The Rise of Russian Oligarchs and their Importance
World news has been full of stories of governments seizing properties and items belonging to Russian oligarchs, such as this article by Yahoo, entitled “Justice Department seizing Russian oligarch's massive private jet”. The seizure of oligarchs’ belongings is an imperative move in slowing or stopping Putin’s invasion. This analytical spotlight will look into the rise of Russian oligarchs and their importance in modern day Russia. In order to do so, we must go back to the 1990s, when the Soviet Union fell.
Russian oligarchs rose in the 1990s, directly after the fall of the Soviet Union when there was a “messy [and] wildly corrupt market”. The new Russian government began selling off parts of formerly Soviet-owned companies. Many of these stocks and assets being given away via a voucher program were acquired by a select few, the future oligarchs. These vouchers were given away at extremely low prices, especially when compared to how large and important the companies were. Around 1996, when the Kremlin needed cash and funding for Yeltsin’s re-election campaign, the government ended up receiving loans from oligarchs in exchange for shares of ownership in more state-owned companies. These shares were sold off at below market prices. These select few now controlled some of Russia’s biggest and most profitable organizations, making them ever more powerful.
Under Putin, the oligarchs further prospered. However, his public aim was to reduce their power. Putin held a meeting with Russia’s richest in his first year of the Presidency. In this meeting, he stated that the oligarchs would have to follow what he says or be punished. Shortly after this, two oligarchs who owned major TV stations were forced to leave the country. Putin’s former Prime Minister stated the 2003 arrest of Mikhail Khodorkovsky, Russia’s richest man at the time, was politically motivated as he funded an opposition party. In 2013, an oligarch that had been a critic of Putin was found dead in his home. Police were unable to determine if it truly was a suicide.
New oligarchs emerged, building their empires on Putin’s authoritarian leadership. This is the reason for their importance. Their dependence on Putin and the government for their wealth is exactly why they have been targeted by sanctions. While Putin may have had the power previously, it is now somewhat shared between Putin and the new oligarch class. Oligarchs in the inner-circle are dependent on Putin for their wealth, and Putin is dependent on these oligarchs for helping keep the Russian people in line.
The sanctions being placed on the oligarchs and Putin are being used to punish both, in an attempt to anger the oligarchs enough to convince Putin to back down. As they were being sanctioned and their properties, such as homes and yachts, were being seized, the oligarchs began to sell and move their assets. This pressured Putin, and removed his emergency funding options – if he needs anything, the oligarchs will be unable to spare their already sparse funds. While it does not have a strong financial effect, the oligarchs will still be richer than most people, it does have a psychological effect. Shortly after sanctions, two Russian oligarchs came out against Putin, asking him to end the war. Targeting Putin’s inner circle is how Western powers hope to end the war, pressuring those closest to him puts even more pressure on Putin.