Russian oligarch

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The term Russian oligarch (see the related term "New Russians") generally labels wealthy businessmen of the former Soviet republics who rapidly accumulated wealth during the era of Russian privatization in the aftermath of the dissolution of the Soviet Union in the 1990s. The failing Soviet state left the ownership of state assets contested, which allowed for informal deals with former USSR officials (mostly in Russia and Ukraine) as a means to acquire state property. Harvard medieval historian Edward L. Keenan has drawn a comparison between the current Russian system of oligarchs and the system of powerful Boyars which emerged in late-Medieval Muscovy.[1][dead link]

The Russian oligarchs are business entrepreneurs who emerged under Mikhail Gorbachev (General Secretary 1985-1991) during his period of market liberalization.[citation needed]

Yeltsinian oligarchs[edit]

By the end of the Soviet era in 1991 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.

Anatoly Chubais, the man most credited with the Yeltsin-era privatization that led to the growth of the oligarchs[2]

During the 1990s, once Boris Yeltsin (President of Russia from 1991) took office, 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 enabled a handful of young men to become billionaires, specifically by arbitraging the vast difference between old domestic prices for Russian commodities (e.g. gas, oil) and the prices prevailing on the world market. Because they stashed billions of dollars in private Swiss bank accounts rather than investing in the Russian economy, they were dubbed[by whom?] "kleptocrats".[3] These oligarchs became extremely unpopular with the Russian public, and are commonly thought[by whom?] of as the cause of much of the turmoil that plagued the country following the collapse of the Soviet Union in 1991. The Guardian described the oligarchs as "about as popular with your average Russian as a man idly burning bundles of £50s outside an orphanage".[4][5]

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 of 1991-1999.[citation needed] Specific accusations of corruption are often leveled[by whom?] at Anatoly Chubais and Yegor Gaidar, two of the "Young Reformers" chiefly responsible for Russian privatization in the early 1990s.[citation needed] 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".[citation needed] 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 connected with the Communist Party of the Soviet Union, there are allegations[by whom?] 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. Official Russian media usually depict oligarchs 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 (1991-1999) oligarchs became increasingly influential in Russian politics; they played a significant role in financing the re-election of Yeltsin in 1996. With 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 still based mainly on banking lost much of their fortunes.

The most influential and exposed oligarchs from the Yeltsin era include Boris Berezovsky, Mikhail Fridman, Vladimir Gusinsky, Mikhail Khodorkovsky, Vladimir Potanin, Alexander Smolensky, Pyotr Aven, Vladimir Vinogradov and Vitaly Malkin.[6][7][8] They formed what became known as Semibankirschina (or seven bankers), a small group of business moguls 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.

Potanin, Malkin and Fridman are the only ones on the list to have retained their influence in the Putin era (1999- ). Khodorkovsky, Berezovsky and Gusinsky "have been purged by the Kremlin", according to The Guardian.[9]

Oligarchs during Putin's presidency[edit]

The most famous oligarchs of the Putin era include Roman Abramovich, Alexander Abramov, Oleg Deripaska, Mikhail Fridman, Mikhail Prokhorov, Alisher Usmanov, German Khan, Viktor Vekselberg, Leonid Mikhelson, Vagit Alekperov, Pyotr Aven, and still Vladimir Potanin and Vitaly Malkin.

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.[10][11]

Many more business people have become oligarchs during Putin's time in power, and often due to personal relations with Putin, such as the rector of the institute where Putin obtained a degree in 1996, Vladimir Litvinenko,[12] and Putin's childhood judo-teacher Arkady Rotenberg.[13] However, other analysts[which?] argue that the oligarchic structure has remained intact under Putin, with Putin devoting much of his time to mediating power-disputes between rival oligarchs.[1]

During Putin's presidency, a number of oligarchs came under fire for various illegal activities, particularly tax evasion in the businesses they acquired. However, it is widely speculated and believed[by whom?] 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 (of Yukos oil), was arrested in October 2003 and sentenced to 9 years, which was subsequently extended to 14 years. (Putin, however, pardoned him, and he was released on 20 December 2013.[14])

The term 'oligarch' has also been applied[by whom?] to technology investors such as Yuri Milner, although without involvement in Russian politics.[15]

Defenders of the out-of-favor oligarchs (often associated with Chubais's party—the Union of Right Forces) 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. 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, 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 [art] 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.[16]

Oligarchs in London[edit]

A significant number of Russian oligarchs have bought homes in upscale sections of London in the United Kingdom, which has been dubbed[by whom?] "Moscow on Thames".[17] Some, like Len Blavatnik, Eugene Shvidler, Alexander Knaster, Konstantin Kagalovsky and Abram Reznikov, are expatriates, having taken permanent residency in London. This community has led to journalists calling the city "Londongrad". 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 the 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 bought the English football club, Chelsea F.C., in 2003, and has spent record amounts on players' salaries.[18]

In 2013 expatriate oligarch Leonard Blavatnik's refurbished home was possibly the most expensive house in London (per sq ft.)[19]

The billionaire Moscow oligarch Mikhail Fridman (Russia's second richest man as of 2016) is currently restoring Athlone House in London, to be one of his primary residences.[20] The house will be worth £130 million when restored.[21]

