Russian oligarchs

From Vero - Wikipedia
Jump to navigation Jump to search

Template:Short description Template:Use dmy dates Template:Multiple image Russian oligarchs (Template:Langx) are business oligarchs of the former Soviet republics who rapidly accumulated wealth in the 1990s via the Russian privatisation that followed the dissolution of the Soviet Union. The failing Soviet state left the ownership of state assets contested, which allowed for informal deals with former Soviet officials as a means to acquire state property.

The Russian oligarchs emerged as business entrepreneurs under Mikhail Gorbachev (General Secretary, 1985–1991) using various loopholes during economic liberalization under Gorbachev's perestroika.<ref>Template:Cite book</ref> Boris Berezovsky, a mathematician and former researcher, became the first well-known Russian business oligarch.<ref>Template:Cite web</ref>

Oligarchs became increasingly influential in Russian politics during Boris Yeltsin's presidency (1991–1999), a period often dubbed as the wild nineties; they helped finance his re-election in 1996. Well-connected oligarchs like Roman Abramovich, Michail Khodorkovsky, Boris Berezovsky and Vladimir Potanin acquired key assets at a fraction of the value at the loans for shares scheme auctions conducted in the run-up to the election.<ref>Template:Cite web</ref> Defenders of the out-of-favor oligarchs argue that the companies they acquired were not highly valued at the time because they still ran on Soviet principles, with non-existent stock control, huge payrolls, no financial reporting and scant regard for profit.<ref name="Aslund 1995">Template:Cite book</ref>

Since 2014, hundreds of Russian oligarchs and their companies have been hit with US sanctions for their support of "the Russian government's malign activity around the globe".<ref>Template:Cite web</ref><ref>Template:Cite web</ref> In 2022, many Russian oligarchs and their close family members were targeted and sanctioned by countries around the world as a rebuke of Russia's war in Ukraine.<ref>Template:Cite web</ref>

Yeltsin era, 1991–1999

During Mikhail Gorbachev's perestroika period (Template:Circa–1991), Soviet economic restructuring allowed limited private enterprise, enabling many entrepreneurs in Russia to import high-demand goods such as personal computers, electronics, and clothing (e.g. jeans). These goods, scarce in the Soviet market, were sold at significant profits, laying the groundwork for the rise of a new business class.

Following the dissolution of the Soviet Union in 1991, Boris Yeltsin became President of Russia in July 1991, the oligarchs emerged as well-connected entrepreneurs who started from nearly nothing and became rich through participation in the market via connections to the corrupt, but elected, government of Russia during the state's transition to a market-based economy. The so-called voucher privatization program of 1992–1994 enabled a handful of young men to become billionaires, specifically by arbitraging the vast difference between old domestic prices for Russian commodities (such as natural gas and oil) and the prices prevailing on the world market. These oligarchs became unpopular with the Russian public and are often blamed for the turmoil that plagued the Russian Federation following the collapse of the Soviet Union in 1991.<ref name="piie.com">Template:Cite book</ref><ref>Template:Cite news</ref><ref>Template:Cite news</ref><ref name=Granville>Template:Cite journal</ref>

Emergence

Economists Sergei Guriev and Andrei Rachinsky contrast older oligarchs with nomenklatura ties and younger-generation entrepreneurs such as Kakha Bendukidze who built their wealth from scratch because Gorbachev's reforms affected a period "when co-existence of regulated and quasi-market prices created huge opportunities for arbitrage."<ref name=":0" />

The majority of oligarchs were promoted (at least initially) by the Soviet apparatchiks, with strong connections to Soviet power-structures and access to the funds of the Communist Party.<ref name="Aslund 1995"/><ref>Template:Cite book</ref><ref>Template:Cite journal</ref> Boris Berezovsky himself was Head of the Department of System Design at another Academy of Sciences research centre. His private company was established by the Institute as a joint venture.<ref>Template:Cite bailii</ref> Mikhail Khodorkovsky started his business importing computers under auspices of the Komsomol-authorised Center for Scientific and Technical Creativity of the Youth in 1986, briefly serving as a deputy secretary of the Komsomol for a district in Moscow in 1987. His move into banking two years later was funded with the support of Komsomol alumni working in Moscow city government. Later, he served in the Russian government as an adviser to the prime minister and a deputy minister of fuel and power while still running his business.<ref name="gustafson99capitalism">Template:Cite book</ref> Vladimir Vinogradov was the chief economist of Promstroybank, one of the six banks existing in the Soviet Union,<ref>Template:Cite web</ref> previously serving as the secretary of Atommash plant Komsomol organisation.<ref name="gustafson99capitalism" />

