Many people have wondered how Russian oligarchs were able to rise to power. In this blog post, we will explore the topic in-depth and try to answer that question. We will start by discussing the collapse of the Soviet economy and how it paved the way for these billionaires to take control. Then, we will look at their methods of acquiring wealth and power. Finally, we will discuss the future of the Russian oligarchy.
The Collapse Of The Soviet Union
The Soviet Union collapsed in 1991 leaving a power vacuum in Russia. This vacuum was filled by a new breed of businessmen known as the oligarchs. The oligarchs are a group of wealthy Russians who gained control of key industries after the fall of communism. These men used their newfound power to amass even more wealth and influence.
Today, the oligarchs are some of the most powerful people in Russia. Chernomyrdin delegated authority to his deputy, who was his subordinate in the Ministry when he later rose to the position of prime minister.
After a year, Putin issued a new decree with identical provisions that applied to all Russian Federation presidents, including himself. It may be said that Boris Yeltsin, the first president of the Russian Federation, contributed to the development of conditions that were ideal for the burgeoning oligarchy by rushing to convert Russia into a market economy.
They exert a great deal of control over the country’s economy and politics. Many of them have close ties to Russian President Vladimir Putin. This has led to speculation that Putin is actually controlled by the oligarchs.
Oligarchs Lose Control Yet Maintain Their Fortune
The billionaires had the upper hand with the Kremlin in the 1990s and occasionally even had the power to set policy. Numerous oligarchs took on official roles in the government under Yeltsin, and there are numerous accounts about cash being brought into the Kremlin in exchange for political favors.
Putin, though, has been in charge since the 2000s. Putin essentially offered a trade: The billionaires would remain out of politics and the Kremlin would respect their economic decisions and frequently ill-gotten profits.
The public’s dissatisfaction with the 1990s privatization also contributed to its partial rollback in the 2000s. Putin’s Kremlin put political pressure on oligarchs in vital sectors like media and natural resources to give the government control of their holdings. Putin also enacted legislation that favored the so-called state corporations. These actions ensured that the Kremlin retained control over the economy and the oligarchs.
The Three Oligarchy-Related Hues
In terms of their proximity to power, three categories of oligarchs stand out in today’s society. Putin’s close buddies, who are also tied to the president personally, come first. Many of Putin’s close associates have risen swiftly to extreme riches, especially those from his time in St. Petersburg and the KGB.
Yuri Kovalchuk, who is frequently referred to as Putin’s “personal banker,” Gennady Timchenko, whose main asset is the energy trading company Gunvor, and the brothers Arkady and Boris Rotenberg, who own assets in construction, electricity, and pipelines, are a few of Putin’s closest oligarch friends from St. Petersburg. These people have all received penalties.
The second group consists of “siloviki,” or top officials in Russia’s security agencies, police, and military, who have likewise used their networks to gain enormous personal fortune.
Some of these so-called “silovarchs” are former KGB and present-day FSB intelligence agents who had jealously eyed the riches and power of the oligarchs of the Yeltsin period and amassed both under Putin. Igor Sechin, chairman of the oil firm Rosneft, is rumored to be the siloviki’s unofficial leader and is often regarded as the second most powerful person in Russia.
Last but not least, the majority of Russian oligarchs are foreigners with no close ties to Putin, the military, or the FSB. In fact, several of the contemporary outsiders were oligarchs in the 1990s.
Putin pledged to “eradicate oligarchs as a class” during his original election campaign, but he instead selectively eliminated politically unfavorable or obstinate oligarchs after assuming power. Oligarchs like Vladimir Potanin and Oleg Deripaska, who amassed their money in the 1990s, are two examples of those who frequently appear on lists of the richest Russians today.
Putin’s Supporters
Without a doubt, the oligarchs—regardless of the type—have contributed to Putin’s ability to maintain his position of authority by their pecuniary backing of domestic Kremlin programs and political inaction.
Additionally, my research identifies instances in which oligarchs influenced politicians in other nations by using their riches to procure positions, loans, or gifts. For instance, the populist anti-EU party of Marine Le Pen in France received a loan from the Russian bank FCRB in 2014 totaling 9.4 million euros ($10.3 million), incurring a political debt to Russia. Martin Nejedly was a crucial advisor to the Czech president in 2016, and Lukoil, Russia’s second-largest oil corporation, paid a $1.4 million government fine for him to maintain his powerful position.
Some oligarchs seem to voluntarily start such geopolitically crucial transactions in order to build goodwill with the Kremlin. While it is challenging to prove a direct causal relationship between what I refer to as the oligarchs’ “geopolitical volunteering” and the pro-Kremlin policies of their beneficiaries, there is compelling anecdotal evidence that oligarch financing encourages the adoption of pro-Putin positions in nations outside of Russia.
Additionally, my research on the cover-up of corporate political action indicates that one of the most effective ways for institutions like the Kremlin to disguise their political activity is by utilizing intermediaries that appear to be apolitical, like private firms.
Russian Hostages
This gets us to the most pressing concern on many people’s minds: Will the oligarchs be forced to desert Putin or alter the direction of the conflict as the sanctions demolish their wealth?
Some oligarchs, including metals mogul Oleg Deripaska and Alfa Group Chairman Mikhail Fridman, both of whom have received Western endorsements, have already come out against the war. Also urging an end to the conflict was Lukoil. Oil dealers are already avoiding Lukoil’s products in anticipation of penalties, even if there aren’t any direct ones in place right now.
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