US President Joe Biden and other world leaders are watching the Russia oligarchs as they seek new ways to punish Vladimir Putin – and those who gave him power and gained his power – by waging war in Ukraine.
Biden named the wealthy oligarchs in his State of the Union address on March 1, 2022, promising to “take your boats, your luxurious houses, your private jets.” “We have come to your advantage,” he said. And in the UK, two other wealthy Russians were added to the 11 other oligarchs that were directly sanctioned in the attack.
Yet who are these oligarchs, and what is their relationship with Putin? And more importantly, will the destruction of their wealth do anything to end the Ukrainian war?
The Oligarchs Comes to Power
As a emerging market expert, business strategy and post-Soviet political economy, I have studied the oligarchs in depth.
The Oligarchs, in the case of Russia, are the richest and most powerful political entities in the world. They came in two different waves.
The first group to emerge from Russia’s independent trade in the 1990’s, most notably the entire sale of large corporations after 1995. The process was marred by significant corruption, which resulted in the infamous “stock market” system, which was passed. in 12 major natural resource companies from the government to select investors for loans aimed at strengthening the government’s budget.
The government deliberately made a mistake on the loan, allowing debtors – who would become the oligarchs – to sell to large companies such as Yukos, Lukoil and Norilsk Nickel, often on their own. In fact, the administration of then-President Boris Yeltsin seemed to enrich a small group of tyrants by selling key parts of the Soviet economy at a huge discount.
After Putin came to power in 2000, he facilitated the second wave of oligarchs through state contracts. Private property suppliers in many areas such as infrastructure, defense and health care will charge the government prices more often than the market rate, providing the government officials involved. Putin thus enriched the new army of oligarchs who owed him a large sum of money.
Oligarchs Lose Capture, Keep Their Treasure
In the 1990s, the oligarchs had a strong hand with the Kremlin and were able to even set policy at times. Under Yeltsin, many oligarchs occupied official positions in the government, and numerous anecdotes circulated in the Kremlin for financial gain.
But since the 2000s Putin has been calling for a gun. In fact, Putin proposed an agreement: The oligarchs would get out of politics, and the Kremlin would get out of their businesses and leave their often illegitimate profits alone.
In addition, the popular frustration with private practice of the 1990s led to a slight decline in the 2000s. Putin’s Kremlin put political pressure on the oligarchs in strategic industries such as the media and natural resources to sell controls back to the government. Putin also passed laws that give special treatment to so-called state institutions. These measures have protected the Kremlin’s control of the economy – despite the oligarchs.
Make no mistake: No matter what their nature, the oligarchs have helped Putin to continue ruling with his political peace and economic support for the Kremlin’s domestic systems.
In addition, my research highlights situations in which the oligarchs use their wealth – in terms of jobs, debts or donations – to influence foreign politicians. For example, in 2014 the Russian bank FCRB borrowed 9.4 million euros ($ 10.3 million) from the EU-affiliated group Marine Le Pen in France, creating a political debt in Russia. And in 2016, Lukoil, Russia’s second-largest oil company, paid a $ 1.4 million government fine to Martin Nejedly, a key adviser to the Czech president in 2016, which allowed Nejedly to retain his strong position. This helped make Czech President Milos Zema “one of the Kremlin’s most ardent supporters among European leaders.”
Some oligarchs appear to be starting important geopolitically voluntary transactions in order to form alliances with the Kremlin. While it is difficult to establish a direct link between what I call the “national volunteer” of the oligarchs and the pro-Kremlin policies of the beneficiaries, there is strong evidence that the oligarchs’ funding supports Putin’s support positions outside Russia. .
In addition, my research into the seclusion of business political activities suggests that using seemingly non-political mediators as private companies is an important strategy by which organizations such as the Kremlin can conceal their political activity.