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The Attack on the Oligarchs



  • after his election as president in May 2000 Putin moved quickly to consolidate his political authority

  • his first decisive step being to wrest control of the broadcast media from the oligarchs

  • at the same time he assured corporate leaders that he would not interfere with their business activities, so long as they stayed out of politics

  • Putin maintained this ‘equidistance’ approach until 2003, when many business leaders became heavily involved in the preparations for the December 2003 State Duma elections

  • it is estimated that 20% of the candidates were directly linked to business corporations

  • the most politically active firm was Yukos, Russia’s largest oil company, which was headed by Mikhail Khodorkovsky

  • it also seemed to be preparing itself for sale to a Western buyer (thought to be Chevron)

  • in October 2003 Khodorkovsky, the richest man in Russia with an estimated net worth of $16 billion, was jailed on charges of tax evasion

  • he was eventually sentenced to eight years in prison.

  • Yukos was forced into bankruptcy through exaggerated claims for tax arrears, and its prize assets were sold off in a rigged auction to the state-owned Rosneft

  • oligarchic capitalism proved highly unstable, since the economic fate of the individual oligarchs was too closely tied to the course of state policy


The Shift to State Corporatism (State–Oligarchic Capitalism)

  • the oligarchs as a class have not disappeared

  • they have increased in number and seen their wealth multiply under Putin’s rule

  • the oligarchs benefited from Russia’s booming economy, its soaring stock market, and successful stock offerings to domestic and foreign investors

  • Forbes magazine reported that there were 33 individuals in Russia in 2006 with personal assets above $1 billion, the third highest number of billionaires in the world

  • their ranks had risen to 87 by 2008, putting Russia in second place after the US

  • Forbes estimated their combined assets doubled from $90 billion in 2005 to $172 billion in 2006, and more than doubled again to $455 billion by 2008

  • the state recaptured the commanding heights of the economy

  • this has been most pronounced in the all-important oil sector

  • the state raised its holding in key companies

  • the state’s total shareholding portfolio was estimated to have a market value of $469 billion in 2007, equal to 40% of the capitalisation of Russia’s stock market

  • government oversight of the companies is achieved through the placement of currently serving members of the executive branch on corporate boards, in some cases as chairmen

  • many of these are drawn from Putin’s own retinue

  • the increasing fusion of state and oligarchic power


"Private" and "State" Oligarchs

The core of the Russian economic elite, that had emerged in the 1990s, has survived and prospered under Putin. This group of tycoons can be called "private" oligarchs:

  • V. Alekperov, V. Bogdanov (oil industry)

  • A. Mordashov, V. Lisin (iron and steel industry)

  • M. Prokhorov, V. Potanin, O. Deripaska, I. Makhmudov (non-ferrous metals)

  • V. Yevtushenkov (telecommunications)

  • M. Freedman, V. Vekselberg, R. Abramovich (investors with diverse portfolios; in the 1990s Abramovich started his rise as an oligarch in the oil industry)

In contrast to this group, the tycoons that emerged during the economic boom under Putin can be described as "state" oligarchs. They can be further divided into:

State-Related Tycoons State Crisis Managers
Managers of successful holding companies and banks, in which the state has a significant or controlling interest:
  • A. Miller (Gazprom)
  • V. Yakunin (Russian Railways)
  • N. Tokarev (Transneft)
  • Sh. Takhautdinov (Tatneft)
  • S. Bogdanchikov (Rosneft)
  • G. Gref (Sberbank)
State-appointed crisis managers, presiding over state corporations:
  • S. Kirienko (Rosatom)
  • S. Chemezov (Rostekhnologii)

State vs. Private Sectors

  • The influence and weight of state-related oligarchs have grown under Putin. Yet, all the talk about the expansion of the state's control over the economy and the rise of state capitalism notwithstanding, the state sector has not displaced the private one as the core of the Russian economy.

  • In the 2000s, renationalisation has been significant: YUKOS, Sibneft (now Gaspromneft), all helicopter building plants, etc. But at the same time privatisation has also proceeded apace, including electricity generating companies, the completion of the privatisation of the iron and steel industry, coal mining companies, etc.

  • As a result, the overall weight of the state sector in the economy has not changed significantly compared to the late 1990s.    

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Economy under Putin

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Russian Federation

The "Catching up" Cycles
"Non-organic" Reforms
Great Leap to Capitalism
Russia's Privatization
Deformed Capitalism
Coping with Transition
The Yeltsin Era
Yeltsin's Legacy
Putin's Plan
Russian Federalism
The Chechen Problem
"Deprivatizing" the State
First and Second Dumas
Third and Fourth Dumas
Civil Society
"Controlled" Democracy

Post-Soviet Geopolitics

Paradoxes of Russian Mentality
Economy under Putin
The Putinite Order
Putin's Choice
People Speak (Opinion Polls)
Tables and Statistics

Russia from A to Z

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