In an interview to the Financial Times in 2007, Deripaska said that should the Russian state need him to give Rusal up, he would do so because he did not separate himself from the state and had no other interests (Financial Times, 13.07.2007). What at that time sounded like a courtesy nod to the Kremlin, now looks more like an action plan.

The U.S. Treasury called Deripaska on that interview statement in its announcement about the new round of sanctions in April 2018 (U.S. Department of the Treasury, 06.04.2018), which has been the most harmful to Russian businessmen with ties to the Kremlin.

At the end of April 2018, Deripaska announced that he would significantly reduce his role in Rusal and its holding company EN+ (Aluminium Insider, 01.05.2018). Meanwhile, the government is reportedly considering the “temporary nationalisation” of Rusal to help the company survive the turmoil (Reuters, 19.04.2018).

Deripaska’s long-time business rival (and co-owner of Rusal and Renova), Viktor Vekselberg, is not in a better place.

In a meeting with Prime Minister Medvedev, Vekselberg reportedly complained about the impact of the sanctions, including frozen assets, increased loan repayment costs, and having to give up controlling stakes in foreign companies (The Bell, 18.04.2018).

The two rivals have become companions in misfortune, and the biggest victims of the latest round of U.S Sanctions. The way these two businessmen, with similar modi operandi but different support networks, deal with the crisis illustrates the nature of the business-state relationship in Putin's Russia.

Key Points

  • Both Deripaska and Vekselberg were included in the new U.S. sanctions list due to their closeness to the ruling elite and their role as the Kremlin’s commercial diplomacy envoys, which is a common modus operandi of oligarchs listed on the Russian Forbes list.
    You can read more examples of this trend on the Shadow Governance Intel platform (VTB Bank - Political Actor & Tool for Commercial Diplomacy and Russia Outlook 2018).
  • These two oligarchs have relied on their loyalty to the regime and connections to Russia’s political and societal elites for the successful continuation of business operations.
  • Their commercial survival will largely depend on whether the Kremlin will pay for their loyalty. The state’s response will send an important signal to other business elites who employ similar strategies and, therefore, should be monitored closely.