Political support

Economist Yegor Gaidar worked in a Soviet Academy of Sciences think tank modelled after RAND.<ref>Template:Cite book</ref> Gaidar later became the economics editor of the Kommunist journal, the official theoretical organ of the CC of the CPSU. He also held various positions, including Prime Minister in the Russian government during 1991–1992.<ref>Template:Cite web</ref> Together with Anatoly Chubais, the two "Young Reformers" were chiefly responsible for privatization in the early 1990s.<ref>Template:Cite web</ref><ref>Template:Cite journal</ref><ref>Template:Cite news</ref> According to David Satter, "what drove the process was not the determination to create a system based on universal values but rather the will to introduce a system of private ownership, which, in the absence of law, opened the way for the criminal pursuit of money and power".<ref>Template:Cite book</ref><ref name="Aslund 1995"/>

The 1998 Russian financial crisis hit most oligarchs hard and those whose holdings were based mainly in banking lost much of their fortunes. The most influential oligarchs from the Yeltsin era include<ref name="piie.com"/> Roman Abramovich, Boris Berezovsky, Vladimir Gusinsky, Mikhail Khodorkovsky, Vladimir Potanin, Alexander Smolensky and Vladimir Vinogradov.<ref name="Aslund 1995"/> They formed what became known as the Template:Lang (or "seven-banker outfit", Template:Crossreference), a group of businessmen with a great influence on Boris Yeltsin and his political environment. Together they controlled from 50% to 70% of all Russian finances between 1996 and 2000. Historian Edward L. Keenan has compared these oligarchs to the system of powerful boyars that emerged in late-medieval Muscovy.<ref name="A Normal Country">Template:Cite news</ref> The Guardian reported in 2008 that Template:"'oligarchs' from the era of former president Boris Yeltsin have been purged by the Kremlin".<ref>Template:Cite news</ref>

Putin and Medvedev era, 1999–2022 (prior to the invasion of Ukraine)

Template:Further

Putin (left), with Mikhail Khodorkovsky (right) in December 2002. Mikhail Khodorkovsky was jailed the following year.

With the ascent of Vladimir Putin in the Kremlin the influence of the Yeltsin oligarchs dissipated, as some were imprisoned, such as Mikhail Khodorkovsky (pictured here) and Mikhael Mirilashvili, while others emigrated, sold off their assets or died under suspicious circumstances, such as Vladimir Vinogradov and Boris Berezovsky. A number of Yeltsin oligarchs first came under fire for alleged tax evasion.<ref>Template:Cite news</ref><ref>"Khodorkovsky speaks out on plight of Russia's political prisoners". Euronews. Retrieved 30 December 2013.</ref> Vladimir Gusinsky of MediaMost and Boris Berezovsky both avoided legal proceedings by leaving Russia, and the most prominent, Mikhail Khodorkovsky of Yukos oil, was arrested in October 2003 and sentenced to 9 years. This was subsequently extended to 14 years, and after Putin pardoned him, he was released on 20 December 2013.<ref name="YukosCase">Template:Cite news</ref>

A second wave of oligarchs emerged in the 2000s, friends and former colleagues of President Putin either from his years in the St Petersburg municipal administration or his Dresden tenure in the KGB. Examples are the director of the institute where Putin obtained a degree in 1996, Vladimir Litvinenko,<ref name="Bureau">Template:Cite web</ref> and Putin's childhood friend and judo-teacher Arkady Rotenberg.<ref>Template:Cite web</ref> Gennady Timchenko was close friends with Russian leader Vladimir Putin since the early 1980s.<ref name=":1">Template:Cite web</ref><ref>Template:Cite web</ref> In 1991, Putin gave Timchenko an oil export license.<ref name=":0" /> These oligarchs worked in close cooperaton with the government, displacing a system of crony capitalism with a system of state capitalism whereby the new oligarchs benefited from financing by state-owned banks and access to public procurement projects.<ref name="Russia’s Economy under Putin: From Crony Capitalism to State Capitalism">Template:Cite news</ref>

Gennady Timchenko and Arkady Rotenberg in 2015

An economic study distinguished 21 oligarchic groups as of 2003.<ref name=":0">Template:Cite journal</ref> Between 2000 and 2004, Putin apparently engaged in a power struggle with some oligarchs, reaching a "grand bargain" with them. This bargain allowed the oligarchs to maintain their powers, in exchange for their explicit support of – and alignment with – Putin's government.<ref>Putin: Russia's Choice. Richard Sakwa, (Routledge, 2008) pp. 143–150Template:ISBN?</ref><ref>Playing Russian Roulette: Putin in search of good governance, by Andre Mommen, in Good Governance in the Era of Global is Neoliberalism: Conflict and Depolitisation in Latin America, Eastern Europe, Asia, and Africa, by Jolle Demmers, Alex E. Fernández Jilberto, Barbara Hogenboom (Routledge, 2004)Template:ISBN?</ref> However, other analysts argue that the oligarchic structure has remained intact under Putin, with Putin devoting much of his time to mediating power-disputes between rival oligarchs.<ref name="Russia's Oligarchy, Alive and Well">Template:Cite news</ref>

