Tue. Jun 6th, 2023
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As hundreds of Ukrainians faced annihilation in an encircled steel plant, Russian oligarch Roman Abramovich sent word last month that he had achieved a possible breakthrough.

The billionaire and would-be peace broker told officials in Ukraine that he had met with Russian President Vladimir Putin in mid-April and “reached an understanding” that would allow wounded soldiers and civilians — children among them — to leave the besieged mill in Mariupol, according to people with knowledge of the discussions.

But when Ukrainian officials sought details on how to proceed, they were met by silence from Moscow. Russia continued bombing the Azovstal plant without any letup until the United Nations and the International Committee of the Red Cross brokered a separate commitment from Putin to allow some civilians to be evacuated this week, officials said. Abramovich was not involved in those discussions, officials said, and offered no explanation for the demise of his purported deal.

Abramovich, who built a fortune in Russian oil and owns England’s Chelsea soccer club, is now entering his third month serving as mediator between the Kremlin and Kyiv.

So far, that arrangement has worked out better for Abramovich than the people of Ukraine, according to U.S. officials and experts. Peace talks have foundered amid ongoing attacks and mounting evidence of Russian atrocities. And yet Abramovich’s involvement has shielded him from the barrage of sanctions the United States has unleashed on other Russian elites, U.S. officials said.

“It’s a kind of useful fiction for Abramovich to keep alive,” said Gavin Wilde, who served as director for Russia on the National Security Council staff until 2019. “To the extent that his negotiation efforts have staved off U.S. sanctions, I’d say they’ve definitely been more beneficial to him — and perhaps even Moscow — than to Ukraine.”

Associates of Abramovich insist that his motives are genuine. “It’s human nature to think somebody is doing something not because he’s a good person but because he wants something,” said a business colleague who spoke on the condition of anonymity, citing the sensitivity of Abramovich’s role. “The people who matter treasure Roman.”

Ukrainian officials described their interactions with him in more measured terms, saying they have been careful not to place too much trust in an oligarch with such long-standing ties to the Kremlin, while acknowledging that he is the only interlocutor who appears to have a direct line to Putin.

“This is the only channel at this stage that is practically working,” one official said, adding that while Abramovich has been a reliable conduit to the Russian leader, “the decision-making is on Putin solely.”

A spokeswoman for Abramovich did not respond to requests for comment.

While recasting himself as a back-channel diplomat, Abramovich has gone further than other Russian oligarchs in exploiting political connections and calling in favors to protect a financial empire that has sustained significant damage in the fallout from the war. It’s a gamble that risks ultimately backfiring by exposing his connections with the Russian president — ties that he had previously strongly denied.

Abramovich has enlisted support from unlikely sources, including Ukrainian President Volodymyr Zelensky, who pressed both President Biden and British Prime Minister Boris Johnson to refrain from imposing sanctions on Abramovich while he served as a channel to Putin, according to U.S. officials and others with knowledge of the matter.

Biden agreed to grant Abramovich a reprieve after a Zelensky request that seemed almost inadvertent, officials said. In March, Biden used a call with Zelensky to run through measures the administration planned to announce to support Ukraine, including sanctions targeting a list of Russians. Only when Zelensky heard Abramovich’s name did he ask that the administration hold off in hopes that the oligarch could prove useful in talks with the Kremlin, officials said. Zelensky’s intervention was first reported by the Wall Street Journal.

An associate of Abramovich said that Zelensky also asked Johnson to refrain from imposing sanctions on the oligarch, but that Abramovich’s higher profile in Britain and political pressure on Johnson made such a move untenable. A spokesman for Johnson declined to comment. Abramovich was targeted with sanctions by Britain in March.

By then, Abramovich, 55, had orchestrated a separate appeal to the U.S. government involving prominent Israeli institutions that had taken or been promised hundreds of millions of dollars in donations from him in recent years. Among them was Yad Vashem, Israel’s official Holocaust memorial, where the chairman’s decision to advocate for Abramovich triggered a backlash within the organization.

The Abramovich lobbying effort also reached into the chambers of the British Parliament. In the early days of the war, Labour lawmakers, including Chris Bryant, delivered scathing speeches in the House of Commons calling for Abramovich to be sanctioned and stripped of the Chelsea team.

Bryant said in an interview that he then received texts and calls from Conservative Party colleagues urging him to back off and citing Abramovich’s role in peace talks. Bryant declined to identify those members but shared the contents of their messages.

One member said he had been contacted by a representative of Zelensky’s government who asked for help getting Bryant “to stop saying anything about Abramovich in public. We are in the midst of sensitive negotiations with him. … Chris’s talk does damage to this.”

It was clear, Bryant said, that Abramovich and his allies “were trying to do everything they could” to keep him out of the sanctions’ crosshairs. “I think they were being played.”

At the same time, Abramovich was making overt appeals to head off British sanctions, some of which backfired.

Two days after the invasion, he handed control of his Chelsea soccer team to the club charity, apparently hoping that would end calls for him to be stripped of ownership. When that didn’t work, he pressed ahead with plans to sell the club and pledged to donate net proceeds to war victims.

