Putin's Biggest Weakness is Money Laundering... Russian New Tycoons Hide Over 1000 Trillion Won

"Limitations of Existing Sanctions... Need to Track Hidden Assets of Chaebols Colluding with Putin"

On the 24th (local time), a video showing Russian President Vladimir Putin declaring a military operation in Ukraine was posted on the official website of the Russian President. In the video, he expressed confidence that the Russian military would achieve its objectives and urged Ukrainian soldiers to disarm and return home.
[Image source=Yonhap News]

[Asia Economy Reporter Lee Hyeyoung] Paul Krugman, Nobel laureate in Economics and professor at the City University of New York, argued that the most effective pressure tactic would be to locate and sanction the overseas assets hidden by Russian President Vladimir Putin and his close associates.

In an op-ed for the New York Times (NYT) on the 24th (local time), Professor Krugman predicted that the general financial sanctions currently imposed by Western countries would inflict significant pain on Russia in the long term but would have little effect in the short term.

He particularly pointed out that completely blocking Russia’s exports through trade sanctions is a "double-edged sword" for Europe, which heavily depends on Russian natural gas. He also foresaw that financial sanctions would be limited in effect unless Russia is expelled from the international financial messaging system SWIFT (Society for Worldwide Interbank Financial Telecommunication). Furthermore, he analyzed that expulsion from SWIFT would ultimately mean cutting off Europe’s supply of Russian gas, making it a difficult step to take.

Professor Krugman claimed that the strongest weapon Western countries have against Putin is to pursue the vast overseas wealth of Russia’s emerging oligarchs.

According to a 2015 paper by Philippe Novokman of the Paris School of Economics (PSE), the assets hidden by Russian oligarchs are estimated to be about 85% of Russia’s Gross Domestic Product (GDP), exceeding 1,000 trillion won in scale.

Professor Krugman stated, "Using laws like the United States’ Countering America’s Adversaries Through Sanctions Act (CAATSA), it is possible to find and pressure the assets hidden by Russian oligarchs."

He added, "There are means to exert enormous financial pressure on the Putin regime, but I don’t know if there is the will to do so."

Professor Krugman argued that two uncomfortable facts make one doubt the West’s will. One of these is the collusion between influential Western figures and Russian oligarchs.

It is widely known that Russian oligarchs own luxury yachts, large sports teams, and ultra-expensive mansions in various countries. Especially in the UK, Russian funds are so openly present that the term "Londongrad" has emerged.

Professor Krugman pointed out that people with significant economic and political influence in the West are deeply financially entangled with Russian oligarchs, raising doubts about whether sanctions can be effectively imposed.

The second point is that tracking the funds of Russian oligarchs could cause hardship for all money launderers. Most of the ultra-wealthy worldwide hide their money in overseas accounts, and in the process of tracing Russian funds, their assets could be exposed.

He said, "To take effective measures against Putin’s greatest vulnerability, the West must confront and overcome its own corruption," adding, "We will know in a few months whether the democratic world can meet this challenge."

This content was produced with the assistance of AI translation services.