Chill falls over summer hot spots for ill-gotten gains

Tourism in wartime has created a new kind of beach activity: tracking superyachts linked to Russian wealth. These temples of conspicuous consumption, which got a huge boost in orders during the pandemic, are symbols of the new geopolitical order dominating soft-power travel hot spots such as the French Riviera.

Boats linked to Russian oligarchs not known for their discretion have gone “dark” and sailed to friendlier shores such as Dubai or Turkey, keen to escape the fate of more than $30bn in sanctioned assets seized by governments looking to squeeze Vladimir Putin’s inner circle. Spain, Italy and France are among those impounding yachts; dozens are also blocked in Dutch shipyards.

Ostentatious displays of wealth are also firing up public opinion at a time when energy poverty is leading to calls for windfall taxes. Jeff Bezos’s 127m, $500m superyacht narrowly avoided an egg-pelting in Rotterdam by angry locals after a plan to dismantle a historic bridge to allow it to sail through was dropped.

A frosty reception for wealthy Anywheres might seem a minor inconvenience. Yachtmakers such as Italy’s Sanlorenzo can still expect double-digit revenue and profit growth in 2022, partly because the euro’s slump has boosted the US dollar’s buying power and because demand for status symbols is as deep as the ocean.

But if Europe is “for sale”, as US tourists shopping on Paris’s Avenue Montaigne say, its determination to be a soft power without being a soft touch is more urgent than ever.

The enforcement of yacht seizures is being accompanied by an EU crackdown on easy routes into its single market for offshore wealth. Golden passport and visa schemes that offered EU citizenship or residency rights for anywhere between €60,000 and €1.25m are being scrutinised and potentially scrapped after a string of money-laundering scandals.

Intended to revive investment after the financial crisis, these schemes have been too light touch for their own good, with Cyprus allegedly breaking its own laws after handing swathes of passports to rich Russians. The approval of Portuguese golden visas to China’s ultrarich has evaporated.

The anonymity of offshore wealth is also under fire. If identifying superyacht owners is hard, it’s because of the matryoshka doll structure of shell companies that own them. In August, the UK launched a registry of overseas entities owning property, even if the proposal’s flaws make it far from perfect. Outgoing Italian Prime Minister Mario Draghi has called for an international asset register for the oligarchs.

It takes a deft hand to ensure that geopolitical reputation takes precedence over economic expediency. Flexible digital nomad visas for remote workers appear to be the new post-Covid battleground for overseas cash.

Still, the rebound in summer tourism presents an opportunity to flex soft-power muscles. Cyprus, a favourite destination for Russians, is down about 25% compared with 2019; Finland is calling for restrictions on visas for Russians. Regional and US tourists have helped offset the drop, with foreign policy values and Ukraine solidarity featuring in social media sentiment, according to Olivier HenryBiabaud of TCI Research, a Belgian travel industry consulting firm. Research firm Oxford Economics expects arrivals to Western Europe in 2022 to be 21% below 2019 levels, compared with a forecast 39% fall for Eastern Europe.

A Cold Warification of travel may seem like cold comfort when Europe faces recession this winter. The tourism economy is not going to bring energy independence or manufacturing growth to a region sorely in need of both. The weak euro travellers love is not a point of political pride.

But yacht-spotting should at least bring recognition of an EU more focused on political unity and fighting the money flows than aggravating inequality. For once, fewer eyesores on the water will be more than just an aesthetic win.