Why Putin’s Oligarchs Are Under Fire Amid Russia-Ukrainian War
“We [Russians] no longer have oligarchs. The oligarchs are those who take advantage of their proximity to the authorities to collect super-profits. We have large companies, private or with government participation. But I don’t know of any large company that gets preferential treatment because of its proximity to the authorities.
So said Russian President Vladimir Putin in a mid-2019 interview while refuting the accusation that Russia was dominated by oligarchs.
Few people following Russian politics believed Putin’s claim. They say that even if the Kremlin [literally meaning a fortress, it is Russian government building complex] officially reports Putin’s annual income at $1,31,900, the Russian president earns much more. They say Putin benefits from billions in cash and overseas assets held by trusted friends and relatives, the oligarchs.
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A 2017 study by the US-based National Economic Bureau (NEB) supports this claim. The study estimated that Russian oligarchs held around $800 billion in countries including the UK, Switzerland, Cyprus and similar offshore banking centers.
These few hundred ultra-rich Russians have roughly equal wealth to the rest of Russia’s 15 crore population.
The forgotten dictionary meaning of the word, oligarch, refers to a ruler in an oligarchy, which is a form of government run by a group of equals. No country is technically an oligarchy in the world today. But oligarchs usually refer to influential Russians with super fat chests and political power in the country. They are believed to be the power that runs Vladimir Putin’s government.
Known for their immense wealth and luxurious, exotic lifestyles, a number of Russian oligarchs have become targets of sanctions from the West in general and the United States in particular. These oligarchs, many of whom, are on Forbes’ list of the richest Russians and have investments ranging from Silicon Valley in the United States to British Premier League soccer teams.
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Russia’s invasion of Ukraine has brought these oligarchs into the limelight after the United States sanctioned them for weakening Putin to the knees. US President Joe Biden announced sanctions against a number of oligarchsincluding Sergei Borisovich Ivanov and his son Sergei Sergeevich Ivanov, and Nikolai Platonovich Patrushev and his son Andrey Patrushev.
Biden identified the Ivanovs and the Patrushevs as families with close ties to Putin. Sergei Borisovich Ivanov is the Russian President’s special representative for environmental protection, ecology and transport. His son Sergei Sergeevich Ivanov runs Alrosa, a government-backed diamond mining company that accounts for 28% of the world’s diamond mining capacity.
Nikolai Platonovich Patrushev is the Secretary of the Security Council of the Russian Federation. His son Andrey Patrushev heads Gazprom Neft, Russia’s third largest oil company.
Among others, oil baron Igor Ivanovich Sechin, his son Igorevich Sechin and banker Alexander Aleksandrovich Vedyakhin of Sberbank, which owns about a third of Russian banking assets.
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Those who followed the Russian oligarchs and Putin’s government expressed surprise at the omissions, especially two Roman Abramovich and Alisher Usmanov.
Roman Abramovich is a former Russian provincial governor and close ally of Putin who became a steel and metals tycoon. He has dual citizenship with an Israeli passport. His net worth is estimated at over $13 billion.
Abramovich bought the British football club Chelsea. He has homes in London and New York. It is said to have the most expensive superyacht in the world, the Solaris, equipped with a helicopter hangar, tennis court, swimming pool and luxurious accommodation for around 100 guests and crew members. ‘crew.
Not so long ago, her name was caught in the same social breath as former US President Donald Trump’s daughter, Ivanka Trump, and her husband Jared Kushner.
Alisher Usmanov is another Russian metal tycoon. His fortune is estimated at more than 14 billion dollars. Usmanov held a stake in British football club Arsenal. He sold his stake recently for $700 million. He is said to own two vast estates in London worth a combined $300 million. The talk in the city of the oligarchs is that Usmanov’s superyacht, named Dilbar, is longer than Abramovich’s.
Experts say the US sanction measure would mean nothing if Abramovich and Usmanov are on the omissions list.
THE HISTORY OF THE RUSSIAN OLIGARCHS
The history of Russian oligarchs basically begins after the fall of the Soviet Union. The collapse of the Soviet structure was a turbulent phase in Russia. These oligarchs saw an opportunity in the crisis and came to control state assets in the mining, industrial and other sectors.
Boris Yeltsin’s tenure was crippled by rampant corruption that helped the oligarchs seize state powers and economic control. In 1996, the Russian oligarchs decided the elections and controlled all other aspects of the Yeltsin government. Suddenly, in 1999, Yeltsin resigned. He had already declared Vladimir Putin his successor.
Some of the commentators described the Russian situation just before Putin took the reins of power saying that the country was ruled by wandering bandits, referring to the oligarchs.
PUTIN AND THE OLIGARCHS
Putin has upset the relationship between the government and the oligarch. Over the years, the oligarchs have become the weapons of government. Putin came to control them rather than the previous situation where the oligarchs dictated the government.
The wealth of Russian oligarchs still depends on their proximity to the government, but they have been turned into stationaries by roving bandits. Through a system of punishment for political disobedience, Putin created a band of oligarchs who spoke and acted in sync with him.
During his 22 years of rule in Russia, Putin crushed those who dared to challenge him. Early in his reign in 2003, Mikhail Khodorkovsky, an oil baron once considered Russia’s richest man, got a taste of Putin’s medicine.
Khodorkovsky was arrested in 2003 for fraud, money laundering and embezzlement. It took him 10 years to secure his release from prison in 2013, after which he fled to London. Khodorkovsky runs a foundation, called Dossier Center, dedicated to exposing the criminal activities of Kremlin insiders.
Likewise, Boris Berezovsky, a mathematician turned Mercedes dealer who became ultra-rich by buying the country’s main television channel at the end of the Soviet Union. He was tried in absentia for fraud and embezzlement after fleeing to London in 2000.
In 2013, Berezovsky was found dead on the bathroom floor of his home in southern England.
IS PUTIN PREPARED FOR THE SANCTION OF THE OLIGARCHS?
This should affect Putin personally. But two things play in Putin’s favor here. First, that the West does not opt for sanctions in cases where its own interests could be affected, for example, by leaving out some of the main influencers of Russian politics.
Second, the sanctions of 2014, when Putin ordered the annexation of Crimea, made him wiser. Reports indicate that Putin’s oligarchs are investing heavily in cryptocurrencies. This way of investing not only disturbs the United States, but much of the world. Putin’s ministers have publicly stated that they began preparing for sanctions long before the United States imposed them.
So while the West might be pursuing Putin’s oligarch, he and his oligarchs might be better prepared to have diversified business holdings in countries aiming to sue them. The cost of sanctions could be mutually detrimental.