The gesture angered British officials when it became clear that Abramovich intended to give money not only to families in Ukraine but ones in Russia as well. “To me, that was not supporting the Ukrainians,” said Kevin Hollinrake, a Conservative member of Parliament. “He hasn’t condemned Putin. He hasn’t condemned the invasion. He’s quite clearly on Putin’s side in my view.”

The results of Abramovich’s machinations have been mixed. The U.S. reprieve has given him two months to sell holdings, stockpile cash and take other steps to safeguard his fortune.

British measures, however, have already taken a toll. He was ultimately forced to put his prized Chelsea team up for sale under terms imposed by the British government that are designed to prevent him from profiting and instead use proceeds to help Ukraine.

Abramovich transferred control of investments in British-listed companies and offshore investment firms to longtime associates, according to public filings, only to see those individuals themselves become targets of British sanctions. Several of his yachts and private jets have been moved to Turkey and other jurisdictions out of reach of Western authorities, according to media reports and websites that track the movement of vessels.

Other assets, including a 15-bedroom mansion near Kensington Palace, have been frozen, meaning that he can’t sell the properties. The island of Jersey, a British Crown dependency that has long served as a tax shelter for the wealthy, froze an estimated $7 billion in Abramovich accounts on April 12.

The European Union has taken similar steps, citing Abramovich’s “long and close ties to Vladimir Putin” and “privileged access to the president.” France seized his $120 million estate in Cap d’Antibes, whose previous occupants included the Duke of Windsor after his 1936 abdication of the British throne.

U.S. hunt for Russian oligarchs’ huge fortunes faces barriers offshore

Combined, these measures have crumpled a fortune once estimated at $14.5 billion. But experts said that U.S. sanctions could cause even greater damage because of the pervasive role of the U.S. dollar in global transactions.

Abramovich’s U.S. holdings are estimated to be worth billions. He has a 29 percent stake in a steel conglomerate, Evraz, that operates six U.S. manufacturing sites. He has invested vast sums in U.S. hedge and private equity funds, according to documents and media reports, and owns luxury properties including a 14,000-square-foot home near Aspen, Colo.

U.S. sanctions would not only freeze these assets, but effectively deprive him of the ability to carry out transactions in American currency.

An Israeli appeal against sanctions

Abramovich began maneuvering to avoid that possibility even before Russia invaded Ukraine, tapping connections he’d been forging in Israel since 2014, soon after Russia’s annexation of Crimea.

In early February, as the Biden administration began making clear that it was preparing to unleash punitive economic measures if Russia invaded Ukraine, seven leaders of prominent Israeli institutions sent a letter to U.S. Ambassador to Israel Thomas Nides asking for Abramovich — who is Jewish and has Israeli citizenship — to be spared.

“We would strongly urge you to consider Roman Abramovich’s standing and importance for the community and Israel,” said the letter, dated Feb. 6. “We would caution that any action against him would not only be unfair, but also have a negative impact on the Jewish world and Israel.”

Among the signatories were the president of Tel Aviv University; the director of the Sheba Medical Center, Israel’s largest hospital; the chief rabbi of Israel; the general director of the City of David Foundation, a far-right archaeological and development group active in East Jerusalem; and Dani Dayan, the chairman of Yad Vashem, the Israeli Holocaust memorial.

Even as he signed that letter, Dayan was finalizing an agreement with Abramovich to donate at least $10 million to the organization, according to Yad Vashem officials with knowledge of the matter.

Yad Vashem researchers and officials provided conflicting accounts about whether there was any link between the donation and the testimonial. Two members of the organization said they were told that the donation was conditioned on Yad Vashem’s willingness to endorse the letter and help Abramovich’s case against sanctions.

“Abramovich said that because he donated, Yad Vashem should do this. It was quite clear that this was a condition,” said Yehuda Bauer, a 96-year-old Israeli historian who serves as academic adviser to the organization. In an interview, Bauer said he warned Dayan that signing the letter would be “catastrophic,” placing the deliberately apolitical establishment in the middle of a global diplomatic storm.

“There had never before been a donor who tried to use Yad Vashem for his personal or political uses,” Bauer said.

Dayan denied that Abramovich’s contribution was contingent on the letter. “Whoever claims otherwise doesn’t know the facts,” he said.

He said he signed the letter out of concern that sanctions would deprive Yad Vashem of that donation and future contributions from one of its most generous donors. Yad Vashem’s fundraising had dipped dramatically during the coronavirus pandemic, Dayan said, and Abramovich’s promised money would have been enough to double its research budget.

Even when Abramovich came under sanction by Britain on March 10, Yad Vashem hesitated to cut ties. Later that day, the organization issued a statement saying that it was suspending its “strategic partnership” with Abramovich. But Dayan had initially refused, officials said, and briefly considered resigning.

The wording of the statement caused further internal friction. Bauer said he feared that describing the break with Abramovich as a suspension left open the possibility of accepting the oligarch’s money in the future. “Suspension means you come back at some point,” he said. Bauer said he threatened to go public with his concerns before Dayan assured him that there would be a “complete rupture.”

