'...in Moscow alone there are 25 thousand Jewish millionaires and that is where most of the wealth in Russia is concentrated'
The rise of Jewish money from Russia: 30 billion dollars are looking for the way to Israel
The wealthy Russian Jews are panicking, many of them have already left on private planes to homes abroad or to yachts. These are not oligarchs but wealthy businessmen whose liquid assets amount to tens of millions of dollars. In the meantime, money can only be taken out of Russia if it is proven that it will be used for a deal that has already been signed. Banks in Israel do not accept Now Russian money
By Sophie Shulman
02.03.22
Yesterday Eli Gravitz came home from work at three in the morning. It was the same the day before, and in fact he spent the entire weekend in his office in Tel Aviv. "The number of visits to our website in Russian has jumped tenfold in the last week and every day I handle hundreds of new inquiries from Russia, which are divided in half. There is the group that tries to find out what documents are required to immigrate to Israel and the other half wants to know how to get the money out of Russia and bring it here." , Gerbitz tells Calcalist.
The law firm of Gerbitz, which specializes in representing businessmen from Russia in matters related to investments, real estate and the law of return, is celebrating its 25th anniversary these days, but it has never been as flooded and busy as it has been in recent days since Russia invaded Ukraine. "The amount of Jews who want to escape from Russia is something Completely crazy, much more than the wave that was after the annexation of the Crimea. We are not talking about oligarchs who are constantly in the headlines, but wealthy businessmen whose liquid assets amount to several million dollars or tens of millions of dollars. They are not under sanctions and are not related to politics, but they are afraid of losing their money because of what is happening in Russia and Ukraine in recent days."
In response to a long and painful series of economic sanctions imposed on Russia by the West, Putin's administration has taken a series of violent domestic countermeasures of its own. Measures designed to keep the dollars inside Russia. Some of the Russian banks were cut off from the SWIFT interbank communication system and the Moscow stock market plummeted after giant companies such as BP and KS announced the liquidation of their holdings in Russian gas and oil companies.
Queue at the entrance to a bank in Russia. The big problem is getting the money out of the country. Against this background, the Russian ruble collapsed this week by dozens of percent to an all-time low, and only a jump in interest rates from 9.5% to 20% managed to slow down the plunge even a little. In addition to the interest rate increase, all exporters are now required to immediately convert 80% of their receipts from abroad from dollars to rubles, and in a move even more painful than yesterday, it is also forbidden to withdraw dollars from banks in Russia to transfer them to a bank account abroad, even if it is the same person's account.
Israel is becoming a major investment option for oligarchs
Also Mark Oygman, co-CEO of Smartgan, which represents affluent Russian-speaking clients in Israel, and previously headed the Bank Hapoalim representative office in Russia, until the panic that gripped the wealthy Jews from Russia, and his email box and office phone are just blowing up. "99% of the inquiries that reach me in the last few days are Requests to help bring money into Israel or at least take the money out of Russia. People are just panicking and one is warming the other. The fear at the moment is the worsening of the measures in Russia and the possibility that Russian citizens will be forced to convert all their money into rubles."
Gravitz and Oigman share the assessment that billions of dollars are knocking on the doors of Israeli banks, but of course they do not want to receive the money from Russia. According to Oygman, the banks in Israel have, as of now, frozen the acceptance of money originating from Russia and are not ready to open new accounts for anyone who has ties to the country.
"The banking system in Israel is a very difficult system and that's in the best sense of the word," Gravitz explains. "I tell my clients that if they managed to go through all the processes at the bank in Israel, they can be calm all over the world. But I hope that in light of the situation, even in the Israeli banks that were already in the process of receiving money from Russia, they will continue the process and not stop it."
Since the corona virus, Putin has made an effort to return the capital to Russia and has given a kind of amnesty even to those who were not "clean". Wealthy Russians, some of them Jewish, now have a larger stake in local banks
The major banks in Israel say that they have not yet noticed any unusual movement of money from Russia or requests to transfer money here.