Prominent oligarchs

{{#invoke:Labelled list hatnote|labelledList|Main article|Main articles|Main page|Main pages}} The ten most-prominent oligarchs of the early Putin era included Roman Abramovich, Oleg Deripaska, Mikhail Prokhorov, Alisher Usmanov, Viktor Vekselberg, Leonid Mikhelson, Arkady Rotenberg, Gennady Timchenko, Andrey Guryev and Vitaly Malkin.<ref>Template:Cite news</ref> In 2004, five years after Putin's ascent to power, Forbes listed 36 billionaires of Russian citizenship, with a note: "this list includes businessmen of Russian citizenship who acquired the major share of their wealth privately, while not holding a governmental position". In 2005, the number of billionaires dropped to 30, mostly because of the Yukos case, with Khodorkovsky dropping from No. 1 (US$15.2 billion) to No. 21 (US$2.0 billion). A 2013 report by Credit Suisse found that 35% of the wealth of Russia was owned by the wealthiest 110 individuals.<ref>Template:Cite news</ref><ref name="Russia’s Economy under Putin: From Crony Capitalism to State Capitalism"/>

Daniel Treisman proposed using a term "silovarch" (silovik and oligarch) for a new class of Russian oligarchs with backgrounds in Russian military and intelligence.<ref>Template:Cite journal</ref>

On 30 January 2018, the U.S. Treasury published a "list of oligarchs" as part of a document known as the "Putin list" which was compiled under the requirement of the CAATSA Act.<ref name=OligarchsListVOA30012018>Template:Cite news</ref><ref name=CNN2018>Template:Cite web</ref> According to the document itself, its criterion for inclusion was simply being a Russian national with a net worth of over $1 billion.<ref name=CAATSA-report>Template:Cite web</ref> The list was criticised for being indiscriminate, and including critics of Putin.<ref name="reuterslist">Template:Cite news</ref>

2008 global recession and credit crisis

According to the financial news-agency Bloomberg L.P., Russia's wealthiest 25 individuals collectively lost US$230 billion (£146 billion) from July 2008 to July 2017.<ref>Chorafas, D. Capitalism without capital. Springer, 2009.</ref><ref>Template:Cite news</ref><ref>Template:Cite news</ref> The fall in the oligarchs' wealth relates closely to the meltdown in Russia's stock market, as by 2008 the RTS Index had lost 71% of its value due to the capital flight after the Russo-Georgian War of August 2008.<ref>Template:Cite news</ref>

Putin (left) with Oleg Deripaska (right) in the Kremlin in March 2002

Billionaires in Russia were particularly hard-hit by lenders seeking repayment on balloon loans to shore up their own balance sheets. Many oligarchs took out generous loans from Russian banks, bought shares, and then took out more loans from western banks against the value of these shares.<ref name="guardian.co.uk">Template:Cite news</ref><ref name="forbes.com">Template:Cite news</ref> One of the first to get hit by the global downturn was Oleg Deripaska, Russia's richest man at the time, who had a net worth of US$28 billion in March 2008. As Deripaska borrowed money from western banks using shares in his companies as collateral, the collapse in share price forced him to sell holdings to satisfy the margin calls.<ref name="guardian.co.uk" /><ref name="forbes.com" />

Putin era, 2022 invasion of Ukraine and international sanctions

After the 2022 Russian invasion of Ukraine, Canada, US, and European leaders with the addition of Japan, took unprecedented steps to sanction Putin and the oligarchs directly.<ref name="CNBC">Template:Cite web</ref> In response to the sanctions, the targeted oligarchs started to hide wealth in an attempt to prevent the Western nations from freezing their assets.<ref>Template:Cite web</ref> These sanctions intend to directly impact the Russian ruling class as a response for their perceived contribution and acquiescence to the war with Ukraine. Although the sanctions miss some of the richest oligarchs, the impact on the war is unknown due to Putin's power over those that were sanctioned.<ref>Template:Cite web</ref> Since the invasion began, nine of the Russian oligarchs' yachts have turned their navigation transponders off as they sail to ports where they are less likely to be searched and seized.<ref name="CNBC"/>

Putin (left), with Petr Fradkov (right) in the Kremlin in May 2019

On March 2, 2022, the United States announced a special task force dubbed "Task Force KleptoCapture". This team was put together to specifically target oligarchs. It is made up of officials from the FBI, Marshals Service, IRS, Postal Inspection Service, Homeland Security Investigations and Secret Service. The main goal of the task force is to impose the sanctions set against these individuals to freeze and seize the assets that the US government claimed were proceeds of their illegal involvement with the Russian government and the invasion of Ukraine.<ref>Template:Cite web</ref> On March 21, 2022, the Organized Crime and Corruption Reporting Project launched Russian Asset Tracker to showcase the profiles and assets of several Russian oligarchs.<ref>Template:Cite web</ref>

