and i think that could really have a much more of an effect on the russian economy if it was properly enforced. yeah. i mean, you do make the very important point that there are these shadow fleets and the russians have been, you know, pretty successful in in evading a lot of these sanctions. but i guess they could be better enforced. but certainly that's all selling well, albeit like with a country, india, at a very discounted price. so you begin your book with a wonderful story about a yacht that the western countries have seized, were trying to impound and. you have very interesting description in the book about how difficult it's been in going after a number of these oligarchs to seize their and then to dispose of them. so, i mean, i have one fun question, which is why, are yachts so important to to these russian oligarchs?

but more seriously, why is it been so difficult to dispose of and what's the situation now and a half years after the outbreak of the war, some of these yachts. yeah, it's incredible. i mean, most of these russian billionaires, they all have a super yacht. it's sort of a symbol. it's the ultimate symbol of russian opulence and wealth. it's a status symbol. and so after the invasion, the us justice department went after one, it went after several yachts, but it went after one yacht in particular called armadale, which was owned by a sanctioned russian billionaire named sulaiman karimov, who had been sanctioned by the trump administration in 2018. and so they had like it in many of the cases, took against these russian billionaires. they had four years of track record to look at his behavior and whether or not he had violated sanctions. and so they that he had bought

this yacht and asked the mexican to search it and then fbi agents were waiting to seize it in fiji in mid-april. 2022. but this yacht saga has drawn on for far longer than anyone. they seized it, sailed it to san diego, and the justice department has been fighting with another russian billionaire who claims that he actually owns this yacht on paper and in reality. and the justice department has how no, he doesn't own it. this he's an unsanctioned, clean straw that's being put forward as as the person that actually owns it on behalf of this other sanctioned billionaire. and, of course, what has transpired fired is literally thousands of pages of legal documents in this one particular case that i've gone through and

it's a series of opaque transaction ins involving offshore companies, and it's proven very difficult for the justice department to try to advance their case and show that actually crimes is the one who actually controls it, even though he may not own it on paper. it's a classic russian story of the way they hold. it's not always it's not always clear. it's not always straightforward. oh, you know, i should make it clear that karimov says he doesn't own it. and this other guy, edward dan dayton, says he is the real owner. this is playing out in us courts while the us government is on the hook for maintaining this yacht, which is quite expensive. so it's proven in credibly difficult, but it's, it's a symbol in many ways of the government's efforts to seize

russian assets. it's not been easy, hasn't been straightforward. these russian billionaires do have substantial assets in the us, many of which are frozen. and, you know, the plan is to proceed with forfeiture and use the proceeds. ukraine. yeah, i mean and you point out, as you say, how expensive is to maintain these yachts, to service them. it's being decided what's going to happen to them. fairly staggering figures. okay. let's continue with the discussion now. how a number of these russian oligarchs have been trying to evade sanctions, have hired the best lawyers to rescind some of the things that being done against them. you provide very vivid descriptions of all of this. talk to some of them. so i'll just mention a few and i'd be very if you if you talk more about them oleg deripaska who has been really quite successful in in going around

these sanctions and and then and i think partly what you describe is also it's very difficult in opens societies like the united states or the united kingdom to enforce a lot of these rules or to prevent these, you know, very clever oligarchs from getting around them. and so i'll also mention besides oleg deripaska, we have friedman pizza oven and roman abramovich, who, of course, has a very interesting role, you point out, in terms of having also been a mediator at the beginning, at least between russia and ukraine in this conflict. so how have these people dealt with the sanctions against them and how successful they been in evading them? right. well it's slightly differs from depending on who you're talking about. oleg deripaska, who's someone i interviewed at length in 2011 at his house outside moscow. he's been under sanctions since 2018.

