Ukraine war: Russia’s war economy is awash with bags of ‘black cash’ kept out of banks
- Payment for soldiers hired by the Wagner Group has turned on the spigot of cash, one of several sources of paper money flowing through the Russian economy
- With restrictions imposed on bank transactions in Russia, the use of paper money is becoming more widespread to settle external trade
Russian mercenaries killed in Ukraine are inadvertently helping stoke a new cash boom at home in an unusual side-effect of the war.
Money paid in compensation for their deaths – which adds up to 5 million roubles (US$60,000) per person, on top of any uncollected wages – usually comes stuffed in bags, according to several women who had to travel to pickup points around the country and requested that only their first names be used to speak openly.
Many are being told to avoid depositing the cash at a bank. Oksana from Chelyabinsk in the Urals region, whose husband died fighting for the Wagner paramilitary group in Bakhmut, needed no instructions, saying she wanted no “problems” with the tax system and lacked any documents stating where the money came from.
“Wagner paid everything it was supposed to,” she said. “We already bought an apartment.”
Financing for foot soldiers hired by Wagner, which the US estimates had 50,000 personnel fighting in Ukraine, has turned on the spigot of cash that has become one of several sources of paper money oozing through the Russian economy. The volume of roubles is a stark example of the distortions caused by the war that is now in its 16th month.
