The government may want oligarchs out but it can’t bank on City sanctions

Russian oligarchs, the rouble and the Moscow stock market all felt the pain of US sanctions last week. The share price slumps at Oleg Deripaska’s En+ and Rusal companies, the steepest daily fall in the national currency for three years, and a double-digit hit to the dollar-denominated RTS index all showed that it is possible to punish Vladimir Putin and his associates.

But the international community needs to be vigilant. At the same time that US sanctions were wiping billions of pounds off the value of Russian companies, Russia’s president was preparing a consolatory gift to sugar the pill. The Kremlin has, according to multiple reports, drawn up plans for two new domestic tax havens aimed at Russian millionaires and billionaires who may be considering whether to repatriate their wealth and take shelter from tit-for-tat sanctions.

Amid this manoeuvring, the big question for Theresa May, as the UK considers its own toolkit of measures, is whether sanctions will cause genuine discomfort to the Kremlin. Some informed observers say knocking a few billion off the personal wealth off an oligarch class that few ordinary Russians have any love for will not play too badly for Putin, even if it is ordinary workers who end up losing their jobs.

It is also unclear why some oligarchs are deemed to be worthy of sanctions by virtue of their closeness to the Kremlin, but others are not. Why target the owner of an aluminium giant, which competes with US industry, but not the owner of a football club, which does not?

London’s position as a playground for Russia’s elite means the opportunities available to May are more subtle. The so-called Magnitsky measures, named after the anti-corruption whistleblower who met his death in a Russian jail, could be used to bar suspect figures from entering the UK.

Some politicians, notably the Liberal Democrat leader and former business minister Vince Cable, have suggested deploying new unexplained wealth orders, introduced in February. These could be used to force people suspected of using dirty money to buy stately homes and Kensington townhouses to explain where they got the cash.

Russian figures with ties to the Putin regime own British properties worth nearly £1.1bn, according to recent estimates, most of it in London. The true value is likely to be far greater because buyers can take advantage of offshore secrecy loopholes left open under May.

That’s one reason why Labour has asked for British overseas territories to be forced to disclose the ownership of offshore companies more quickly than the current deadline of 2021. Any or all of these measures would hurt individuals with at least some influence in various corners of Russia’s labyrinthine political corridors.

But the big question mark hanging over the path ahead is whether the City of London’s lobbying heft will ultimately prove telling. Russian oligarchs’ business is highly lucrative for lawyers and investment bankers. One major bank in the City is said to have a team of more than 20 people dedicated to managing $1bn on behalf of a well-known oligarch. Britain’s oil giant BP derives a huge slice of its income from its stake in Moscow-based Rosneft.

The economic uncertainty of Brexit has raised fears that the capital’s standing as a financial centre could be on the wane. With the government keen to prevent the feared decline – and the concomitant impact on tax revenue – the City’s bargaining power is substantial.

The financial industry can argue that being seen to reject Russian cash would simply see the money diverted elsewhere and spook other foreign investors, who fear the murkiest corners of their wealth may no longer be safe in London. That is a practical approach but not a moral one. Money will always follow the path of least resistance and it is not clear that the UK has the stomach to offer any at all.

Streaming puts song in heart of music biz

With UK record labels enjoying the biggest growth surge in revenues in more than two decades, the music industry has finally put the once-looming threat of a piracy apocalypse behind it.

Digital formats have moved from being the industry’s bete noire to its saviour: royalties from subscriptions to streaming services underpinned record growth last year. A 10.6% rise in record-label earnings, to £839m, came thanks to a 45% increase to £347m in income from services such as Spotify, Apple Music and Amazon Music. Income from CD sales, formerly the cornerstone of the music money-making machine, remained almost flat at £246m.

The digital revolution has fuelled a democratisation of the industry, opening up the opportunity for fans to discover more of the “long tail” of artists – those beyond the traditional radio-dominating stars such as Taylor Swift, Adele and the ubiquitous Ed Sheeran.

While more artists are sharing in the new digital bonanza, they are all having to get used to the idea that it is much harder to make money out of music than it used to be. The industry may be recovering, but it is still only worth two-thirds of what it was in 2001, the days of peak CD. Profit margins on CDs were a licence to print money: digital streaming royalties per track, not so much.

And that is without starting on the music industry’s unhappiness with YouTube paying a pittance for the hundreds of millions of music videos viewed on its site each year. The few million vinyl records sold provide more royalty income to artists than YouTube does.

The profits of live music have never changed, hence the resurgence in popularity of touring to top up artists’ bank accounts.

Yet with Spotify’s well-received $30bn stock-market listing, and Amazon reigniting the popularity of streaming music at home with its Echo smart speakers, digital income looks set to remain top of the pops.

Uber’s bikes are not a sign of back-pedalling

Uber’s acquisition of US bike-hire firm Jump looks rather pedestrian by the standards of its own vaulting ambition, at least at first glance.

Compared to moonshot ideas such as cars that can fly – or the more tangible advance of driverless taxis – Jump’s electric “pedal-assisted” bikes might as well be Victorian-era penny-farthings. But the deal should not be seen in isolation. Uber does not need electric bikes to become the commuter’s carriage of choice for the acquisition to make sense.

Rather, it envisages a world in which most City-dwellers will have no need to own their own car, with an alternative available for any given journey. The Uber user of 2038 might hop into a driverless taxi to get to work, whizz round the corner for lunch on an electric bike, then impress their date by whisking them off for dinner in a flying limousine.

Fanciful as that might be, the goal for Uber is not to hit every imaginable futuristic milestone. Instead, it is to have a foot in the door of whatever technological advances gain the most traction.

This attitude is born of a mindset akin to that of the San Francisco firm’s near neighbours in Silicon Valley, even if Uber’s bread and butter is a rather less glamorous mobile-phone-based taxi service.

Unlike longstanding industries that have developed amid fierce competition and political opposition to monopolies, the likes of Facebook and Google emerged so quickly that, for them, world domination seems almost the natural order of things.

That isn’t to say that Uber, which is no stranger to regulatory resistance, will be allowed to lock competitors out of a sector as vast as transport. But it is already ubiquitous in much of the world, its name synonymous with what it does, much like Hoover in the UK or Xerox in the US.

Coupled with its speculative investment in multiple modes of transport, that gives it a huge head start in the race towards the future.