An oligarch is a wealthy and powerful person who holds significant influence in a country or organization. Oligarchs often have a lot of money and use their resources to shape political decisions and control major industries. They can come from various backgrounds but share a common trait: their wealth gives them a strong voice in important matters.
An oligarchy is a form of governance in which a small number of people control all the authority. In this system, these few individuals make decisions that affect everyone. They might be wealthy individuals, military leaders, or influential families. This type of government contrasts with democracies, where power is distributed among the people.
Understanding Russian Oligarchy
An oligarchy is a system where a small group of people have control over a country. In Russia, this group is made up of wealthy businessmen, often called oligarchs. These oligarchs gained their wealth and power after the fall of the Soviet Union in the 1990s.
During this time, many state-owned industries were sold off cheaply. The oligarchs bought these industries and became extremely rich. They have a lot of influence over Russian politics because of their wealth. They often support the government and, in return, receive favors like business deals or protection.
The power of oligarchs can be risky. If they go against the government or fall out of favour with the president, they can lose their wealth or be forced to leave the country. This system creates a close connection between money and political power in Russia.
The Evolution of the Russian Oligarchy
After the Soviet Union fell apart in the early 1990s, Russia went through big changes. The government started selling off state-owned businesses. Smart and quick businessmen, known as oligarchs, took advantage of this. They bought these businesses and quickly became very rich.
Early Oligarchs
One of the most famous early oligarchs was Boris Berezovsky. He was a fast-talking mathematician who managed to buy cars from Russia’s biggest automaker at a loss to the manufacturer. He also took over big companies like the Sibneft oil company, the national airline Aeroflot, and a major TV channel called ORT.
Other important figures included:
– Vladimir Gusinsky: He owned the influential NTV channel.
– Mikhail Khodorkovsky: Known as Russia’s richest man at the time, he was involved in oil and politics.
– Roman Abramovich: Another oil tycoon who gained huge wealth.
Putin’s New Deal
When Vladimir Putin became president in 2000, he noticed that many Russians were unhappy with the rich oligarchs. They felt that the rich were doing well while ordinary people struggled. Putin made a deal with the top oligarchs: stay out of politics, and your wealth will be safe.
Some oligarchs, like Berezovsky, didn’t follow this deal. Berezovsky criticized Putin and eventually left Russia. He was found dead in the UK in 2013. Gusinsky faced jail time and had to sell his media holdings. Khodorkovsky, who had political ambitions, was arrested in 2003 and spent ten years in prison. He was eventually pardoned and left Russia.
Current Status of the Russian Oligarchy
Today, the Russian oligarchs are still very wealthy, but their situation has changed. Many have stayed quiet about Russia’s war in Ukraine. Oleg Tinkov, a banking and brewing entrepreneur, spoke out against the war and left Russia. Mikhail Fridman, a major banker, called the war a tragedy but has returned to Moscow.
Putin seems to be trying to replace the old oligarchs with a new group who are more loyal to him. He’s redistributing wealth from foreign companies that left Russia and undoing some of the privatizations from the 1990s. This means creating a new set of wealthy individuals who owe their fortunes to Putin’s support. The Russian oligarchy has evolved from a group of independent businessmen to a more controlled and loyal group under Putin’s influence.
Big Losses for Russian Oligarchs Amid Sanctions
Sanctions are penalties aimed at influencing behavior. For Russian oligarchs, the goal is to pressure them into changing Russia’s actions, especially regarding the conflict with Ukraine. Authorities applied early sanctions individually, targeting those who committed serious crimes or corruption. These sanctions had some success but faced difficulties.
Challenges of Enforcing Sanctions
Sanctions worry oligarchs because they harm their wealth and businesses. Boris Nemtsov was killed, and Vladimir Kara-Murza was poisoned and imprisoned, highlighting the risks involved. The West struggles to distinguish between regular big businessmen and oligarchs, and defenders often claim these are just ordinary businesses. The COVID-19 pandemic has further complicated the situation by restricting communication between Putin and the oligarchs.
Oligarchs Lose Billions
Roman Abramovich, the former owner of Chelsea FC, has seen his fortune drop by 57% this year. His wealth now stands at $7.8 billion, according to the Bloomberg billionaires index. Abramovich was one of the first Russsian oligarchs hit by UK sanctions. The UK government accused him of having “clear connections” to Putin’s regime and being part of a group of wealthy Russians with “blood on their hands.”
Other Russian billionaires have also faced significant losses. Gennady Timchenko, a billionaire energy investor and close friend of Putin, has seen his fortune fall by 48%, leaving him with $11.8 billion. Suleiman Kerimov, another ally of Putin, has lost 41% of his wealth, bringing it down to $9 billion.
Sanctions and Asset Freezes
The UK government has frozen more than £18 billion in assets belonging to oligarchs and other Russians. This total is the highest amount frozen under any UK sanctions regime. 1,271 individuals, including Abramovich and Vladimir Potanin, also referred to as the “Nickel King” and the second-richest person in Russia, are the targets of sanctions.
In 2022, Russian oligarchs lost around $95 billion in total. US tech billionaires like Elon Musk overshadow these substantial losses with their own struggles. The impact of sanctions on Russian elites and the market fluctuations affecting tech giants highlight the volatile nature of global wealth.
The Role of Russian Oligarchs in the Russia-Ukraine War
Since Vladimir Putin became president in 2000, Russian oligarchs have lost much of their influence. They no longer wield the power they once did. Today, they are less influential in Russian politics and more controlled by Putin. This shift is similar to a Tudor court, where aristocrats keep their wealth only if the king allows it.
Sanctions and Oligarch Reactions
Sanctions have hit Russian oligarchs hard. Many have seen their fortunes drop significantly. However, these sanctions have only led to muted comments from a few oligarchs. Most of them live outside Russia and avoid direct criticism of Putin. For example, Oleg Deripaska and Mikhail Fridman have called for peace but have been careful not to challenge Putin openly.
Putin’s Control and Isolation
Putin’s decision to invade Ukraine seems to have been made alone. He has grown increasingly isolated from his former inner circle. During a security council meeting before the invasion, even top officials like Sergey Naryshkin appeared frightened and unsure. This isolation means that oligarchs and officials have little power to influence his decisions.
While sanctions may not immediately change Putin’s course in the war, they are significant. They highlight the oligarchs’ limited power and their dependence on Putin. The sanctions show how the actions of an increasingly isolated leader tightly link the oligarchs’ fortunes.This situation could have long-term effects on the Russian elite and their role in the country’s politics.