Billionaire Howard Marks once sarcastically said Putin would never invade another country — and Russia's rule of law is an investor concern
- Howard Marks took a jab at Vladimir Putin for Russia's invasion of Crimea in 2014.
- "It's a great distraction from economic suffering — to operate strongly, nationalistically," he told Bloomberg in an interview.
Billionaire Howard Marks pointed to the risks to investors from Vladimir Putin's invasion of Crimea in 2014, and suggested investments in Russia weren't safe.
Howard sarcastically said Putin "would never invade another country" in response to a comment from Bloomberg's Matt Miller, who said the Russian leader is unpredictable, intelligent, and an educated man.
The billionaire cofounder and co-chairman of Oaktree Capital Management made those comments in a December 2014 interview.
"The popular masses in many countries like to see the leader behaving powerfully, especially when the country has been suffering economically," he said. "It's a great distraction from economic suffering — to operate strongly, nationalistically."
Russia's economy was reeling after its decision to invade Crimea in mid-2014, as it was losing influence to the European Union. It faced economic turmoil, with the ruble collapsing, and Russian companies finding it highly difficult to repay foreign-denominated debts. Western sanctions cost Russia nearly $27 billion in 2014, and those may have surged to $80 billion by 2015.
The picture is ironically similar now. After Russia's move to attack Ukraine in late February, its economy is again being isolated by Western nations as the number of sanctions piles up. President Joe Biden's ban on Russian oil imports has been called the toughest sanction yet.
Speaking in the 2014 interview, Marks pointed to investor concerns about Russian financial markets.
"In order to make investments, you have to believe that you will benefit from the rule of law," he said. "And the underlying question about Russia is whether you will."
The rule of law is a philosophy that no one is above the law, implying that all citizens and institutions within a country, state, or community are accountable to the same laws.
On December 2014, Russia's central bank spent $2 billion to prop up the ruble. Marks cautioned against making investments in Russia at the time, suggesting he doubted whether one would get their money back.
"The question is, if you put your money in the bank to make 17%, which sounds like a lot of money, will you get it back at the end?"
He suggested Oaktree prefers to make safe investments, where the number of outcomes are few. In Russia, they might be too many to be counted "because you simply can't trust the rule of law," he said.