2008 global recession and credit crisis[edit]

According to the financial news-agency Bloomberg L.P., Russia's wealthiest 25 individuals have collectively lost US$230 billion (£146 billion) since July 2008.[citation needed] The fall in the oligarchs' wealth relates closely 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 of August 2008.[22][need quotation to verify]

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.[16][23] 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.[16][23]

The Russian oligarch as an archetype[edit]

The wealth, political power, and (to some) negative attributes of Donald Trump as a candidate for the presidency of the United States in 2016 drew comparisons with Russian oligarchs.[24][25]

See also[edit]


  1. ^ a b "Russia's Oligarchy, Alive and Well", New York Times, December 30, 2013.
  2. ^ Profile: Anatoly Chubais,” BBC News, March 17,2005
  3. ^ Johanna Granville, "The Russian Kleptocracy and Rise of Organized Crime." Demokratizatsiya (summer 2003), pp. 448-457.
  4. ^ Profile: Boris Berezovsky BBC Retrieved on April 28, 2008
  5. ^ What a carve-up! The Guardian Retrieved on April 28, 2008
  6. ^
  7. ^ British Paper Names Banking Clique at The Moscow Times, November 5, 1996 (archived)
  8. ^ Dmitry Butrin. The Results of 10 Years of Capitalism. Kommersant newspaper, March 5, 2002 (in Russian)
  9. ^ Billionaires boom as Putin puts oligarchs at N2 in global rich list The Guardian, 19 Feb 2008
  10. ^ Putin: Russia's Choice. Richard Sakwa, (Routledge, 2008) pp 143-150
  11. ^ Playing Russian Roulette: Putin in search of good governance, by Andre Mommen, in Good Governance in the Era of Global Neoliberalism: Conflict and Depolitisation in Latin America, Eastern Europe, Asia, and Africa, by Jolle Demmers, Alex E. Fernández Jilberto, Barbara Hogenboom (Routledge, 2004)
  12. ^ "The fabulous riches of Putin's inner circle". The Bureau Investigates. Retrieved June 7, 2012. 
  13. ^ Oligarchology by Alex Yablon, New York Magazine, Mar 31, 2013
  14. ^ "Hague court awards $50 bn compensation to Yukos shareholders". Russia Herald. Retrieved 29 July 2014. 
  15. ^ Wired Magazine: "How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley" by Michael Wolff October 21, 2011
  16. ^ a b c Harding, Luke (October 25, 2008). "Twilight of the oligarchs". The Guardian. London. Retrieved April 1, 2010. 
  17. ^ According to British journalist Nick Watt, reporting for ABC's Nightline. (broadcast of June 1, 2007)
  18. ^ "Over there: American and other foreign owners are revolutionizing British football", Boston Globe, May 25, 2007
  19. ^ Britain's second richest man refurbishes his £200m home: Russian-born tycoon orders 'mind-boggling' revamp of London mansion with 13 bedrooms, pool and now a multi-storey car park in the basement, by Leon Watson, 29 April 2013, Daily Mail
  20. ^ New Athlone House owner: ‘I want to restore it to its former glory’ 11:21 30 June 2016 Anna Behrmann, Ham and High
  21. ^ Billionaire's plans for £65 million derelict mansion approved By Emma Woollacott Sep 15, 2016
  22. ^ Thomas Jr., Landon (September 5, 2008). "Russia's Oligarchs May Face a Georgian Chill". The New York Times. Retrieved April 1, 2010. 
  23. ^ a b "Margin Calls Ignite Billionaire Fire Sale". Archived from the original on 2008-10-26. 
  24. ^ Applebaum, Anne (2016-08-19). "The secret to Trump: He's really a Russian oligarch". The Washington Post. ISSN 0190-8286. Retrieved 2017-02-15. The real problem with Trump isn't that he is sympathetic to Russian oligarchs, it's that he is a Russian oligarch, albeit one who happens to be American. [...] By this, I don’t mean that Trump eats caviar or hangs out in Moscow nightclubs, although for all I know he's done both of those things. He is, rather, an oligarch in the Russian style — a rich man who aspires to combine business with politics and has an entirely cynical and instrumental attitude toward both. [...] Trump also has the Russian oligarch aesthetic: The gilt fixtures of his Trump Tower apartment rival those in the palatial "cottages" that have been built in the suburbs of Moscow. [...] He isn't running a campaign designed to help his party or his country, or even to push a coherent set of ideas. He’s running a campaign for the same reasons a Russian oligarch would: to build a brand, to stoke an ego, to make money. 
  25. ^ Mayer, Jane (2016-10-03). "Donald Trump, American Oligarch". The New Yorker. ISSN 0028-792X. Retrieved 2017-02-15. Now, with the Times reporting that congressionally crafted loopholes for real-estate magnates could have enabled Trump to legally evade all income taxes for eighteen years, while earning as much as fifty million dollars a year, we have a perfect example of how oligarchic interests have made inroads in the United States. [...] For decades, Trump has been part of the private sector that has used its wealth and power to carve out tax loopholes for its own self-interest. This may be acceptable in Russia, and other oligarchic parts of the world, but whether it's O.K. in America, too, is now on the ballot next month. 

Further reading[edit]