SOCIETY
It’s Not Only Soldiers Making Money off the War
May 20, 2023
Tatyana Rybakova
Journalist and writer
Tatyana Rybakova writes that there are more and more beneficiaries and thus supporters of the war, because each of them – even if they do not support the war itself, even if they are against Putin – will lose money, a career or status when it ends.
Not too long ago, a friend of mine, who after the annexation of Crimea had left his small town on the border with Ukraine, gleefully announced that he had finally managed to sell his old house. The house was expensive – big and in a good location – but in a city that had become the front line from the very beginning of the war, which made selling it seem like a hopeless endeavor. Surprised, I asked: “But who bought it?” “Who else? A local military commissar!” was the answer.
Of course, I suspected that with the beginning of the mobilization last autumn, military enlistment office personnel, as they say, had hit the jackpot. Still, I did not expect that they would do so well so fast.
Then I learned that in Moscow the price to dodge the mobilization was RUB 1.2 million, about $15,500. That is approximately the annual salary of a middle-class Muscovite. According to human rights activist Vladimir Osechkin, who started Gulagunet, bribes reach up to RUB 2.0 million. However, the price is lower outside of Moscow, starting at RUB 500,000. The matter has blown up such that the Duma has proposed equating the sale of “white” military IDs (which indicates someone is unfit for military service) to treason.
Of course, it’s not just military enlistment office personnel making money on the war and Russians’ unwillingness to fight in it. It’s also military commissars themselves, who threaten them with blackmail. Its also officials of the military-industrial complex – Alexei Navalny’s Anti-Corruption Foundation recently detailed this. It’s entrepreneurs, who siphon off military orders through connections or kickbacks – the noisiest scandal has been over Gardarika uniforms, which tripled in price.
Of course, I suspected that with the beginning of the mobilization last autumn, military enlistment office personnel, as they say, had hit the jackpot. Still, I did not expect that they would do so well so fast.
Then I learned that in Moscow the price to dodge the mobilization was RUB 1.2 million, about $15,500. That is approximately the annual salary of a middle-class Muscovite. According to human rights activist Vladimir Osechkin, who started Gulagunet, bribes reach up to RUB 2.0 million. However, the price is lower outside of Moscow, starting at RUB 500,000. The matter has blown up such that the Duma has proposed equating the sale of “white” military IDs (which indicates someone is unfit for military service) to treason.
Of course, it’s not just military enlistment office personnel making money on the war and Russians’ unwillingness to fight in it. It’s also military commissars themselves, who threaten them with blackmail. Its also officials of the military-industrial complex – Alexei Navalny’s Anti-Corruption Foundation recently detailed this. It’s entrepreneurs, who siphon off military orders through connections or kickbacks – the noisiest scandal has been over Gardarika uniforms, which tripled in price.
McDonald’s (now renamed."Tasty , and That's it") sold its Russian business to one of the franchisees for a symbolic sum (Nizhny Novgorod, 2022).
Source: Wiki Commons
Source: Wiki Commons
Redistribution of business
There are also beneficiaries in areas with only indirect connections to the war. Businessmen profit from getting the property of Western companies leaving Russia on the cheap. Here, it needs to be said, the Russian government assisted them: at the end of 2022, a rule was approved that foreign companies could sell their business in Russia only at a discount of 50% or more, with installment payments over 1-2 years. And in March of this year, a requirement was added that companies had to pay money to the budget for leaving Russia: at least 5% of the market value of the assets, while if the discount was 90%, the amount would increase to 10%.
Some companies have sold assets to their own management. At the beginning of the war, sales with a buyback option were common – McDonald’s did that, for example, when it sold its Russian business to one of the franchisees for a symbolic sum, as he himself acknowledged. In the second year of the war, hopes for a comeback seem to have disappeared, and foreign companies are simply selling off their assets – for as much as they can. Meanwhile, the buyers are often completely unknown companies, often created literally before the deal.
