The terrible war by Putin against Ukraine raises many issues of which fossil fuel dependency of Europe on Russian oil and gas resources is just one. The emergence of wealth from these resources and how that wealth is used is of interest. Norway and Russia are two countries blessed with an abundance of fossil fuels that have created economic wealth and climate change crises. But the paths of these two countries vis-à-vis the use of the wealth generated from exploitation of those resources are substantially different. The path chosen by Russia potentially provides a way forward once the war is over and both Ukraine and Russia need to rebuild their economies.
Norway established an “oil fund . . . to ensure responsible and long-term management of revenue from Norway’s oil and gas resources, so that this wealth benefits both current and future generations.” This fund reports transparently on its activities and has a value as of the end of 2021 of approximately USD 1.4 trillion. That amount is just under USD 260,000 for each of the 5.4 million residents of Norway.
The Russian model is quite different. The Carnegie Council for Ethics in International Affairs in an article: How Did Russia’s Oligarchs Rise to Power provides access to an excerpt from a 2001 book by David Hoffman: The Oligarchs: Wealth and Power in Russia. In essence the oligarchs were able to amass huge amounts of wealth essentially through purchase of companies, many of which were based on fossil fuels, owned by the Russian government at very favourable prices. This transfer of wealth from the government to individuals gave away the value which would have been for the benefit of the Russian people to a small number of individuals.
It is difficult to determine the actual amount of wealth of the oligarchs but there have been a series of attempts to do so. In 2018 the National Bureau of Economic Research published study of the history of wealth in Russia produced by Thomas Piketty among others. In 2020 the Atlantic Council in an article “Defending the United States against Russian Dark Money,” the authors estimated that the value of “dark money” from Russia held outside of the country was about USD 1 trillion. The amounts can also be estimated from the real time billionaires list provided by Forbes Magazine. Regardless of the source, the Russian oligarch wealth would appear to be more than 70% of the wealth accumulated in the Norwegian fund – but that oligarch wealth is solely for the benefit of a few individuals rather than the Russian people from whom it was stolen.
The significant wealth of the oligarchs is now under scrutiny from those fighting the invasion of Ukraine by Putin and his army. It appears highly likely that the wealth of the oligarchs invested in assets outside of Russia, will be subject to sanctions and perhaps even confiscation. Chris Truax in The Bulwark suggest that this wealth could be the basis of a fund noy only to provide for support of the millions of refugees from the terrible Putin war underway but also a source of funding for the rebuilding of the destroyed Ukrainian infrastructure. And perhaps even for the necessary rebuilding of a Russian economy that is focused on meeting the needs of all the Russian people and not just the oligarchs.
