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Business oligarch is a near-synonym of the term "business magnate", borrowed by the English speaking and western media from Russian parlance to describe the huge, fast-acquired wealth of some businessmen of the former Soviet republics (mostly Russia and Ukraine) during privatization in Russia after the dissolution of the Soviet Union in the 1990s. Businessmen with great wealth from these countries were commonly labeled (simply) "oligarchs" in Russian regardless of whether they had real political power, as the term "oligarch" would imply.
Post-Soviet Russian oligarchs
The Russian oligarchs are business entrepreneurs who ended under Mikhail Gorbachev during his period of market liberalization.
By the end of the Soviet era and during Mikhail Gorbachev's perestroika, many Russian businessmen imported or smuggled goods such as personal computers and jeans into the country and sold them, often on the black market, for a hefty profit.
During the 1990s, once Boris Yeltsin took office, the oligarchs emerged as well-connected entrepreneurs who started from nearly nothing and got 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 oligarchs became extremely unpopular with the Russian public, and are commonly thought to be the cause of much of the turmoil that plagued the country following the collapse of the Soviet Union. The Guardian described the oligarchs as "about as popular with your average Russian as a man idly burning bundles of £50s outside an orphanage".
Post-Soviet business oligarchs include relatives or close associates of government officials, even government officials themselves, as well as criminal bosses who achieved vast wealth by acquiring state assets very cheaply (or for free) during the privatization process controlled by the Yeltsin government. Specific accusations of corruption are often leveled at Anatoly Chubais and Yegor Gaidar, two of the 'Young Reformers' chiefly responsible for Russian privatization in the early 1990s. According to David Satter, author of Darkness at Dawn, "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." In some cases, outright criminal groups in order to avoid attention assign front men to serve as executives and/or 'legal' owners of the companies they control.
Although the majority of oligarchs were not formally related with the Communist Party of the Soviet Union, there are allegations that they were promoted (at least initially) by the communist apparatchiks, with strong connections to Soviet power structures and access to the monetary funds of the communist party. In official media, oligarchs are usually pictured as the enemies of "communist forces". The latter is a stereotype that describes political power that wants to restore Soviet-style communism in Russia.
During Yeltsin's presidency, oligarchs became increasingly influential in politics and played a significant role in financing the re-election of Yeltsin in 1996. With the insider information about financial decisions of the government, oligarchs could easily increase their wealth even further. The 1998 Russian financial crisis hit some of the oligarchs hard, however, and those whose holdings were based on banking lost much of their fortunes.
Oligarchs during Putin's presidency
The power of oligarchs diminished significantly after Vladimir Putin became president, though others have become oligarchs during his time in power and often due to personal relations with Putin, such as the rector of the institute where he obtained a degree in 1996, Vladimir Litvinenko.
During Putin's presidency, many oligarchs came under fire for various illegal activities, particularly tax evasion in the businesses they acquired. However, it is widely speculated and believed that the charges were also politically motivated, as these tycoons have fallen out of favour with the Kremlin. Vladimir Gusinsky (MediaMost) and Boris Berezovsky both avoided legal proceedings by leaving Russia, and the most prominent, Mikhail Khodorkovsky (Yukos oil), was arrested in October 2003, and sentenced to 9 years, which was subsequently extended to 14 years.
Roustam Tariko, one of Russia's most successful businessmen and the creator of Russian Standard Vodka and the owner of Russian Standard Bank, is a rare case of an oligarch in that he did not get rich by capturing state assets during privatization, but created his empire completely from scratch.
The defenders of the out-of-favor oligarchs (often associated with Chubais's party—the Union of Right Forces) argue the companies they acquired were not highly valued at the time because they were still run on Soviet principles, with non-existent stock controls, huge payrolls, no financial reporting and scant regard for profit. They turned the businesses—often vast—around and made them deliver value for shareholders. They obtain little sympathy from the Russian public, though, due to resentment over the economic disparity they represent.
In 2004, Russian Forbes listed 36 billionaires of Russian citizenship, with an interesting 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 #1 (US$15.2 billion) to #21 (US$2.0 billion).
Billionaire, philanthropist,art patron and former KGB agent Alexander Lebedev has criticized the oligarchs, saying "I think material wealth for them is a highly emotional and spiritual thing. They spend a lot of money on their own personal consumption." Lebedev has also described them as a bunch of uncultured ignoramuses, saying "They don't read books. They don't have time. They don't go to exhibitions. They think the only way to impress anyone is to buy a yacht." He also notes that the oligarchs have no interest in social injustice. In Britain currently, the Krilovs family are one of the families descended from the Russian mafia.
Oligarchs in London
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A significant number of Russian oligarchs have bought homes in upscale sections of London, United Kingdom, which has been dubbed "Moscow on Thames". Some, like Boris Berezovsky, Konstantin Kagalovsky and Abram Reznikov, are expatriates, having left Russia permanently. Most own homes in both countries as well as property and have acquired controlling interests in major European companies. They commute on a regular basis between EU and Russia; in many cases their families reside in London, with their children attending school there. In 2007, Abram Reznikov bought one of Spain's mega recycling companies, Alamak Espana Trade SL, while Roman Abramovich, considered the wealthiest of the oligarchs, bought the English football club, Chelsea F.C., in 2003, and has spent record amounts on players' salaries.
2008 global recession and credit crisis
Since July 2008, according to the financial news agency Bloomberg L.P., Russia's wealthiest 25 individuals have collectively lost US$230 billion (£146 billion). The fall in the oligarchs' wealth is closely linked to the meltdown in Russia's stock market, as the RTS Index has lost 71% of its value, due to the capital flight after the Russia/Georgia conflict.
Billionaires in Russia and Ukraine have been particularly hard hit by lenders seeking repayment on balloon loans in order 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. One of the first to get hit by the global downturn was Oleg Deripaska, Russia's richest man at the time whose net worth was 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.
- Ukrainian oligarchs
- Business magnate
- History of post-Soviet Russia: The "loans for shares" scheme and the rise of the "oligarchs"
- Robber baron (industrialist)
- Russian mafia
- Political groups under Vladimir Putin's presidency
- Profile: Boris Berezovsky BBC Retrieved on April 28, 2008
- What a carve-up! The Guardian Retrieved on April 28, 2008
- Billionaires boom as Putin puts oligarchs at N2 in global rich list The Guardian, 19 Feb 2008
- "The fabulous riches of Putin's inner circle". The Bureau Investigates. Retrieved June 7, 2012.
- Harding, Luke (October 25, 2008). "Twilight of the oligarchs". The Guardian (London). Retrieved April 1, 2010.
- According to British journalist Nick Watt, reporting for ABC's Nightline. (broadcast of June 1, 2007)
- "Over there: American and other foreign owners are revolutionizing British football", Boston Globe, May 25, 2007
- Thomas Jr., Landon (September 5, 2008). "Russia's Oligarchs May Face a Georgian Chill". The New York Times. Retrieved April 1, 2010.
- http://web.archive.org/web/20081026022503/http://www.forbes.com/business/2008/10/23/billionaires-margin-calls-biz-billies-cx_af_1023billiemargin.html. Archived from the original on 2008-10-26. Missing or empty
- The Russian Oligarchs of the 1990s
- David E. Hoffman, The Oligarchs: Wealth and Power in the new Russia, Perseus Book Group, New York, 2002
- Mark Hollingsworth and Stewart Lansley, Londongrad; From London with cash: The inside story of the oligarchs, London, 2009
- Oligarchology Mar 31, 2013 New York (magazine)