"A large number of those who contact me want to transfer their money to Israel, because many of them already have a base here such as relatives, real estate or a passport," says Eugeman, "but in the end if we are to be realistic. Probably Dubai, which is also a favorite of millionaires from Russia, will win more Jews than Israel."
And it is a lot of money. According to databases about the Jewish community in Russia, many billions can come or try to come to Israel. "According to studies we have done in the past, there are currently 30,000 millionaires living in Russia who have the right of return," says Eugeman. Gravitz also strengthens this assessment according to his data which show that in Moscow alone there are 25 thousand Jewish millionaires and that is where most of the wealth in Russia is concentrated.
"We are talking about liquid assets, not including real estate, of a million dollars or more," Eugeman emphasizes, basing, among other things, on the annual list that Merrill Lynch used to publish and whose latest update stated that there are a total of 100,000 liquid millionaires in Russia.
According to the same review, there were about 10,000 people in Israel who own a million dollars or more. According to these calculations, it is tens of billions of dollars. More precisely, at least 30 billion dollars - if we start from the assumption that each millionaire has "only" a million dollars - that will find their way to Israel in the near future. "There is nothing to expect the immigration of a million people from Russia because there are no longer a million Jews there, but in terms of the money that will try to move here, it is about sums that even Israel as a unicorn state will feel, ten-digit sums," says Grabitz.
At this stage it is mainly money that is held in Russian banks and according to Oygman it is 10-20% of the total wealth of the Russian Jews. Historically,
Russian businessmen did not use to keep their money in Russian banks because they did not trust their stability and also preferred that the money be outside the borders of Russia. However, in the recent period, and especially in the last two years since the outbreak of the Corona epidemic, Putin has made efforts to return the money home, and in this context, he waived due disclosure requirements and gave a kind of amnesty to all the money that was not the most "clean".
And this is how the Russian businessmen find themselves today, some of them Jewish, and out of the list of the richest people of "Forbes" Russia, about a third have ties to Judaism, with a much larger share than before in local banks. "In the meantime, the money can still be taken out of Russia as long as it is proven that it should be used to pay for a deal that has already been signed, such as for example the purchase of property outside of Russia, payment for the purchase of a business or medical services," Oigman points out the possible loopholes for the money to reach Israel.
It is not impossible that several flash deals in luxury real estate will soon be signed in order, on the one hand, to allow the money to be spent and, on the other hand, to provide a safe harbor for the Jews fleeing Russia. Gravitz thinks that a large part of the money that is in the banks in Russia has already been lost. "Until a week ago, the big problem My clients had their money received in Israel, but then the Russian banks had no problem transferring it here. The biggest problem now is getting the money out of there. And yet, as the State of Israel, which did not ban flights from Russia, unlike most European countries, it is better for us to accept these Jews with their money, instead of them starting to ask for social security benefits here," adds Gerbitz.
The movement of Jews out of Russia has already begun and of course it is not only flowing to Israel, but a larger and larger part of the people who until recently only kept the country as another option, actually preferred England or Cyprus. Now the situation has changed. The loss of trust in Putin who assured them that Russia could withstand sanctions and then took drastic measures on the banking system is complete and will be impossible to restore.
"I can already hear the noise of the engines of the planes on the way," says Grabitz, "from my conversations with people there, they understood the message from both Putin and the US and Europe. Even those who were in the slow process of moving to Israel, and were not enthusiastic about Israel, because real estate here is expensive and so is the cost of living, the recent events definitely speed everything up."
In fact, the greatest fear now among Russian Jews is a new Iron Curtain. Many of them have already left Russia in favor of their homes abroad or for yachts and according to evidence, since the war between Russia and Ukraine broke out, the traffic of private planes at the private landings terminal in Ben Gurion has also increased.
"The iron curtain on the money in Russia has already come down, but many believe that Israel will simply accept them and there are those who in recent days have simply landed here believing that they will simply be issued a certificate of immigration on the spot," says Gravitz.
According to sources familiar with the industry and from traffic monitoring of private planes, it appears that in recent days two of Russia's richest people have already landed in Israel for residential purposes, and this is just the beginning.