Latvia Looks Good to Russians Unhappy With Putin

The Ukraine crisis prompts Russians to move abroad

Oksana Bratislavskaya says she’s never had any illusions about Russia, where she was born and has lived all her 37 years. The politically liberal lawyer says she and her husband, an IT expert, have grown estranged from the Russia of Vladimir Putin. “We have always been foreigners here. They call us ‘Westernizers,’ ‘the fifth column,’ or ‘national traitors’—in Stalin’s and Hitler’s fashion.” But it was the war in Ukraine that left the couple “without oxygen,” as she puts it. “We were appalled by the scale of public support for the annexation of Crimea and the subsequent war in Ukraine,” she says.

So Bratislavskaya’s family joined the latest wave of emigration, which is almost entirely composed of highly skilled middle-class urbanites frustrated by the war in Ukraine and the suppression of the democratic opposition under Putin. They’re heading for European countries such as Latvia, where they can get residence permits in exchange for investment, most typically in property. Hungary, Poland, Finland, Spain, and Greece offer similar deals.

In June, Bratislavskaya’s family bought a house, 22 miles away from the Latvian capital, Riga, for €105,000 ($132,625). This home is a far cry from her cramped flat in a Soviet-era apartment building in Moscow. Such one-bedroom apartments, given to families by the Soviet government and privatized for free in the 1990s, typically measure 40 sq m to 70 sq m (431 sq. ft. to 753 sq. ft.) and cost from €180,000 to €300,000. A renovated, furnished 80 sq m apartment in an art nouveau building in Riga’s center can go for €150,000. Bratislavskaya’s family continues to live in Moscow while it settles financial and job-related issues.

For many Muscovites, whose savings are locked up in overpriced real estate, the first step in emigrating begins with the sale of their apartments. Yana Mandrykina of Moscow’s Best Realty says the number of clients selling apartments with the intent to buy property abroad started to rise after the government suppressed the anti-Putin protests in 2012. But until the start of this year, it was more about people diversifying their assets and creating “a reserve landing strip,” she says, in case things go very badly in Russia.

That all changed in the wake of the Ukrainian crisis. Between January and August the number of panic sales by emigrating clients increased fivefold, Mandrykina says. Initially, most of those who left were journalists, but a broad array of professionals—architects, surgeons, advertising executives, bankers—is selling in Moscow and heading abroad. Other Russian cities are witnessing emigration but not on the scale of the capital.

This summer, Alexei, a public-relations executive (who doesn’t want his last name used because he works for a big state-owned company) invested €370,000—his life savings and those of his financial analyst wife, plus a hefty loan—in Latvian property. “I was quite unsure at the time. But now I am feeling that I was absolutely right,” Alexei says. His confidence has been bolstered by reports of regular Russian troops fighting in eastern Ukraine. “I am officially a reservist, so a full-out war will touch upon me immediately,” Alexei says. “I don’t mind defending my motherland against aggression, but I am not prepared to sacrifice my life for the insane ambitions of one man.”

Local right-wing pressure to limit the influx of foreigners led Latvia in September to raise the threshold investment required for residency permits to €250,000 from €142,000. Alexei managed to beat the deadline and secured permits not only for his wife and child but also for his in-laws, who count as a separate family under Latvian law. The clan now owns a huge apartment in a new “business-class” development in Latvia’s most prestigious seaside resort, Jurmala. Only the wealthy can afford the equivalent accommodations in Moscow.

According to data published by Schengen Property in Riga, applications for residency under Latvia’s investor law increased by 70 percent in the first eight months of 2014, from the same period in 2013. By July 1 more than 13,800 foreigners qualified for residence permits under the program, of whom 9,650 were Russians, followed by Chinese and Ukrainians. These residents have invested more than €1.1 billion in Latvia, according to Ministry of Interior data. The investment threshold is likely to come down after the election on Oct. 5, when moderates are expected to defeat more nationalist parties.

For Russians, Latvia—a former Soviet republic—has advantages over other countries that offer investor residency permits. Riga is the closest European Union capital to Moscow with a majority Russian-speaking population and an ethnic Russian mayor, Nils Ushakovs. “It is arguably faster to hop on a plane and get to your Latvian seaside house than to fight through traffic to your countryside cottage outside Moscow on a Friday night,” says Renats Lokomet, senior vice president of Rietumi Bank, which caters to Russians wishing to invest in Latvia. The number of Russian children enrolled in Latvian schools is rising fast, he notes.

Few choose the route of Latvian citizenship, which requires a five-year wait, knowledge of the local language, and an understanding of Latvian history. The residency permit provides Russians with few benefits. They do, however, have the right to work. Bratislavskaya says that even though she can’t practice law in Latvia, she’s confident her managerial experience with big companies will help her find a job. Alexei has a digital startup he hopes will soon bring in revenue. Many Russians who move can work remotely, earning money in Russia to spend in Latvia.

The Baltic nation has become popular with Russian journalists chafing under Putin’s restrictions on media. In Riga, reporters who left the popular website in March when its editor was replaced by a pro-Putin journalist, started a Russian-language news aggregation project called Meduza. The venture is being funded with the help of Mikhail Khodorkovsky, the wealthy Putin opponent who spent more than a decade in prison.

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