The aim of the new sanctions package against Russia is to hit President Putin and the oligarchs and to spare the population as much as possible. But if the Russian economy takes a hit, ordinary Russians will also feel the consequences, it is expected, while they already have little to spend.
How big is the gap in Russia between rich and poor? And how big is it compared to other superpowers?
Most Russians are not well off. Half of the population has an income of less than 8,000 euros per year and has an average of about 3,000 euros. This means that the poorest 50 percent of Russians own about 3 percent of the wealth. That is a remarkably small share, according to data from the researchers behind the World Inequality Database, including the well-known economist Thomas Piketty. By way of comparison: in the Netherlands, the least wealthy half of the inhabitants owns 9 percent of the wealth.
The richest 10 percent of Russians together own nearly three quarters of the wealth; the richest 1 percent even own almost half. Since the 1990s, the share of the 10 percent richest Russian inhabitants of the total property has increased by more than 70 percent.
According to the Boston Consultancy Group, even within 1 percent, there is an even richer upper class. The richest five hundred Russians – each of whom have more than 100 million dollars (more than 90 million euros) – together have more to spend than 99.8 percent of the population, according to reports from The Moscow Times about the investigation. Steel magnate Alexei Mordashov is, according to business magazine Forbesthe very richest, with a wealth of more than 25 billion euros.
Reliable data on the wealth of super-rich is hard to find. The revelations after the Panama, Pandora and Paradise Papers are probably just the tip of the iceberg. French economist Gabriel Zucman estimates that Russian oligarchs have deposited more than half of their wealth abroad, often in tax havens. That is a much larger proportion than among the American and European financial elite.
Many researchers and institutes agree that the gap between rich and poor has widened in Russia in recent years. After the protests in 2017 – 60 thousand Russians took to the streets to demonstrate against inequality and corruption – the share of the richest Russians has only grown. As in many other countries, those with the most wealth have suffered relatively little from the corona crisis.
The gap between rich and poor is now even wider than that in the United States. In the first years after the dissolution of the Soviet Union, income inequality in Russia was still a lot lower than in the US, in recent years the Russian empires have surpassed the Americans. The richest 1 percent of Russians own 48 percent of the wealth, their American counterparts 35 percent. Because the US economy is a lot bigger, that equates to a higher average asset. The wealthiest Americans own nearly 10 million euros per person, the 1 percent richest Russians about 2.5 million.
According to the report of the World Inequality Database, income inequality in Russia and the US is much higher than in many other major economies. In the European Union, the richest 1 percent own a quarter of the total wealth, in the Netherlands ‘only’ 17 percent. China’s rich are somewhere in between, with just over 30 percent of wealth held by the richest 1 percent.