Authors

Discussion

This study utilises a novel approach to reappraise round-tripping, the prevalent model in explaining capital flows between Cyprus and Russia. To overcome the known barrier of collecting data on corporate capital movements and transactions, the study focuses on the case-study of TNK-BP, on which rich public data exist due to protracted litigation between the shareholders. It systematically collects and analyses data from litigation and court documents, media reports, and insider accounts to challenge the core pillars of the round-tripping framework. Subsequently, it tests these assertions against macro data to prove the generalisability of the findings to a broader set of cases. The paper suggests that capital movements back and forth from the ‘home’ to the ‘host’ economy, as envisaged by the round-tripping model, are infrequent. It labels this type of movement as ‘vertical’ round-tripping and instead proposes that ‘horizontal’ round-tripping, between offshore jurisdictions, is far more prevalent, paving the way for future research that can focus on uncovering why certain (sets of) jurisdictions are preferable in facilitating such capital movements. It further identifies two additional pathways for Russian capital, such as that genuinely invested in the Cypriot economy, which has given rise to grassroots Russian communities that actively resist the limitation of Russian capital flows. Jointly, the findings lay the foundations for rethinking how offshore capital transfers work, which is the most significant contribution of this paper as it constitutes an important step toward combatting sanctions’ evasion, a most pressing current issue for policymakers. In doing so, it advocates for a turn to an interdisciplinary approach, grounded in area studies knowledge, such as the one deployed in this study, to satisfactorily explore the elusive issue of persisting Russian capital flows. The papers argues that relying on such approaches that combine insight from financial economics with financial and political sociology and a profound knowledge of the localities involved is critical in enabling scholars to adequately interrogate the patterns of capital movements, their motivations, the agents enabling them, and the choice of jurisdictions. Adopting such an approach will be essential in tackling sanctions' evasion and money laundering both at present and in the future.