so justice department did go after him quite aggressively in the successive years looking at his efforts to get around sanctions, evasion. he had several indictments have grown out of that investigation, including an effort by him to have his girlfriend give birth to their child their children in the united states twice. i go into that case in great detail in the book. the others were sanctioned. later in 2022. and i do think that it's quite interesting that so many of them and i do believe them, i think that they were not expecting putin to invade. i think in many cases they thought putin was bluffing to try to, you know, persuade the west to agree to not allow to join nato, for instance. and so while some of them started moving assets around

before february 20, 22 or in the run out in the weeks, running up to the full scale invasion as a kind of insurance policy in case he did invade, i think they were shocked and many were caught, and they did have huge assets of dollars worth of assets that were frozen as soon as they were sanctioned in the west. and that created, you know, issues for each of them. michael friedman happened to be you know he runs a he ran a private equity firm based in london and had huge assets in both london and europe that were frozen as soon he was sanctioned by the eu and then the uk then eventually took a little bit of a time by the us and he fought those sanctions with mixed success really. and the uk tried to go after him for sanctions, evasion and the case they raided his luxury mansion in north london and didn't have the right a search

warrant and so he was able fight that in court and got the uk authorities to pay him damages and he as soon as he won he soon left. finally the uk, after spending 18 months under sanctions in london, the other one roman abramovich, he owned one of england's premier football club soccer clubs, chelsea, and sold that club after he was sanctioned to try to save the club because at the club chelsea couldn't operate under under sanctions, effectively and. he had promised to put the proceeds into a foundation to benefit all the victims of the war, ukraine. and now that has turned into this whole saga. 2.3 billion your pounds of proceeds from that sale were supposed to go into a foundation and it's been held up by a disagreement between uk

authorities and foundation over how exactly to spend money. so the sanctions really created all these very unique issues involving huge assets in the west and i think that will continue for a number of years it will you'll have hundreds of millions of pounds worth of real estate for in the uk that that are that are frozen will remain frozen for the foreseeable future and will no doubt be the subject of legal battles that will drag on for years. yeah. i mean it's yeah a lot of court cases involve giving very large sums of money. obviously people in the biden administration, even before the invasion and certainly since then have been busy creating new organized and new ways of imposing sanctions. so i wonder if you could talk a little bit about the kind of the organizations that exist in the us and i guess in the uk as well

in terms of devising and enforce these sanctions and then maybe bring us up to date also with something that you mentioned, which is with the situation now that involves the frozen russian assets because there's been a lot of discussion and controversy about this both in the us and also in europe, particularly in the european union. so where do we stand with that now? right. so seen the uk in particular have to stand up a sanctions regime really quickly. and they changed actually legislation to bring to be able to impose sanctions more quickly. about as many, you know, under an urgent procedure they added and you almost tripled staff you know, to go through sanctions designations and so they you know really particularly because there was so much russian money in london they really did step up the sanctions attack they've also more recently set up a body

to impose to enforce trade restrictions. now, that's been the other front in the economic war, the export controls were imposed on russia to try to deny russia and its defense industry access western technology and semiconductors for its defense industry and that those restrictions were enforced by a us treasury. body called the office of asset control, as well as a commerce department body called the bureau of industry security, which was sort of a backwater for many years. but those two institutions have had to grow tremendously over the past two and a half years because their mandate has expanded dramatically with the with the frozen russian central bank assets. it's been a really fascinating fight because here we have.

$300 billion belonging to the russian government. these are not russian that are not private individuals. you know, you could argue that private individuals shouldn't have to pay for the action of a state, that the state their government, you know, waging war. but with the russian central bank. this is directly tied. these are russian sovereign assets tied to the government that invaded ukraine. and there's been this huge fight over whether or not they could go the next step just to mobilizing them and using the actual oil principle for there's a belief amongst lawyers pretty unified that russia is required to pay war reparations to ukraine. and so that money's not going back unless russia agrees to pay ukraine to rectify the damages that they've inflicted on the country. so why not just use money now and it's drag on for far longer than anyone thought because of division in europe in

particular, countries like hungary, but also germany and, france have been reluctant to go ahead and seize those assets as remember, most of them are actually in euros putin as, part of his preparation, i think long term for for were defending russia against any kind of economic warfare or had transitioned and shifted lot of russia's central bank assets away from dollars into euros. i think he betting that there would be division within europe as to whether or not to do anything with them. and i think in one respect, he was right. the europeans agreed to immobilize those assets, but they've been far more divided on whether or not to take the next step in sees them. so they came up with an alternative plan to raise a loan based on the interest payments on that pot of money and there's been problems with that. europe has moved ahead with by

