh months, nationalisation has increased in peculiar in Russia. According to the NSP's law firm's estimates, the full value of assets taken over from February 2022 to June 2025 was around 3.9 trillion rubles (about $50 billion at the rate of June 2025), i.e. around 2% of GDP, of which over 1.5 trillion rubles accounted for those belonging to abroad entities.^[2]. This means a three-fold increase in the value of the seized property during the year (in mid-2024 it was estimated to be 1.3 trillion rubles). The same results were obtained by an analysis of 100 lawsuits by the prosecutor regarding the nationalization of ownership conducted by the anti-corruption expert Ilia Szumanova. It follows that during the first 3 years of the full-scale war (i.e. until March 2025) the value of the assets received was around 2.6 billion rubles, i.e. about 28 billion dollars (at the average rate of 2024). These studies besides show a marked increase in the dynamics of this process in 2025: while it included 157 companies worth 1.1 trillion rubles in 2024, in the first 4th of 2025 the state already took over 50 entities with a full value of over 800 billion rubles^[3].

An crucial component in the seizure of ownership by people in the Kremlin's surroundings is, as has already been pointed out, the acquisition or nationalisation of abroad companies withdrawing from the country, although the pace of this process has slowed down. According to studies conducted by Kiev School of Economics (KSE) from the beginning of the invasion until July 2025. Russia has completely left over 500 companies^[4] (of about 1.5 1000 holding assets there at the time of her attack on Ukraine). At the same time, any of them were expropriated, and most of them were sold to home underpriced operators (e.g. Moscow car factories owned by Renault fresh owner bought for 1 ruble)^[5]. At the same time, information about many transactions does not scope the public.

The CSE, on the another hand, estimated the losses incurred by external companies withdrawing from the country in the first 3 years of the full-scale war at $167 billion for the failure of assets or their full failure or exchange rate differences.^[6]. At the same time, any half of this property was written off in 2022 and another 38% in 2023. The lower dynamics of leaving Russia is mainly a consequence of the business strategies of these companies and their willingness to proceed to gain on this market, but besides the barriers introduced by the authorities, including the request to get the approval of the government commission to dispose of assets and accept the value of specified a move.

Under the current regulations in 2025, abroad ownership sales take place at a 60% discount from the established price. In addition, a taxation of 35% of the value of the transaction, called ‘voluntary fee’, should be paid (depending on the agreement of the parties, it is paid by the buyer or seller)^[7]. The KSE calculations say that the full gross of the Russian Federation budget for this intent from 2022 to 2024 amounted to around $3 billion. This means that the external owner leaving it in 2025 can get for his assets only about 5% of their value, with the transfer of these funds abroad besides requiring separate government approval.

It is hard to measure the property seized by Russia in occupied territories of Ukraine. According to Ukrainian statistics, in 2021 the nominal gross regional product value of the 4 formally annexed regions, whose aggressor army does not control in its entirety, was about $24 billion. From an analysis carried out in August 2022 for The Washington Post by SecDev – Canadian global hazard company – Ukrainian natural resources, including coal, gas, oil and metals deposits, seized by invaders were worth at least $12.4 trillion (i.e. almost half of what all 2209 investigated by SecDev in this country)^[8]. CConsistent control over the most industrialized areas of the Donetsk and Luhansk regions has already been gained in 2014. However, it must be remembered thatThe impact of the invasion has been destroyed by a large part of the possible of these areas, and especially the cities that were fighting for, specified as Mariupola. The detonation of the barrier by the aggressor in Nowa Kachowce caused permanent harm to the agriculture of the Kherson and Zaporosian circuits^[9].

Unclear Principles of Depriving of Property

The collection of assets is chaotic in Russia and goes violently. This step is seldom preceded by signals about the intentions of the authorities. Usually, the owners are amazed by the prosecution's decision (see further). The selection of nationalised entities, which disagree in value terms (for example, Domodedowo holding company, which controls, among others, Moscow airport, is estimated at around $12.5 billion and Rolf car dealership at around $0.7 billion). The phenomenon is affected by almost all sectors of the economy, including transport (airports, ports, logistics companies), metallurgical (Czelabinian Electrometalurgical Complex), device (companies cooperating with the shipyard in St. Petersburg), armaments (optico-mechanical plants, tin- and lead-producing company), chemical (methanol production), agri-food (masonry production, agroholdingi) and energy, where assets are received mainly by abroad operators. Attractive land (agricultural and construction), property (such as the 4 Seasons Hotel at Red Square) and even intellectual property (patents in the field of radar systems and means of communication) are besides nationalised.