The story of the sale of IKEA’s production assets in Russia is telling: the large forest products producer Segezha and Sistema holding, both belonging to the oligarch Vladimir Yevtushenkov, fought for them, but they went to companies called Slotex and Luzales – for many, never before heard of. Who is behind them is still unknown.
Another 2,000 companies are waiting their turn to leave Russia, and given the slowness of the government commission considering their applications, it is hard to imagine how long they might have to wait. But it is not hard to imagine (of course, purely hypothetically) what things some especially impatient companies might do to ensure that their application gets to the front of the line.
Those dealing with parallel imports – in other words, legalized smuggling – are making money (see Nikolai Petrov’s article in Russia.Post about the customs service), with state-connected importers of semiconductors for missiles being launched on Ukraine, along with small businessmen who import spare parts for foreign cars and Western brands, minting money.
Producers dealing in import-substituting products also feel great: some, taking advantage of the situation, just like the subsidies and benefits from the state, while others really produce things similar to what has left the Russian market due to sanctions – usually of worse quality and at higher prices (see Nikolai Kulbaka’s article in Russia.Post.).
It is no coincidence that, according to the Central Bank, “income from business activities” has jumped in the structure of household income. “Now it’s real haymaking – just make sure to reap the money,” a businessman happily shared with me. He is involved in a relatively respectable area: helping people fleeing the war and the mobilization to emigrate.
The war is also driving a redistribution of business within Russia. For example, in the Russian segment of Telegram, there was a sudden wave of arrests of channel authors, including those affiliated with Ksenia Sobchak, on the same grounds: allegedly, they extorted money from the management of Rostec and Sergei Chemezov. Note that Telegram and YouTube are the last media platforms in Russia that have not yet been banned or monopolized by the state.
The elite of the war
New opportunities have appeared not only for businesspeople – the labor market is also hot. Yandex, which has always been considered a “dream job,” is now looking for workers through employment websites, offering remote work.
There are also beneficiaries in areas with only indirect connections to the war. Businessmen profit from getting the property of Western companies leaving Russia on the cheap. Here, it needs to be said, the Russian government assisted them: at the end of 2022, a rule was approved that foreign companies could sell their business in Russia only at a discount of 50% or more, with installment payments over 1-2 years. And in March of this year, a requirement was added that companies had to pay money to the budget for leaving Russia: at least 5% of the market value of the assets, while if the discount was 90%, the amount would increase to 10%.
Some companies have sold assets to their own management. At the beginning of the war, sales with a buyback option were common – McDonald’s did that, for example, when it sold its Russian business to one of the franchisees for a symbolic sum, as he himself acknowledged. In the second year of the war, hopes for a comeback seem to have disappeared, and foreign companies are simply selling off their assets – for as much as they can. Meanwhile, the buyers are often completely unknown companies, often created literally before the deal.
The story of the sale of IKEA’s production assets in Russia is telling: the large forest products producer Segezha and Sistema holding, both belonging to the oligarch Vladimir Yevtushenkov, fought for them, but they went to companies called Slotex and Luzales – for many, never before heard of. Who is behind them is still unknown.
Another 2,000 companies are waiting their turn to leave Russia, and given the slowness of the government commission considering their applications, it is hard to imagine how long they might have to wait. But it is not hard to imagine (of course, purely hypothetically) what things some especially impatient companies might do to ensure that their application gets to the front of the line.
Those dealing with parallel imports – in other words, legalized smuggling – are making money (see Nikolai Petrov’s article in Russia.Post about the customs service), with state-connected importers of semiconductors for missiles being launched on Ukraine, along with small businessmen who import spare parts for foreign cars and Western brands, minting money.
Producers dealing in import-substituting products also feel great: some, taking advantage of the situation, just like the subsidies and benefits from the state, while others really produce things similar to what has left the Russian market due to sanctions – usually of worse quality and at higher prices (see Nikolai Kulbaka’s article in Russia.Post.).
