(Bloomberg Opinion) -- Tourism in wartime has created a new kind of beach activity — tracking superyachts linked to Russian wealth.
These temples of conspicuous consumption, which got a huge boost in orders during the pandemic, are symbols of the new geopolitical order dominating soft-power travel hot spots like the French Riviera.
Boats linked to Russian oligarchs not known for their discretion have gone “dark” and sailed to friendlier shores like Dubai or Turkey, keen to escape the fate of over $30 billion sanctioned assets seized by governments looking to squeeze Vladimir Putin’s inner circle. Spain, Italy and France are among those impounding yachts; dozens are also blocked in Dutch shipyards.
Beyond what Joe Biden terms “ill-gotten gains,” ostentatious displays of wealth are also firing up public opinion at a time when energy poverty is leading to calls for windfall taxes. Jeff Bezos’s 127-meter, $500 million superyacht narrowly avoided an egg-pelting in Rotterdam by angry locals after a plan to dismantle a historic bridge to allow it to sail through was dropped.
A frosty reception for wealthy Anywheres might seem a minor inconvenience. Yachtmakers like Italy’s Sanlorenzo can still expect double-digit revenue and profit growth this year, partly because the euro’s slump has boosted the US dollar’s buying power — and because demand for status symbols is as deep as the ocean.
But if Europe is “for sale,” as American tourists shopping on Paris’s Avenue Montaigne say, its determination to be a soft power without being a soft touch is more urgent than ever this summer.
The enforcement of yacht seizures is being accompanied by an EU crackdown on easy routes into its single market for offshore wealth. Golden passport and visa schemes that offered EU citizenship or residency rights for anywhere between 60,000 euros to 1.25 million euros ($1.27 million) are being scrutinized and potentially scrapped after a string of money-laundering scandals.
Intended to revive investment after the financial crisis, these schemes have been too light-touch for their own good, with Cyprus allegedly breaking its own laws after handing swathes of passports to rich Russians. The approval of Portuguese golden visas to China’s ultrarich has evaporated. The EU partially halted visa waivers to Vanuatu after its own passport scandal.
The anonymity of offshore wealth is also under fire. If identifying superyacht owners is hard, it’s because of the matryoshka doll structure of shell companies that owns them. The UK this month launched a registry of overseas entities owning property, even if the proposal’s flaws make it far from perfect. Outgoing Italian Prime Minister Mario Draghi has called for an international asset register for the oligarchs.
It takes a deft hand to ensure that geopolitical reputation takes precedence over economic expediency. Flexible digital nomad visas for remote workers appear to be the new post-Covid battleground for overseas cash, even if we are a long way from the days when a tech mogul like Snap’s Evan Spiegel could get a French passport based on little more than his Idaho grandmother’s French cookbook.
Still, the rebound in summer tourism represents an opportunity to flex soft-power muscles. Cyprus, a favourite destination for Russians, is down about 25% compared with 2019; Finland is calling for restrictions on visas for Russians. Regional and American tourists have helped offset the drop, with foreign-policy values and Ukraine solidarity featuring in social-media sentiment, according to Olivier Henry-Biabaud of TCI Research, a Belgian travel-industry consulting firm. Research firm Oxford Economics expects arrivals to Western Europe this year to be 21% below 2019 levels, compared to a forecast 39% fall for Eastern Europe.
A Cold War-ification of travel may seem like cold comfort when Europe faces recession this winter. The tourism economy is not going to bring energy independence or manufacturing growth to a region sorely in need of both. The weak euro travelers love is not a point of political pride.
But yacht-spotting should at least bring recognition of an EU more focused on political unity and fighting the money flows that aggravate inequality. For once, fewer eyesores on the water will be more than just an aesthetic win.
More From Bloomberg Opinion:
- Why So Few Big Rats Have Fled Putin’s Ship: Leonid Bershidsky
- Clear Up Yacht Ownership and Other Secrets: Paul J. Davies
- Bankers Had Their Crisis. Now It's Lawyers' Turn: Chris Hughes
To contact the author of this story:
Lionel Laurent at [email protected]