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Vladimir Putin has asked oligarchs to donate to Russia’s budget in a bid to stabilise the country’s finances as he presses on with his invasion of Ukraine, according to three people familiar with the matter.
The comments by Russia’s president to a large group of prominent businessmen on Thursday made it clear that he is intent on pursuing the war to a victorious end despite the growing strains on the Kremlin’s budget.
Russia will fight on, Putin said, until it captures the remaining areas of Ukraine’s eastern Donbas region not under its control, according to two of the people. He said the decision was necessary because Ukraine had refused to withdraw unilaterally from the Donbas during recent rounds of talks brokered by the US, the people added.
The Russian leader had supported what he viewed as a compromise proposal to turn the Donbas into a “demilitarised zone” or US-backed “special economic zone”, but dropped the idea after Ukraine made it clear that surrendering the region was a red line, one of the people said.
Putin’s request to the oligarchs was the latest of several attempts since the full-scale invasion of Ukraine at shaking down Russian businesses to help fund the Kremlin’s lavish spending on defence — and the first time Putin has asked the tycoons directly himself.
In January the Kremlin increased VAT by 2 percentage points to 22 per cent in a bid to raise an extra Rbs600bn ($7.4bn) over three years from small and medium businesses. Russia also raised Rbs320bn through a one-off 10 per cent windfall tax on some large companies in 2023.
Economy minister Maxim Reshetnikov said separately on Thursday that Russia was considering another windfall tax this year if the rouble continues to weaken.
The Kremlin’s defence bill soared 42 per cent to hit Rbs13.1tn last year.
Russian independent news outlet The Bell first reported Putin’s remarks. Dmitry Peskov, Putin’s spokesman, did not immediately respond to a request for comment.
Putin’s personal outreach to Russia’s oligarchs makes it all but inconceivable they would refuse the request. The country’s business elite have rallied around the president despite misgivings over the war and its effect on the country’s economy.
At least two of the businessmen told Putin they would be happy to make voluntary contributions to fund the budget, the people familiar with the matter said.
Suleiman Kerimov, an oligarch reportedly linked to the controversial recent takeover of leading online retailer Wildberries, said he was prepared to make a Rbs100bn contribution, they said.
Metals magnate Oleg Deripaska also agreed to contribute when asked, they added. Spokespeople for Kerimov and Deripaska did not immediately reply to requests for comment.
Brutal drone warfare on the frontline has slowed Russia’s advance in the Donbas — a bulwark of Kyiv’s defence against Putin’s invading forces since 2014 — and led to a sharp rise in casualties among the country’s forces.
The latest round of peace talks stalled in January amid Ukraine’s defiance of Russia’s sweeping territorial demands and Putin’s insistence on securing the objectives he set out when he launched the war in February 2022.
Russia’s budget deficit for January and February swelled to more than 90 per cent of the figure projected for the whole year as US sanctions forced Moscow to sell its oil at deep discounts and scared away buyers.
Moscow has been given a short-term boost of up to $150mn a day in extra oil revenues after the US and Israel launched their war against Iran nearly a month ago.
Russia said on Thursday that it was no longer selling Urals, its main crude blend, at a discount to Brent, the global benchmark. The US also relaxed sanctions against Russia’s oil exports earlier this month.
The finance ministry had planned to tighten rules on funnelling oil revenues above a set price threshold into the depleted National Wealth Fund before the outbreak of the Iran war.
But Putin told the oligarchs they should use the windfall to shore up their balance sheets, according to Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs lobby group.
Shokhin told Russian media that Putin had said he hoped the Iran war would end in “three to four weeks”. Putin warned Russia’s finance ministry and business community “not to count on this windfall to last all that long”, Shokhin added.