Home / Articles / Even Thieves Need a Safe: Why the Putin Regime Causes, Deplores, and Yet Relies on Capital Flight for its Survival
Early in the millennium, Vladimir Putin resurrected the Russian economy and reasserted state power, but the methods that he employed have more recently led to economic stagnation. In response, the Kremlin regime proposed several economic reforms. It has not, however, implemented these reforms for fear of undermining its control, which is exercised largely by applying the law selectively to advance the regime’s interests, instead of impartially on behalf of the country at large. This arrangement is a profitable one for the elite. Without legal security, however, even the elite cannot know whether the regime will someday come for their property. The resultant fear of expropriation has led to massive capital flight from the Russian Federation to jurisdictions where, in contrast to Russia, the law will protect private property. Collectively, these jurisdictions comprise what could be called a vast, virtual “Anti-Russia.” The Kremlin has acknowledged the problem of capital flight, but is loath to stop it for fear of provoking Russia’s moneyed classes to press for reform should they be forced to keep their wealth in Russia. The result is a regime that has expanded at the expense of the wellbeing of the country at large, which is shrinking, a good part of its wealth having fled across the border to a flourishing Anti-Russia.