Despite Sanctions, Cash Keeps Flowing at Playground for Russia’s Rich
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Version 0 of 1. FORTE DEI MARMI, Italy — In this seaside resort town that is Italy’s version of a Russian Riviera, where furs dangle in shop windows in August and beach clubs keep chilled bottles of vodka, a temblor of anxiety unnerved hoteliers and restaurateurs in March. Usually, the phones would ring with Russians booking rooms, villas, even helicopters. But the phones suddenly went quiet. It was the silence of sanctions. When the United States and Europe announced the first round of sanctions early this year in response to Russian aggression in Ukraine, the intent was to cripple individuals and institutions close to the Russian president, Vladimir V. Putin. But Russian money is on conspicuous and regular display on this stretch of the Tuscan coast, and the possibility that it might dry up alarmed the town’s business leaders. Not to worry. “For a few days, there was a pause, and business looked like it was slowing down,” said Paolo Corchia, owner of the Hotel President, one of the town’s most elegant hotels, and president of the regional hotel association. “But then business went back to normal.” If normal can be defined as one shop selling violet-colored crocodile-skin loafers for 1,690 euros, or about $2,200. Or simple beach canopies that rent for up to €250 a day just to reserve 10 square feet of shaded sand. Or aviation companies that rent helicopters to take Russian shoppers on day trips to Monte Carlo for €4,450. For all the attention to wider sanctions, which the United States and the European Union threatened to impose after a NATO meeting last week, the scope of Russian investment and influence across Europe is expansive and much of it not affected, especially as Russia’s rich have transformed places like London, the Côte d’Azur and Forte dei Marmi into their playgrounds. Russian money is so important that even as European leaders are taking a tougher line with Mr. Putin, none want to damage the broader economic ties with measures that go beyond targeted sanctions. Unlike the days when Russians were cloistered behind the Iron Curtain, today they are so ensconced in Europe that more punitive steps would be likely to inflict the greater damage on still-weak European economies. That is so especially, but not only, in Italy. Like Germany, Italy is a major consumer of Russian natural gas, but ties go far beyond energy. Once a favorite summer spot of Italian industrialists, Forte dei Marmi has survived the economic downturn since 2008 largely because of Russian money. Russian tourism has grown rapidly in Italy, increasing by 25 percent in 2013 alone. According to Italy’s Foreign Ministry, 747,000 Russians visited Italy in 2013, while 52,000 Italians visited Russia. Russians are also roughly tied with Japanese as the biggest spenders among tourists, averaging €150 to €175 a day, roughly $195 to $225, according to Italy’s Foreign Ministry. Before the Ukraine crisis, the two countries had declared 2014 as the year of Russia-Italy cross-tourism — a campaign whose timing has turned out to be awkward, at best. Italy’s tourism agency was participating in a trade show in Moscow when Russia annexed Crimea. New direct flights were started from Italy’s Adriatic coast to different Russian cities to attract middle-class tourists, even as Forte dei Marmi continued to lure the Russian superrich to the Mediterranean coast. “Here, it is beautiful, safe, clean, comfortable, equipped with boat and yacht rentals — and full of elegant people,” explained Irina Krassiouk, a native of Moscow who has lived in Italy for 23 years and manages one of the private beach clubs lining the shore. In August, Ms. Krassiouk organized a fashion show for Russian clients, with contestants from the Miss Italy pageant prowling a catwalk in furs. Guests also were allowed to browse Ferraris, Maseratis, jewelry and other luxury Italian goods. “Now that Russia is closing its relations with Europe, I imagine it’s hard to have Italian products there,” Ms. Krassiouk said. “If they come here, my clients will know where to find them.” Russians have been coming to Forte dei Marmi for two decades and have steadily reshaped to their own tastes what was once a quiet, elegant beach village for the Italian elite. Locals describe a real estate frenzy that became so crazed a decade ago that Russian buyers would purchase homes sight unseen — and then knock them down and build bigger villas. The village center, once filled with quaint local shops, has been overtaken by luxury brands such as Prada and Gucci, along with furriers and other designer shops. Rich Russians have long been regulars in the Mediterranean, having established a prominent enclave at the Côte d’Azur in France. But Forte dei Marmi offered wider beaches, a good location for jumping off to other areas (hence the thriving helicopter services), an established infrastructure of beach services (some clubs offer piped-in music or Wi-Fi with beach chairs) and, most of all, exclusivity. It is not unusual, according to several shop clerks, for Russian customers to arrive just before closing and request that a store be kept open, just for them. “They would leave a shop with €150,000 or €200,000 in clothes,” said Enrico Salvadori, a journalist who has covered the region for 25 years for the newspaper La Nazione. “The Russians have been vital, especially from 2008 onward, when the economic crisis hit and the number of Italians coming here started falling.” Yet many longtime residents do not regard the Russians as saviors. “A tsunami can be from the ocean, but from money, too,” said Fabio Genovesi, author of “Morte dei Marmi,” or “Death of the Marmi.” “This place wasn’t ready for the amount of money the Russians brought.” Mr. Genovesi and others tell stories of Russian excess that have become local lore: of €400 tips to gardeners or €1,000 tips to waiters; of a Russian driver who, having bumped a person on a motorbike, handed over €4,000 ($5,182) in cash and drove away; of early-morning fireworks shows above private residences that cost thousands of euros and make laughable the fines of a few hundred euros handed out by the police. “It is too late,” said Mr. Genovesi. “The economy is now built on them. We can’t go back.” Others are less gloomy. Mr. Corchia, the hotelier, said Russians have steadily adapted to village ways, eschewing giant sport utility vehicles for bicycles. “The leitmotif is understated elegance, not ostentation,” he said. “In the beginning, it was not easy.” The prospect of expanded sanctions raises worries that the local economy will feel a pinch. Across the country on the Adriatic coast, the number of Russian visitors dropped by 12 percent in Rimini Province, which had targeted a middle-class clientele. In Forte dei Marmi, tourism is also down from last year, but many people blame a rainy July and the continued decline in Italian visitors. At Lobster Russian Corner, a private restaurant and club, the Ukraine crisis has been an inconvenience, since members living in Moscow are no longer allowed to fly over Ukrainian airspace, and must follow longer routes. Some members have decided not to make the trip, yet for many of the wealthiest Russian businessmen, little has changed. The billionaire Roman Abramovich, who lives in London, stopped by the village on his yacht in August, local residents say, as did the former governor of Moscow, Boris Gromov. “The oligarchs have not changed anything because of the war,” said Indrek Alberg, an ethnic Russian raised in Estonia, who is one of the owners of the club. “I think these are political games. Not so much has changed. It is basically the same.” Or so Forte dei Marmi is hoping. “We’re like Crimea, and we’ll ask to be part of Russia,” Mr. Corchia said, laughing, only to quickly add, “That is just a joke.” |