Saturday, October 25, 2014


Russia

Russia Has Highest Level Of Wealth Inequality

A yacht belonging to Russian billionaire Roman Abramovich  moored on the French Riviera
A yacht belonging to Russian billionaire Roman Abramovich moored on the French Riviera
By Ron Synovitz
A new report on global wealth has determined that Russia now has the highest level of wealth inequality in the world -- with the exception of a few small Caribbean nations where billionaires have taken up residency.

The annual global wealth study published by the financial services group Credit Suisse says a mere 110 Russian citizens now control 35 percent of the total household wealth across the vast country.

By comparison, billionaires worldwide account for just 1 to 2 percent of total wealth.

The report says Russia has one billionaire for every $11 billion in wealth while, across the rest of the world, there is one billionaire for every $170 billion.

One of the report's main authors, Tony Shorrocks of the London-based consultancy Global Economic Perspectives, told RFE/RL on October 10 that wealth disparity in Russia is unparalleled.

"Russia is really an outlier," Shorrocks said. "Even compared with the U.S., which has more wealth inequality than most countries, [Russia] is still totally separate from the rest of the world. It may not be too different from some of the Central Asian countries, and there are a few Caribbean nations that happen to have a resident billionaire. So they get similar sorts of numbers."

Shorrocks says what is most striking about Russia's richest citizens is that most have made their money by controlling companies in the natural-resources sector -- like gas giant Gazprom, oil companies, or metals firms -- and use their political connections with the Kremlin to maintain their fortunes.

"Billionaires in Russia obviously have very much connected with natural resources," he said. "And clearly, we're talking about recent fortunes that have been made in the last 20 years. It's quite clear that these natural-resource companies do require political support in various ways. So there does seem to be more political connections between the billionaires in Russia than there are in other countries."

Shorrocks said many reformers had hoped shortly after the collapse of communism that Russia would evolve into a high-skilled economy with a fair distribution of wealth.

'Almost A Parody'

But his new report says "this is almost a parody of what happened in practice."

"There were efforts made early on to ensure that the privatized wealth was distributed.," Shorrocks told RFE/RL. "A very large proportion of the Russian housing stock was actually given to their residents. That was a massive privatization and it was, on the whole, relatively equal -- certainly compared with the wealth distribution now. Shares in Gazprom were also allocated to Russian citizens. Obviously, what happened was that there wasn't really enough safeguards put in place and some people managed to acquire more than their fair share of the privatized assets."

Shorrocks said he is intrigued that the highest levels of wealth inequality are found in former communist countries that have been going through economic transition -- countries where wealth distribution was fairly equal two decades ago.

He says he wants next year's report to take a closer look at why there are so few people in places like Russia who control so much of the wealth.

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He says it also would be interesting to see whether the large fortunes amassed by Russian oligarchs will remain intact when they are passed on to future generations, or if they will be divided up in some way.

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