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Abramovich at risk of US sanctions as peace talks sputter out

Two months into the war, the prospect of a negotiated settlement appears as remote as ever, with Russia undertaking a new offensive in Ukraine’s south and east.
Image: Simon Dawson/Bloomberg

Senior US officials are renewing a push for sanctions against billionaire Roman Abramovich after the Russian tycoon’s recent trip to Kyiv to revive peace talks failed to achieve a breakthrough.

Abramovich didn’t meet with Ukrainian President Volodymyr Zelenskiy on that trip, speaking instead to his chief of staff, Andriy Yermak, according to three people familiar with the discussions who asked not to be identified because the talks were private. Zelenskiy is increasingly pessimistic about negotiations to end the war after seeing evidence of Russian atrocities in towns such as Bucha and Mariupol, two of the people said.

As it’s become clear the talks aren’t progressing, pressure has mounted from senior White House advisers to impose sanctions that were drawn up weeks ago, according to people familiar with the administration’s thinking.

A spokesperson for Abramovich didn’t respond to a request for comment, and there was no response from Yermak. White House officials didn’t immediately respond to a request for comment.

Two months into the war, the prospect of a negotiated settlement appears as remote as ever, with Russia undertaking a new offensive in Ukraine’s south and east.

The billionaire’s role as an unofficial mediator has been controversial from the start, with critics claiming Russia’s 10th-richest man was only seeking to protect his vast wealth from the penalties unleashed against other business leaders over President Vladimir Putin’s invasion of Ukraine.

On the day the war started, Abramovich accepted a request from Zelenskiy, passed through an intermediary, to get involved in negotiations to end the fighting, according to three people familiar with the situation. He threw himself into trying to broker a cease-fire, shuttling between Moscow, Kyiv, Belarus and Istanbul for talks behind the scenes, they said.

Early on, Abramovich asked Zelenskiy to request that Western nations not sanction him while he was trying to act as a mediator, the people said.

Despite opposition from some members of his administration, US President Joe Biden honoured Zelenskiy’s appeal and has not targeted the tycoon, according to the people familiar with the administration’s position.

Tabloid staple

Abramovich, 55, has long denied he has financial links to the Kremlin. At the same time, his role as an unofficial mediator undermines his assertion he’s not close to Putin and therefore shouldn’t be sanctioned.

Zelenskiy also appealed to British Prime Minister Boris Johnson, according to two people familiar with the matter. Abramovich is perhaps the most famous Russian billionaire in the UK and a tabloid staple thanks to his ownership of Chelsea Football Club. That club is now up for sale.

The UK sanctioned Abramovich on March 10, with the European Union following days later. The measures led to a court in the English Channel tax haven of Jersey freezing more than $7 billion of assets linked to him, equal to half his estimated wealth.

The UK has also targeted Abramovich’s close associates Eugene Shvidler, Eugene Tenenbaum, and David Davidovich with measures it said would freeze assets worth as much as £10 billion ($12.8 billion).

Abramovich “represents that side which backs a diplomatic resolution and end of the war” among people in Russia, Zelenskiy said in a recent interview with Ukrainian media in which he stated talks were at a dead-end. “Nobody can guarantee that it is not a game.”

In jeopardy

Mikhail Khodorkovsky, the exiled former Russian oil tycoon who has feuded with Abramovich since 2003, called the talks a ruse.

“Abramovich’s only goal was to get out from under sanctions,” said Khodorkovsky, who was once Russia’s richest man before Putin jailed him for a decade. “It didn’t work out.”

Immediately after the invasion, it was clear that Abramovich’s business empire was in jeopardy. Amid outrage over Russia’s war in Ukraine, Abramovich announced in early March he would sell Chelsea as the UK targeted other Russian businessmen with asset freezes and travel bans.

He is expected to decide on the preferred bidder for the football team soon, but the proceeds will be subject to UK sanction rules, with the funds frozen unless Abramovich is granted a license to access the money.

Shifting wealth

Abramovich, who holds Russian, Israeli and Portuguese passports, began to shift his wealth at the start of the war. The UK Foreign Office said Tenenbaum took control of Evrington Investments Ltd., an Abramovich-linked company, on the day of the invasion and that the company was taken over by his associate, Davidovich, in March.

He has moved two of his yachts to Turkish waters amid the prospect of asset seizures in Europe. He’s also been house hunting on Dubai’s exclusive Palm Jumeirah, people familiar with the matter said last month.

Early in the war, Abramovich met with Putin one-on-one and got his approval to pursue peace talks, two people familiar with the situation said.

Abramovich was optimistic initially about prospects for a peace deal, despite people with knowledge of the event saying he suffered a suspected poisoning after talks in Kyiv in early March. He and Ukrainian negotiators temporarily experienced peeling skin, red eyes, loss of eyesight and headaches, people close to him said.

Abramovich recovered and he continued the shuttle diplomacy. He made a rare public appearance at talks in Istanbul on March 29, when he was seen dressed in a navy suit and chatting with Russia’s negotiating team and Turkish President Recep Tayyip Erdogan.

Those were the last in-person meetings, and the delegations have now reverted to sporadic video conferences.

The Kremlin this week claimed its troops captured Mariupol, the largest city to fall in the war so far, amid what Russian military officials call the second phase of the war. Ukrainian forces there remain holed up in a steel factory with hundreds of civilians, refusing to surrender.

© 2022 Bloomberg

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