the interest payments on those russian central bank reserves. the us was supposed to join, but has not yet because it wanted a long term insurance. is that that money in europe would remain frozen for several years. and there's been opposition, particularly from hungarian, from hungary against giving those long term assurances. so we're in a bit of a muddle at the moment on that. europe is pressing ahead. it's unclear what the us will do. yes, very complicated. and so when mcdonald opened its first restaurant in moscow in late soviet period, this was seen as a real sign that this is a beginning. and it was the soviet union then under gorbachev. but was moving closer to the west and and it was seen as a positive development, certainly in the west. and then, of course, following mcdonald's. but after the soviet union collapsed, the large number of

western companies, closed companies, whatever, open branches in in russia, it came as well. obviously, the swedish manufacturer now, you go into great and very interesting detail in your book about it's taken now for mcdonald's has had to leave. it's no longer mcdonald's is it stores for its restaurants but taken over they have a different name now and the same is true for a large number of western firms, but not all of them. so you talk a little bit about how difficult been for western firms to leave russia and what they've lost economically, but also why so many western firms are still operating in russia. yeah, it's such a fascinating story. the full scale invasion and created all these discussions amongst cis wheat's executives trying to figure out how do they respond to this? because they were also unprepared. and i do go into the mcdonald's example and detail because they

are such a symbol. and although their response in the first sort of ten days of the war was quite slow, they didn't really say anything about what they were going do while other companies were talking about to suspend their businesses in russia, they actually ended up being one of the smartest and fastest in terms of getting of russia and they quickly pivoted and negotiated, made it a deal to sell it first suspended the businesses closed all their restaurants and then negotiated a deal with one of its franchise partners to buy the business on quite strict terms in terms of what they were able to use for. so it was not connected to mcdonnell as they were able to protect their brand. so i kind of hold out mcdonald's as the example of how they many of these companies should have behaved. unfortunately, many, many other

western companies, their time perhaps thinking that the war would soon be over or they might get a better deal. and i think the longer many of these companies waited, the worse it got. and it became increasingly difficult. putin started narrowing the door, the exit doors for many of these companies companies. he required a 50% discount to a company's value, as well as. taxes paid to the russian government increased that. now. so it's even more costly to get out. and what you saw is, in a couple of cases, signed decrees allowing russia to take temporary control over some western assets. and he did that. and in a couple of instances with, for instance, carlsberg, the beer maker. which had been in the process of trying to negotiate a sale with a russian buyer. so you do have examples of

cronies around, putin scooping up western assets and putin handing them out to some of his inner circle order to keep them onside. but i do that the longer the western companies stayed, the riskier it became for them. they were continuing to pay taxes to the russian government. you know, the kiev school of economics has done some great research on this. i think in 2023 they were paying something like $6 billion in profit taxes to to the russian government. so it's not a good look for a western company that is concerned about their brand and what you was actually oil companies who cut ties more quickly because were seen to be more closely tied to russian government revenues. it was consumer companies that ended up staying arguing that well we're selling pet food or

diapers. so that's unconnected to the war. even though they were paying taxes to the russian government and in funding the defense spending. so i many, many have stayed have gotten out. just recently we the case of unilever, a big consumer company, finally deciding get out and finding a russian buyer who actually has bought up some other assets of russian of western companies, including heineken. i more will probably exit in the coming year because i think it's untenable to stay and i you know, it's it's not that they run the risk of having their assets seized eventually. i think that's that that's a real risk that they're running by staying. but unfortunately, a lot of the attention on this has shifted away as people, you know, stopped focusing so much on what was happening in ukraine.

so i think some of this has been lost with, you know, corporate pr departments saying, oh, we're leaving russia, but they didn't actually leave. so it's actually quite hard to determine who's there and what are they doing. yeah, i think the very important point so clearly the issue of sanctions remains controversial in the west. when people look at the impact of the sanctions, you point out in your book that, few people thought that by imposing these far reaching sanctions on russia that it would necessarily change putin's calculus, the war politically, but at least they thought it would really impact the russian economy in a very severe way and that putin would then have to make choices. interestingly, what we see today is a russia appears to have come back economically since the beginning of the war. economy is on a wartime footing. growth rates are high. this may be deceptive, but at least they they look high at the moment. and so the question is how effective do you think these

