Getty Images

THE BELL WEEKLY: The richest Russian gives an exemplary statement about the mood of the oligarchs

The Bell

This week’s big story was Andrei Melnichenko; the richest man in Russia spoke in detail about the war and sanctions in an interview with FT. Melnichenko’s interview must be bookmarked as an exemplary statement about the mood among leading Russian business figures. It is far more representative than the recent belated but direct anti-war statement from the Yandex founder Arkady Volozh. Melnichenko’s public statements focus mostly on his resentment towards the sanctions imposed upon him, mixed with complaints about Western leaders who failed to prevent the war. This summer, Melnichenko's business in Russia saw the first sign that it might be at risk of expropriation.

Who is Melnichenko, and why does his interview matter?

Andrei Melnichenko is 51, making him eight years younger than the average billionaire in the top 50 on Forbes Russia List. His story is typical of the wave of self-made Russian billionaires from the 1990s: a talented math student who won a place at one of the top Soviet colleges to study physics. Then in 1990, when the U.S.S.R. started to collapse, he moved into business.

Melnichenko became a successful businessman. But when major Soviet enterprises were controversially privatized during the 1990s, his company was not big enough to be a player. It wasn’t until the 1998 crisis, which his MDM bank survived without losses, that Melnichenko was able to start buying up manufacturing assets. By the mid 2000s, he had assembled three large holdings: Eurochem, one of the world’s biggest producers of mineral fertilizer; coal giant SUEK; and pipe producer operator TMK. Melnichenko left TMK back in 2004, but Eurochem and SUEK remain the foundation of his fortune (in 2022 Melnichenko withdrew as a beneficiary of a trust that controls stakes in both companies in favor of his wife Alexandra).

In 2023, Forbes Russia List ranked Melnichenko as the richest Russian (and 58th worldwide), with a net worth of $25 billion. Over the past year, his wealth more than doubled, primarily due to the rise in fertilizer prices driven by the war.

On the afternoon of Feb. 24, a few hours after Russia launched its invasion of Ukraine, Melnichenko was present at a meeting between President Vladimir Putin andleading businessmen and executives. Even then, it was clear that this meeting was intended to form a relationship between the president and big business. That was also how the West saw it: everyone present automatically found themselves on the U.S. and EU sanctions lists.

Melnichenko also found himself on the list, even though neither Eurochem nor SUEK have been sanctioned. Immediately after sanctions were imposed, the billionaire quit his posts at his companies and transferred the trust that formed part of his shareholding into the name of his wife Alexandra. As a result, in April 2022, she was also sanctioned by the E.U., much to Melnichenko’s indignation. His wife is a Serbian former singer and model, whose only ties to Russia are through her marriage.

To make matters worse, Switzerland, where the couple have lived for the past 15 years, imposed similar sanctions against them. Since then, Melnichenko has tried to challenge these sanctions in various European courts. He has also given numerous interviews to European media, despite a previous reluctance to speak with journalists. In every interview, Melnichenko describes himself as “self-made” and insists that he earned his own wealth without help from the government. He points out that he was not part of the 1990s gold rush, nor is a close acquaintance of Putin who he has never met in a group of fewer than 15 people. Additionally, he has not lived in Russia since the mid-2000s. There is no evidence that connections with the state played a significant role in Melnichenko’s wealth, although it would be impossible to build such sizeable businesses in Russia without a good relationship with the Kremlin.

Stopping short of condemning Russian war crimes

Melnichenko’s FT interview is possibly the best recent illustration of the public attitude of most leading Russian businessmen to the war. Typically, the most “contentious” statements they utter are platitudes like “war is a tragedy” or “peace is really important.” These phrases could be mouthed by representatives of all sides, including Putin himself.

For 20 years, Melnichenko has lived in the west, and he dreams of escaping sanctions. Fellow billionaire Oleg Tinkov told The Bell that Melnichenko basically “hates Putin”(which Melnichenko angrily denies). He is trying to go further than other billionaires, but cannot go too far. He has already made some attempts: in the fall of 2022, when pro-Ukrainian activists protested against Melnichenko’s speech at the Dubai Climate Summit he said that he “completely 100% understands these people.” “What’s so surprising?” he added. “That there are people who are deeply concerned about what’s happening in Ukraine and want to make their opinion known?”