It is besides hard to systematise the process of taking over assets by analyzing their erstwhile owners. The D.A. reaches for the property of both local billionaires from Forbes' first 100 rankings, including Oleg Deripaski (land and property in the Krasnodar Region), Siejfieddin Rustamov (chemical enterprises) and Konstantin Strukow (gold mines and ore processing plants), as well as erstwhile representatives of the authorities, mainly regional (governornors, deputies) and a large number of financial successful businessmen, including those who are inactive in Russia. Most of them were loyal to the Kremlin and did not publically criticize the government or war^[10]. Moreover, the nature of the strategy shows that they had to enjoy the protection (so-called secret) of state authorities (e.g. the peculiar services of the FSB) or those in the circles of power^[11]Which, however, turned out to be besides weak to deal with the prosecution.

Ownership

Despite ambiguity as to how the assets to be nationalised were chosen, the procedure for their acquisition by the State was developed reasonably accurately. The main operator of the process is the prosecution, whose lawsuits courts in the large majority consider positively and at an express rate. Moreover, in the event of doubt, the law is interpreted in accordance with the needs of the investigative authorities. For example, in May 2025 the Constitutional Court ruled that in relation to the question of the effects of privatization in the 1990s there could in rule be no statute of limitations, due to the fact that in cases of this kind the passage of time should be counted from prosecutorial control, which showed infringements alternatively than from the date of the transaction.

As regards the provision of formal grounds for the removal of property, the D.A. is assisted by the national safety Service or the Investigative Committee (they supply information on abroad shares and passports or corrupt links), as well as the national Anti-Monopoly Service (may consider any assets as strategical from the point of view of the State). Nationalisation frequently besides involves arresting existing owners and starting criminal cases against them, and consequently confiscating assets without any compensation.

In most cases, by taking fortunes from Russian businessmen, the court cites:

• illegal entry into possession of them, especially Having called into question the results of the privatisation of the late last century,
• participation in corruption,
• foreign citizenship, including double or permanent residence card, of owners or registration of a company outside Russia; this allegation applies in peculiar to companies which, according to the national Antitrust Service, are of crucial (strategic) importance to the state.

The most common formal reasons for acquisition of abroad ownership are:

• security considerations of Russia and the unfriendly actions of the US and its partners^[12] – then expropriation usually takes place on the basis of peculiar decrees of Putin^[13],
• extremist activity – on this basis they lose their assets especially Ukrainians,
• failure to comply with the laws of the business authorities (e.g. non-registration of the company according to Russian law) – this concerns assets in occupied regions of Ukraine.

However, the reasons given are purely formal, since the FR legal strategy is available, and the chance of defendants to defend themselves against nationalisation is slim, even though there is doubtful evidence. As a result, in 2025 the courts were able to reduce the time taken to deal with cases of this kind on average to 1 to 2 months, and the decision was frequently taken at the first meeting. In any cases (such as the gold holding of the already-uralzoloto) the conviction is passed after respective (here: eight) days after the prosecution's lawsuit. Importantly, her actions are likely to be inspired by people from the vicinity of the Kremlin, as may be evidenced by the further destiny of these assets and by who they are controlled. Sometimes the data of the initiator of the process are not secret (vide The following is the story).

Exceptional withdrawals from nationalisation

So far, only a fewer entrepreneurs who have been affected by the expropriation procedure managed to avoid it. In Russia, it is highly uncommon to change the judgement of the court – this usually means the intervention of powerful powers from the narrow elite. Therefore, an especially interesting case is the effort to nationalise Ivanowski dense device Plant, which In March 2024, a judgement of the first instance court was taken from a private owner. The prosecution argued that in the 1990s the company was privatised in violation of the law, so its assets went under State supervision. The organization in the case was the state giant Rostiech (controls around 70% of the arms sector FR), who demanded the transfer of these assets to him^[14]. Already in July 2024, establishments were included in the government's privatisation plan for the period 2024–2026. After six months the earlier owners of the entity – Vladimir Biezanov^[15] and his boy – but they won the appeal. This verdict was confirmed by the second appeal arbitration court^[16], which means that the company should return to the family, although the prosecutors and Rostiech inactive refuse to accept it. The success of the defence against nationalization may propose that the activity of a dynamically increasing corp managed by Sergei Czemezov has been generating expanding discontent in Putin's elite for years.

In respective situations, asset protection has provided an agreement with the prosecution. They were able to be included, even in 2023, by Andrei Mielec, erstwhile the state attempted to confiscate the Siberian Energy Company (SIBEKO) which belonged to it. As a consequence of the settlement in exchange for the donation to the charity fund, the suit was withdrawn. Neither the size of the donation nor the name of the fund was revealed.