Several dozen business people with family connections to top politicians include President Putin’s younger daughter Katerina Tikhonova, who through her investment fund has been the recipient of numerous large contracts from state-owned energy companies.<ref>Andrey Rudakov. (July 14. 2022). “Putin’s daughter has a big new job at Russia’s most powerful business lobby,”. Fortune Magazine website Retrieved 26 January 2023.</ref> Her former husband Kirill Shamalov runs the largest Russian petrochemicals company Sibur as well as his own investment fund.<ref>Guardian staff. (10 March 2022). “Russia: the oligarchs and business figures on western sanction lists,”. The Guardian website Retrieved 26 January 2023.</ref>

The son-in-law of Foreign Minister Sergei Lavrov runs an investment fund with assets exceeding $6 billion. Andrey Ryumin,<ref>Template:Cite web</ref> the son-in-law of Viktor Medvedchuk, President Putin’s former closest ally in Ukraine, runs another investment fund with large agricultural holdings which have become recipients of state subsidies for import substitution (Rouhandeh 2022). Petr Fradkov, the son of a former Prime Minister and head of the Russian foreign intelligence service, Sergei Sergeevich Ivanov, the son of the former head of the presidential administration Sergei Ivanov, and Andrey Patrushev, the son of the current head of the Russian Security Council Nikolai Patrushev have all joined the ranks of the oligarchs.<ref>Template:Cite news</ref>Template:Circular reference

The list of oligarchs and business executives who have risen to prominence and who have been sanctioned after Russia's invasion of Ukraine includes:

Russian oligarchs in London

{{#invoke:Labelled list hatnote|labelledList|Main article|Main articles|Main page|Main pages}}

The British Government policy encouraged the flow of foreign capital into the United Kingdom, for example through the foreign investor visa routes, introduced during John Major's premiership in 1994, one-fifth of whose recipients since 2008 are Russian citizens.<ref name=TheEconomist>Template:Cite news</ref>

A significant number of Russian oligarchs have bought homes in upmarket sections of London,<ref>Michael Weiss, "In Plain Sight: The Kremlin's London Lobby", World Affairs, Vol. 175, No. 6 (March/April 2013), pp. 84–91.</ref> which has been dubbed "Moscow on Thames" or "Londongrad".<ref>According to British journalist Nick Watt, reporting for ABC's Nightline (broadcast of 1 June 2007).</ref> Some, such as Eugene Shvidler, Alexander Knaster, Konstantin Kagalovsky, David Wilkowske and Abram Reznikov, are expatriates, having taken permanent residency in London. Roman Abramovich bought 16 Kensington Palace Gardens in London, a 15-bedroom mansion, for £120 million.<ref>Template:Cite web</ref> Mikhail Fridman restored Athlone House in London as a primary residence in 2016.<ref>Template:Cite web</ref><ref>Template:Cite news</ref>

Roman Abramovich bought the English football club Chelsea F.C. in 2003, spending record amounts on players' salaries.<ref>"Over there: American and other foreign owners are revolutionizing British football", The Boston Globe, 25 May 2007</ref> Alexander Mamut invested £100m to Waterstones bookstore chain after acquiring it in 2011 for £53m. According to its managing director James Daunt, the intervention saved Waterstones, which managed to make its first annual profit since 2008 in 2016.<ref>Template:Cite web</ref> He remarked that continued Russian ownership would've been "catastrophic" for the chain in 2022.<ref>Template:Cite web</ref>

Russian oligarchs in the Middle East

Dubai and Israel have been havens for oligarchs fleeing sanctions.<ref>Template:Cite news</ref><ref>Template:Cite news</ref><ref>Template:Cite web</ref>

The UAE has become a prominent destination for relocation of yachts, real estate, and private banking services linked to sanctioned Russian elites. In May 2022, the 118-metre Motor Yacht A, owned by oligarch Andrey Melnichenko, was anchored in Ras al-Khaimah, UAE, where it remained largely intact despite international sanctions.<ref>Template:Cite web</ref>

Russian purchases of UAE real estate also surged: Russians spent over US $6.3 billion on Dubai property in 2022 as non-resident buyers, many linked to high-net-worth individuals and oligarchs.<ref>Template:Cite web</ref>

See also

References

Template:Reflist

Further reading

Template:Privatization in Russia Template:Russia topics Template:Economy of Russia Template:Social class Template:Wealth

Retrieved from "https://wiki.sarg.dev/index.php?title=Russian_oligarchs&oldid=696975"