The most striking moment in the FT interview is when Melnichenko says that Russia has committed war crimes in Ukraine. However, after the interview he reached out to the newspaper to clarify that his answer “referred to specific scenes of attacks on civilian targets which are, in his view, a crime ... There are definitely war crimes from both sides. This happens in any war. It’s natural. It doesn’t matter who started it.”

Melnichenko declines to speak out against either Russian aggression, or Putin’s policies. His other comments paint a picture that would appeal to Kremlin activists. They include all the key elements of what can be considered Russian propaganda for intelligent people:

  • That we do not, and cannot, know the whole truth: “I wasn’t on the ground, what can I say? We are getting distracted here.”
  • That all sides are responsible for the war: “This was a global mistake. The people who tried to stop it didn’t do their job.” However, he does not mention Putin on the list of those responsible, despite naming Zelensky and various western leaders. Melnichenko feels no personal responsibility.
  • Melnichenko believes that sanctions pose a greater danger than the war itself. He calls them a war crime, pointing out that sanctions are pushing up global food prices and threatening the developing world with famine.  “Don’t hide behind the term collateral damage — it’s a crime. It doesn’t matter why you did it,” he said. And this is clearly a sincere conviction. In a previous interview Melnichenko claimed that individual sanctions against him threaten the lives of 280 million people, despite his fertilizer company Eurochem not falling under sanctions.

An important detail

Melnichenko never had any close ties or serious problems with the Russian state. However, this summer, for the first time, conflicts began to emerge. In July the prosecutor general filed a suit against Melnichenko demanding the nationalization of one of his assets, the energy company Sibeko. Melnichenko acquired this Siberian company in early 2018 from a former minister, businessman Mikhail Abyzov, with whom he attended Moscow State University. Within a year, Abyzov was jailed for fraud and remains behind bars. It is believed that Abyzov was arrested as part of an attack on former president Dmitry Medvedev. Now the Prosecutor General’s Office believes there was corruption in Abyzov’s deal with Melnichenko.

SIBEKO is not, by Melnichenko’s standards, a major asset. In 2018 he paid 32.5 billion rubles for the company. At the time, that was about $500 million, today it would be $350. But the very fact that the authorities are asking the courts to nationalize his company is a bad sign for all of Melnichenko’s businesses.

Throughout Putin’s 23-year reign there has been a consensus in relations between the Kremlin and the business community. Nobody prevented businessmen from earning billions even without close ties to the authorities, but they had to follow a clear set of rules: don’t get involved in politics, don’t cross paths with Putin’s associates, pay your taxes and fund social projects. So far, this is no visible sign that this consensus is changing. However, if Melnichenko’s problems in Russia continue, we may have our first sign of change.

Why the world should care

For 18 months, only two people on Forbes Russia List have spoken out against the war. Melnichenko’s story highlights once again why most businessmen won’t do it: they dream of escaping sanctions. But nobody is promising them any reprieve and their prospects in the west are uncertain. At the same time, anybody who speaks out against the war will almost certainly lose control of any businesses that are operating and making money in Russia.

Dear readers,

The Bell is now listed as “a foreign agent” in Russia: our website is blocked, we can no longer raise money through advertising, and our business model is in ruins. Journalists in Russia face greater risks than ever before. Repressive new laws threaten up to 15 years in jail for objective reporting.

However, we are not about to give up. This newsletter is our newest project. It presents an in-depth analysis of the Russian economy, which has survived the first year of the war but is becoming ever more secretive. We will try and shed some light on what’s going on. Each edition will tackle a part of the big question: how long can the Russian economy endure under sanctions and when will the Kremlin run out of money for its war?

We don’t want to have to charge a fee for our newsletters. However, if The Bell is to continue its work, we need your support.

You can make a donation here. It will help our journalists continue investigating stories, breaking news and publishing newsletters.

Support The Bell!

The Bell's Newsletter

An inside look at the Russian economy and politics. Exclusively in your inbox every week.