In 2023, a akin situation occurred in the case of a suit concerning the nationalisation of German assets. companies HeidelbergCement, whose offense was to have abroad ownership supervision. The reasons for the prosecution's withdrawal from expropriation are unknown. It simply informed that it could ‘protect the interests of the State by another legal means’.

Ownership distribution beneficiaries

The Kremlin, which strengthens its control of the economy, increases its share of nationalisation. At the same time, private assets are de facto confiscated without the request for compensation by the State budget. Assets are mostly transferred The national Agency for the Management of the State Assets of Russia (Russia) or state-owned companies belonging to the close vicinity of Putin, including Rostiech (supervised by the mentioned Chamiezov), Rosatom (under the strong influence of Yuri and Mikhail Kowalczuk), Rosniefti (managed by Igor Sieczin) and Rossielchozbank (managed by Dmitri Patruszew, boy of erstwhile secretary of the safety Council of the FR). On the another hand, any entities are reprivatized and sold at preferential prices besides to elite members, including companies associated with the leader's friends Arkady Rotenberg or Yuri Kowalczuk.

As a result, we have seen an increase in the state's revenues from privatisation in Russia for 2 years. In 2024, they increased to around 130 billion rubles (about $1.5 billion) from 27 billion rubles (US$0.3 billion, at the rate from that year) a year earlier and only 1 billion rubles in 2022. In total, in 2024 Russia transferred 473 billion rubles (i.e. $5.1 billion) to the State's cash registry for privatisation and profits from the management of state-owned enterprises (mainly dividends). However, these funds are tiny compared to the scale of the assets taken over and the needs of the Russian budget (in 2024 it received a full of 36.6 trillion rubles).

Effects: an increasingly central economy

The ongoing wave of fresh ownership divisions allows the Kremlin to prosecute economical and political objectives. The massive Western sanctions, including the cut-off from abroad capital markets, severely reduced the available financial and property resources that the Verchushka may share. As a result, nationalised assets become an increasingly crucial origin of wealth multiplication for the narrow group around Putin. The progressive partial reprivatisation is only a tiny part of the state budget. The gross from it – despite their growth in the last 2 years – remains comparatively low.

The redistribution of assets serves, among others, to strengthen the pro-war moods in the elite, as it provides its option to usage it for further aggression. Both the handling of the armed conflict financed from the state's money and the nationalisation of assets let people from the nearest dictator's environment to become rich. Thus, by rewarding their loyalty, he shifts work for the attack on Ukraine and increases their interest in maintaining the regime.

The shrinking of resources results in a systematic narrowing of the group inactive able to prey on Russia. This demonstrates the process of nationalisation, in which the prosecution besides reaches out to the assets of people loyal to the Kremlin, but insufficiently crucial to the regime. Expropriation threatens everyone – as a result, it is an effective instrument of subordination of business representatives to the state. Thanks to the danger hanging over them, they are silently accepting much little painful decisions for them, specified as expanding the taxation burden and regulating their activities. The intimidated private entrepreneurs are not yet willing to act against the regime, despite the fact that the process described poses a threat to their state of possession and freedom.

Due to the sheer integrity of the Russian strategy of power, it is hard to say anything about the moods in the elite there. So far there are no sharp conflicts over assets in its ranks, although signs of tensions – they do. He points to them, among others, the mentioned cessation of the acquisition of the Ivanów dense device Plant by Czemezów – the main beneficiary of the war – Rostiech. There was besides information about the increasing competition for the nationalized assets of companies. For example, the Cuban-Wino group, under the control of the Rossielchozbank, is to be curious in Arkady Rotenberg, while the assets after the French Danon, which Ramzan Kadyrov received, wanted to take over Rossielchozbank. It is so fair to presume that competition in the higher circles is getting worse. At this point, Putin plays the function of an arbitrator effectively, settling conflicts and passing on to the community to divide their shares satisfactory, but the greed of the team, increasing with the taking over of subsequent conquests, and uncertainty about economical developments in the context of the war with Ukraine accelerate the rate of ownership division.

Mass nationalisation has a negative impact on the economical situation of FR and, peculiarly in the long term, will have a strong impact on it. In the first months of full-scale aggression, private entrepreneurs have played a key function in adapting the economy to new, sanctioning conditions thanks to their freedom of action (the state did not hinder business conduct). The sector is now subject to strict regulation again, which undermines its performance. Experience to date has besides shown that state ownership has a much lower efficiency than private ownership. The ongoing acquisition of companies' assets so only prolongs the list of entities whose main intent is to meet the financial needs of their managers, not to make and to multiply profits.

Table. Selected processes of nationalisation of assets in Russia