sanctions have been? the whole raft of them so far in having an on the russian economy, do you think in the couple of years, irrespective really of what's happening, the battlefield, we'll see much more severe of these sanctions. what how do you evaluate them now? right. so, i mean, in the first year, the russian economy shrink by 1.2% as a result of the sanctions. but of course, it recovered on the back of high oil prices prices that were high because of the very war that putin started. and i do think that that is the central challenge until you get at russia's revenues, it's going to be really hard to hit russian economy where it hurts. but i also think that the sanctions take time to build pressure. and what you see now is that pressure really starting to play out. inflation is remains very high in russia as partly as a result of the sanctions as well as putin's record on the you know

but but inflation is still at you know, roughly 9%, almost 9% interest rates are at 19% and are likely potentially go up further as a way of trying to cool the economy. and i think crucially, russia is facing payment problems a result of sanctions. it's there are delays in payments and particular particular problems with payments. china, you see in russia, the cost of borrowing and chinese want shoot up partly because washington very effectively threatened to impose sanctions foreign financial institutions last december or if they did business with sanctioned with the russia's military industrial complex. it then widened that threat in june. and that i think did have an effect. you can see it in terms of, you know, the delays in payments in

russia and the bloomberg's own economist has project said that the russian economy will slow to one 1.2% next year. so i think they're facing some real challenges to labor shortages. a massive one that they don't have enough manpower power really to continue this war, both in terms of staffing, of defense factories, as well as recruiting for the meat grinder in ukraine. and i think that that is going to pose challenges. you going forward for the russian economy, whether or not it will be enough and in time to have an effect, it is unclear. you know, i do think that the us could have threatened these so-called secondary sanctions on foreign financial institutions back in 2022 and that would have had a much chilling effect. it's unfortunate that threat only came, you know, relatively

late because you see just they didn't even have to do any do anything, just the mere threat of that. it has sent a chill through chinese banks, you know, worried being cut off from the us dollar because you look at chinese trade data, the amount of business they're doing with russia is relatively small in the greater scheme of things. they don't want to be cut off from the us dollar for the sake of this relatively business with russia. yes, china and russia have their no limits partnership. i think china, china's own economic interests lie elsewhere. so i think that the us could be putting a lot more pressure on the chinese banks to to to cut off that trade because china has really been keeping the economy going. well, unfortunately, we only have a couple of minutes left, but sort of to to close this up. what lessons do you think that the us and its western partners have learned from this two and a half year experiment in sanctioning russia and? do you think that they've put these lessons to good could use?

i think there have been a ton of lessons learned. i think they have learned the limits of using particularly against an economy that is such a major natural resources exporter and that, you know, they don't without being willing to shoulder the costs of cutting off russia's natural resources exports, it's going to be they're going to be pretty limited into how much they can actually respond and putin's economy. i think that is a lesson that is, you know, will will informing policy towards china. if china invades taiwan or imposes a blockade, i think it's going to be really hard to do to respond economically to china the way we have with russia, because china is such a major manufacturing power. it accounts for something a third of global manufacturing capacity.

so i think it's been a real humbling lesson. and how far you can go with this. but i also think that you know, certain lessons like the threat of secondary sanctions have been used far more effectively. if it had rolled out earlier and that the sort of tinkering with the global market like oil, which everyone thought would never work. i think it has had limited success and i think they have learned really hard lessons about how to go, about enforcing something like that in such a complicated market like oil trading. i think it's been also a humbling in terms of how to other allies that have not signed up to the sanctions regime to follow the us and europe on this. countries like the which has

been a major. you know, outflow it's been a major focus of russians trying to get out get money out of russia and evade the sanctions that keeping those sorts of allies onside is really important if you want to keep the pressure up on on russia and i think that's been very hard because russia is trying to this alliance with china. iran now, north korea and then work with global south and countries like the uae, try to counter what they see as american led dominance and try to push this vision of this multipolar world. and i think this is a grand game that is going to be playing out and a number of other spheres as the war in ukraine grinds on. certainly. and this is a subject for

another long discussion. stephanie baker, thank you very much for this conversation and to the viewers, please go out and buy and read. punishing. thanks so much for having me, angela. announcer: c-span is your unfiltered view of government. we are funded by these television companies and more, including wow. >> world has changed. today, a fast, reliable internet connection is something no one can live without, so wow is there for our customers with reliability, value, and choice. now more than ever it all starts with great internet. announcer: wow supports c-span as a public service along with these other television providers , giving you a front row seat to democracy. nouncer: on saturday 2024 democratic vice presidential

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