Russia's second most powerful man becomes the target of new US sanctions

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Audio Transcript:

Marco Werman: I'm Marco Werman and this is The World, a co-production of the BBC World Service, PRI and WGBH Boston. If you wanted to know who the richest Russian tycoons are these days, you could do some research. Maybe there's a who's-who of Russian business. Or you could just look at the list of those targeted by the latest round of US-sponsored sanctions on Russia. That list includes some of the richest businessmen in President Vladimir Putin's inner circle, like Igor Sechin, for example. Putin reportedly considers the oil tycoon one of his most trusted advisors. Jason Corcoran is in Moscow for Bloomberg News. Tell us, first of all, how this Russian oil baron, Igor Sechin, got into such a close relationship with Putin.

Jason Corcoran: Igor Sechin has known Putin since the 1990's when Vladimir Putin was the Deputy Mayor of St. Petersberg and he worked in his administration. When Putin was appointed president, he took Sechin to Moscow where he became his energy czar. He's known inside Russia as Darth Vader. He doesn't wave a light saber, he doesn't have a mask but he has a certain intimidating aura about him and he's regarded by many to be the second most powerful man in Russia. He's very much an old school communist with capitalist values.

Werman: Previous sanctions were kind of shrugged off by Russians who had been targeted. By going now after someone like Sechin, what's the message the US is trying to send?

Corcoran: I think by going after Sechin it's a real shot across the bows. Previously, they went after business associates of Putin's from St. Petersberg who were very rich and had very large assets in Russia and overseas but not people who had day-to-day influence on Putin and the decision making. By going after Sechin, it shows that other people are in the crosshairs, like Alexey Miller, the head of Gazprom and may be Andrey Kostin, the head of VTB, the second largest bank in Russia.

Werman: When these people start to feel the pinch, what are they going to feel?

Corcoran: There's an asset freeze on any assets they have within the US and also they'll be prevented from traveling to the US. Many of Putin's associates would have had condos in Miami.

Werman: So they have condominiums in Miami Beach. Does that mean they won't be able to travel there, they won't be able to rent them to anybody else, they won't be able to take any profits from these properties?

Corcoran: Pretty much. I think these personal sanctions are very inconvenient for Sechin because if he wants to sell a bond or sell equity or talk to investors, he can't go to New York any more. But for these sanctions to really hurt, they have to be sector-driven. If you create a blockade on the sell of Russian gas or oil to Germany, that will hurt Russian exports but at the same time it will also cause gasoline queues in Frankfurt and Munich because the Germans rely on the importation of Russian energy for their own energy needs.

Werman: What about American companies that are doing business with Russia? Will they also take a hit?

Corcoran: There is a lot of speculation at the moment with large companies within the States, like Exxon-Mobil which has a joint venture with Rosneft to explore in the Arctic Circle. This venture might be under jeopardy. There's a lot of spotlight today on Morgan Stanley. Morgan Stanley is trying to sell a commodities brokerage unit and the regulators in the States and the FCC are putting this deal under a lot of spotlight and it's been in the works for quite some time so there might be some difficulty in closing this particular deal.

Werman: If Igor Sechin and some of these other Russian elite are so rich, doesn't that mean they, like many of the 1% around the globe, have cash reserves offshore that they'll just dip into? Will these sanctions really hurt rich Russians?

Corcoran: There's been a lot of rumor that a lot of Russian wealth has been moving away from the States and into new offshore ventures. Not necessarily Switzerland or these traditional havens but to places like Singapore and Dubai, the Middle East and also places like Latvia and Malta.

Werman: On that subject, if men like Igor Sechin and Alexey Miller and Andrey Kostin are the most powerful civilians in Russia after the president and they control oil, can they actually dictate policy to Putin on Ukraine, say if they wanted to tighten the tap or loosen the tap to Ukraine and Europe?

Corcoran: I think they would play a very strong role. In the 1990's, you had the oligarchs who were very close to Yeltsin, they dictated his policy. Today, it's not so much these traditional oligarchs but these inner circles. I think they will be leaning on him but he's not as weak and vulnerable as Yeltsin was, certainly not.

Werman: Jason Corcoran with Bloomberg News, speaking with us from Moscow. Thank very much.

Corcoran: My pleasure.

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