Dayan said the decision to defend Abramovich amid Russian aggression toward Ukraine had harmed Yad Vashem’s reputation. “Was it a mistake to do that? Yes. Did it damage Yad Vashem? Yes, and that’s the reason I regret it,” he said.

Yad Vashem officials said the organization has not received, and will not accept, any portion of Abramovich’s donation. Other organizations represented on the letter have not made a similar commitment.

A senior official at the U.S. Embassy said it did not respond to the letter. Other U.S. officials said the letter was not forwarded to Washington, and never factored into the decision on whether to impose sanctions on Abramovich.

Cracks emerge in Russian elite as tycoons start to bemoan invasion

In recent years, Israel has become an important refuge for Abramovich.

Born to Jewish parents and orphaned at age 3, Abramovich obtained Israeli citizenship in 2018 when his welcome in Britain was threatened by the country’s response to the alleged Russian poisoning of a former military intelligence officer and his daughter in Salisbury, England. In addition to sanctions against Russia and expulsions of suspected Russian operatives, the British government held up Abramovich’s application to extend his visa. It was a remarkable rebuke for an oligarch who had been welcomed, if not celebrated, in London since buying the Chelsea soccer team in 2003 and transforming it into a champion.

In Israel, Abramovich bought a home in the coastal city of Herzliya for $70 million, which at the time was the most ever spent on an Israeli residence. He also purchased the Varsano Hotel for about $30 million from Yaron Varsano, the husband of “Wonder Woman” actress Gal Gadot, in the trendy Neve Tzedek neighborhood of Tel Aviv. A project to double the size of the hotel has been halted since mid-March, when sanctions were imposed on Abramovich.

Israeli Foreign Minister Yair Lapid has vowed that Israel will “not be a route to bypass sanctions on Russia imposed by the United States or other Western countries.” In a private meeting with government ministers, he warned cabinet members not to answer calls from oligarchs seeking favors, according to officials with knowledge of the matter. In that same meeting, Lapid “expressed his displeasure” with the letter that had been sent to the U.S. ambassador.

‘Very down-to-earth, very humble’

Abramovich is among an older guard of Russian oligarchs who made their initial fortunes during the presidency of Boris Yeltsin, when Russian oil reserves and other resources were auctioned off by the state in transactions that were often rigged or marked by alleged corruption. Abramovich, with the assistance of an associate with close ties to Yeltsin, paid about $100 million in 1995 for a controlling stake in an oil business he sold a decade later to Kremlin-controlled Gazprom for $13 billion.

Abramovich was not initially a member of Putin’s inner circle, but ingratiated himself with the Russian leader by showing deference that other oligarchs failed to demonstrate. Abramovich spent years, for example, serving as governor of a remote Siberian province, an assignment that Russia experts regarded as a loyalty test imposed by Putin.

Three dozen tycoons met Putin on invasion day. Most had moved money abroad.

Abramovich wasn’t necessarily Ukraine’s first choice as a conduit to the Kremlin, according to officials involved in negotiations. Two other oligarchs, including Mikhail Fridman, a banking and oil billionaire who was born in Ukraine, had also been approached but declined, officials said.

On Feb. 24, as the invasion began, Abramovich was approached by a Ukrainian movie and television producer who had worked with Zelensky during his career as an actor, and had extensive contacts in Israel and Russia, according to people involved. Abramovich agreed to take part in peace talks after securing approval from Putin.

Ukrainian officials with knowledge of the negotiations described Abramovich as a mild-mannered intermediary who is more inclined than members of the official Russian delegation to listen to Ukrainian positions.

Abramovich “is very down-to-earth, very humble. He doesn’t come in and recite the propaganda of the Kremlin,” one official said. While shuttling back and forth to Kyiv, Abramovich has seen some of the carnage inflicted by Russian forces and put himself in physical peril. In March, officials said, he received medical treatment after he and other negotiators were exposed to a suspected poison.

Abramovich has worked to negotiate evacuation corridors from bomb-damaged cities and swaps of captured soldiers, according to officials and associates. Whether his efforts succeeded is not clear. Ukraine has repeatedly accused Russia of ignoring or violating supposed evacuation agreements and cease-fires.

The failure of the talks to identify any path toward ending the war, however, raises risks for Abramovich. Zelensky recently warned that Ukraine would withdraw from negotiations entirely if people in Mariupol are harmed or if Russia holds referendums to absorb occupied territories. “Are we there yet? No,” said Rustem Umerov, a member of Ukraine’s parliament involved in negotiations with Russia. “But we’re close.”

On Tuesday, Russia resumed its assault on the Mariupol steel plant. With no discernible progress toward peace, and Biden accusing Russian forces of war crimes, the rationale for shielding Abramovich from sanctions appears to be eroding.

“There’s a shared desperation between him and Kyiv to avoid the worst possible outcomes,” said Wilde, the former staffer at the U.S. National Security Council. “But, ironically, his personal case against sanctions is also his biggest limiting factor: He simply doesn’t have much sway in Moscow.”

Catherine Belton contributed to this report.