Under Putin, ‘Oligarchs’ in Russia Retain Wealth but Lose Power

In the two decades under Vladimir Putin’s rule, the wealthy Russians known as “oligarchs” have retained their vast fortunes but have lost a significant amount of power. Initially seen as shadow rulers due to their immense wealth, these oligarchs have become increasingly less influential in Russian politics. A pivotal moment that showcased this power shift was when Putin sent troops into Ukraine in 2022, and during a televised meeting with top industrialists and entrepreneurs, he made it clear that their wealth was subject to his decisions. This marked a significant departure from the perception of oligarchs as all-powerful figures. Despite the changes, loyalty to Putin remains key for these ultra-wealthy individuals, as he seeks to create a new class of loyal billionaires by redistributing seized assets and invalidating privatizations from the 1990s.

Under Putin, ‘Oligarchs’ in Russia Retain Wealth but Lose Power

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Background

In order to understand the current state of oligarchs in Russia under Vladimir Putin’s rule, it is important to review the overview of Putin’s rise to power and the definition of ‘oligarchs.’ When Putin came to power in 2000, the outside world viewed the ‘Russian oligarchs’ as individuals who had amassed vast wealth, making them almost shadow rulers in the country. It is worth noting that the term ‘oligarchs’ has broadened in popular usage to refer to almost any Russian with a substantial fortune, although it originally referred to a specific group of businessmen.

During Putin’s early years in power, the oligarchs enjoyed substantial influence and power in the country. Many of them had taken advantage of the privatization of state industries in the post-Soviet era and had built vast holdings as government controls loosened. Boris Berezovsky, a fast-talking mathematician, epitomized the breed with his successful business ventures and control over major companies. Other prominent figures from that era included media mogul Vladimir Gusinsky and oil tycoons Mikhail Khodorkovsky and Roman Abramovich.

However, the ordinary Russians had grown resentful of the oligarchs, who had thrived while millions struggled through economic changes. In a meeting with approximately two dozen of the top oligarchs in the summer of 2000, Putin made it clear that they needed to stay out of politics to ensure the safety of their wealth. This guarantee allowed them to keep their riches amassed before Putin’s presidency, in exchange for their loyalty to the regime.

Decline of Oligarchs’ Power

The decline of the oligarchs’ power under Putin became evident through various events. Boris Berezovsky started criticizing Putin shortly after he took office, which led him to leave Russia for the United Kingdom. In 2003, he was found dead in his home under disputed circumstances. Vladimir Gusinsky, whose media holdings were critical of Putin, was arrested and eventually agreed to sell his holdings to a state-owned company before leaving the country. Mikhail Khodorkovsky, one of Russia’s richest men at the time, faced arrest and spent a decade in prison before being pardoned and leaving Russia.

Another example of the decline of oligarchs’ power was seen in Mikhail Prokhorov’s presidential bid in 2012. Prokhorov, who had made a fortune in metals, was allowed to run against Putin but was widely seen as a Kremlin-supported candidate designed to create the illusion of political pluralism in Russia.

Reaction to the Ukraine War

During the Ukraine war in 2022, most of Russia’s oligarchs remained silent or offered only mild criticism of the conflict. However, there were exceptions, such as Oleg Tinkov, a banking and brewing entrepreneur, who publicly denounced the war and its supporters. Tinkov eventually left the country and renounced his citizenship.

Mikhail Fridman, a co-founder of Russia’s largest private bank, also called for an end to the bloodshed and referred to the war as a tragedy. Fridman, an Israeli citizen, had previously lived in Britain but reportedly returned to Moscow after fighting between Israel and Hamas began. Overall, despite some grumbling, the oligarchs continued to show loyalty to Putin’s regime.

Putin’s Motives

Experts suggest that Putin’s motives behind the decline of power for the oligarchs are multifold. One motive is his desire to create a new cadre of wealthy individuals who are loyal to him personally. To achieve this, Putin has seized assets from foreign companies exiting Russia and invalidated the privatizations from the 1990s, redistributing wealth and control to a new generation of less-powerful individuals. This deprivatization process aims to strengthen Putin’s own position and create a group of quasi-owner state oligarchs.

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Expert Analysis

According to the Carnegie Endowment for International Peace, Putin values loyalty above all else. Analysts suggest that the guarantee given to the oligarchs by Putin – that their wealth won’t be touched if they stay out of politics – remains intact. Alexandra Prokopenko from the Carnegie Endowment for International Peace emphasizes that the loyalty of the oligarchs has not been enough for Putin. He aims to create a new group of wealthy figures who are beholden to him and to redistribute wealth to secure his own position.

Nikolai Petrov, an analyst from Britain’s Royal Institute of International Affairs, points out that Russia is engaging in deprivatization to redistribute wealth to a new generation of less-powerful individuals and consolidate Putin’s power. This process creates a new group of state-controlled oligarchs who control wealth and assets that were seized from foreign companies and invalidated privatizations from the 1990s.

Conclusion

Under Putin’s rule, the oligarchs in Russia have retained their wealth but have lost significant power. While they were once almost shadow rulers, they are now required to stay out of politics to avoid endangering their riches. The decline in their power has been evident through the criticism, imprisonment, forced sales, and arrests of some of the most prominent oligarchs. Despite the blows to their assets caused by the Ukraine war, most oligarchs have stayed quiet or offered token criticism, while a few have spoken out against the conflict. Putin’s motives behind the decline of oligarchs’ power are rooted in his desire to create a new loyal wealthy class and redistribute wealth and assets to consolidate his own position. Expert analysis suggests that Putin values loyalty and aims to create a new cadre of oligarchs who are beholden to him.

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