Reality bites Russia's 'minigarchs'

Russia's oligarchs have lost spectacular sums of money lately, and are being forced to confront a new reality.

The influence of Russia's oligarchs dwindles by the week. They have lost spectacular sums of money lately: more than £155bn "since the credit crunch came knocking on Russia's door", was Bloomberg's estimate in December. More billions have gone since then. But the "true casualties" of the credit crunch, as Celia Walden put it in The Daily Telegraph, will not be the oligarchs most of whom still have more than enough to get by on but the "minigarchs".

These are the rich Russians who have made fortunes of between £50m and £100m, not by wielding political influence, but simply by being sharp businessmen. Now, however, with the banks calling in old loans and less ready to make new ones, many of the minigarchs have either already been ruined or are facing ruin. London, viewed from Moscow, may once have seemed like a promised land to them, says the historian Yuri Felshtinsky. Now it looks more like paradise lost.

"Those Russian characters who burn money and buy properties without asking the price? They're gone. Russians have always lived in a dream land, always believing that they will live better lives. For a while, they were right. Never would they have thought that this miracle would disappear in a matter of weeks. Now they've been forced to confront a new reality."

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

'Beautiful people' push up prices at St Barts

Wondering vaguely at Christmas time where I might go for some winter sun, I considered the Caribbean island of St Barts. It's always sounded attractive and unspoilt. But a couple of phone calls changed my mind: the best hotels in St Barts, I discovered, cost about twice as much as the best hotels anywhere else. Reading The Independent last weekend, I realised why. What the paper calls this "exclusive, six-mile-long French-Caribbean haven" has suddenly become a magnet for the "beautiful people" and the "very rich". Beyonc Knowles and her husband Jay-Z have been partying there with Mariah Carey; Paul Allen's yacht, Octopus, at 414ft the sixth-largest private yacht in the world, was moored off the island for a party on 30 December, with guests said to include Steven Spielberg. Daniel Craig and his film producer fiancee Satsuki Mitchell have also been spending a week on the island.

Byrton Shirto of the luxury tour operator Abercrombie and Kent describes St Barts as having a cachet of exclusivity. "We rent out a villa at Eden Rock for £105,000 a week, which has a fully-equipped recording studio and a bathroom tiled with pure white gold. There's a golf putting room in the villa, and a croquet lawn outside." Not all the accommodation at Eden Rock is as expensive as that, but you get the idea. I think I'll forego the pleasure of rubbing shoulders with 'beautiful' people and settle for Barbados instead.

Tabloid money... the upsides of the recession

Do 'stressed' staff at an emergency call centre really need to be given Indian head massages at a cost of £10,000? asks Sue Carroll in the Daily Mirror. Chief constable Martin Richards of Lewes, Brighton and Haywards Heath says "'hard-working staff can be sitting in set positions at their desks for long periods with a variety of challenging issues". Right. A bit like the wartime RAF servicemen and women who spent 'now till never' shifts hunched over Morse code transmitters... Just one slight difference. When they got a headache, they took an aspirin."

It's hard to find upsides to the worst economic crisis in living memory, says The Sun. "But one hope is that it ends the obscene culture of Town Hall junkets funded by taxpayers: hiring yachts, flying to Australia to study coral, five-star Beijing Olympic jollies by councils with little or no interest in London 2012. As jobs and homes are lost, voters will have zero tolerance for anyone caught luxuriating at their expense." Actually, this is going to be a great year, says Jeremy Clarkson in The Sun. As "banks fold and town centres fill with dead dogs, we'll all stop worrying about things that really don't matter". When the country was rich, people in power had nothing much to do except feel guilty about all the money pouring in. To "make themselves feel better, they invented a problem with the climate and said no new roads could be built in case a family of snails got squashed". They worried about foxes and GM food, put a bus lane on the M4 and were so bored they "even decided to garnish the nation with a million billion windmills which they knew were utterly useless". It was "a load of frivolous nonsense and now it's all going to stop..."

If it costs £2m a year to fund Tony Blair's job as Middle East peace envoy, says Carole Malone in the News of the World, "why, when Israel has been bombing Gaza to hell and back, has he not uttered one single, solitary word"?