It is no coincidence that, according to the Central Bank, “income from business activities” has jumped in the structure of household income. “Now it’s real haymaking – just make sure to reap the money,” a businessman happily shared with me. He is involved in a relatively respectable area: helping people fleeing the war and the mobilization to emigrate.
The war is also driving a redistribution of business within Russia. For example, in the Russian segment of Telegram, there was a sudden wave of arrests of channel authors, including those affiliated with Ksenia Sobchak, on the same grounds: allegedly, they extorted money from the management of Rostec and Sergei Chemezov. Note that Telegram and YouTube are the last media platforms in Russia that have not yet been banned or monopolized by the state.
The elite of the war
New opportunities have appeared not only for businesspeople – the labor market is also hot. Yandex, which has always been considered a “dream job,” is now looking for workers through employment websites, offering remote work.
"The mobilization has led employers to favor women, the elderly and the disabled versus young men – the former will not be drafted."
The well-known headhunter Alena Vladimirskaya has written that there is a lot of middle-management work, though the top managers who left have all been replaced. In addition, salaries are not falling either, while in some industries they are even growing – first and foremost, in the military-industrial complex, which previously was known for low pay. No wonder the Central Bank has noted a steady rise in wages – 11% year on year.
After the investigation of Navalny’s team into corruption in the rocket industry, a discussion broke out within the Russian opposition: is exposing embezzlers not playing into Putin’s hands? Will this not mean more missiles, shells, military uniforms and dry rations, which will worsen the situation for the Ukrainian army? Opinions were divided. I would call attention to the fact that the problem is not only corruption and its impact on the war.
The war has sprouted more and more beneficiaries – both those involved in corruption schemes and those engaged in relatively honest business or work. Hence the formation of a new elite – the elite of the war – and a large class of people inclined to support the war. And it is definitely not only the siloviki, and perhaps due to a premonition of Russia’s defeat in the war, even not so much them. It is everyone for whom the war has become an opportunity: to develop a business, climb the career, ladder or raise their status.
Yesterday, an unlucky businessman was counting pennies and in debt – today, he is bathing in money. Yesterday, women older than 50 were not hired – today, they are in high demand, as women are not subject to the mobilization. Yesterday, you got an earful from your boss – today, you sit in his chair, having denounced him to the FSB. Yesterday, you performed songs at third-rate corporate parties – today, you are on all the national TV channels reciting “patriotic” texts.
How many of these stories are now visible and invisible? How many people have gotten or will still get their cut from the war? There are more and more supporters of the war, simply because each of them – even if they do not support the war itself, even if they are against Putin – will lose money, career or status when it ends.
After the investigation of Navalny’s team into corruption in the rocket industry, a discussion broke out within the Russian opposition: is exposing embezzlers not playing into Putin’s hands? Will this not mean more missiles, shells, military uniforms and dry rations, which will worsen the situation for the Ukrainian army? Opinions were divided. I would call attention to the fact that the problem is not only corruption and its impact on the war.
The war has sprouted more and more beneficiaries – both those involved in corruption schemes and those engaged in relatively honest business or work. Hence the formation of a new elite – the elite of the war – and a large class of people inclined to support the war. And it is definitely not only the siloviki, and perhaps due to a premonition of Russia’s defeat in the war, even not so much them. It is everyone for whom the war has become an opportunity: to develop a business, climb the career, ladder or raise their status.
Yesterday, an unlucky businessman was counting pennies and in debt – today, he is bathing in money. Yesterday, women older than 50 were not hired – today, they are in high demand, as women are not subject to the mobilization. Yesterday, you got an earful from your boss – today, you sit in his chair, having denounced him to the FSB. Yesterday, you performed songs at third-rate corporate parties – today, you are on all the national TV channels reciting “patriotic” texts.
How many of these stories are now visible and invisible? How many people have gotten or will still get their cut from the war? There are more and more supporters of the war, simply because each of them – even if they do not support the war itself, even if they are against Putin – will lose money, career or status when it ends.
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