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By the
mid-1990s Russia formally had a market economy. However, in
practice, huge financial resources were still distributed through
the state budget. Subsidies and “selective” financial support from
the state budget still existed. Railways, massive energy systems,
and entire branches of industry were completely or partially
state-owned. The state dominated the financial sector. It retained
influence in foreign trade, dictating quotas for exported raw
materials, granting export licenses, and regulating access to the
gas and oil pipe networks. The incomplete nature of Russia’s
capitalist reforms meant that the state continued to play a major
role in running the economy. |
Under these
conditions, it was extremely important for the business class to
establish close relations with state officials at all levels.
Russian entrepreneurs realized that, in a country where officials
had such extensive powers, it made sense to have good political
connections. A handful of the most successful of them thrived on the
confluence of power and big business, accumulating enormous
political and economic influence and concentrating in their hands
control over entire branches of the economy. These magnates soon
began to refer to themselves as “oligarchs.”
The new
oligarchs’ rise to prominence began in 1994. By that time a score of
leading bankers and entrepreneurs had emerged who had made their
fortunes in the period of rampant inflation of 1992—94. The new
magnates included Vladimir Gusinsky (the Most group), Alexander
Smolensky (the Stolichny bank), Mikhail Khodorkovsky (Menatep-Bank),
Vladimir Potanin (ONEXIM-Bank), Boris Berezovsky (the Logovaz
group), Mikhail Fridman (Alfa-Bank), and Vladimir Vinogradov
(Inkombank).
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