Russian oligarchs

• 1. Introduction

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  Russian oligarchs built some of the largest private fortunes in history in roughly a decade, starting from nearly nothing as the Soviet Union fell apart. How does a mathematician go from running a research institute to controlling an entire automobile industry? How does a young man importing computers under the auspices of a Communist youth organization become one of the world's wealthiest people? And what happens to that wealth when the state that enabled it turns hostile? Those questions run through the story of the oligarchs, a class that first emerged under Mikhail Gorbachev in the late 1980s and came to dominate Russian politics and economy within a single generation. The Russian Union of Industrialists and Entrepreneurs, their collective lobbying body, earned a nickname that says everything about how they were perceived: the oligarch trade union.

• 2. Perestroika's Loopholes

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  Gorbachev's perestroika program, running roughly from 1985 to 1991, quietly opened doors that would never fully close again. Soviet economic restructuring allowed limited private enterprise for the first time in decades. Entrepreneurs began importing goods that were simply unavailable in Soviet shops: personal computers, electronics, and clothing like jeans. The scarcity of these items meant they could be sold at significant profits, creating the first layer of a new business class.

  Economists Sergei Guriev and Andrei Rachinsky identified what made this moment so lucrative. The coexistence of regulated Soviet prices and quasi-market prices created enormous opportunities for arbitrage. The gap between what something officially cost and what someone would actually pay was the engine of early oligarchic wealth.

  Mikhail Khodorkovsky offers a precise example. He started importing computers in 1986 through a program authorized by the Komsomol, the Communist youth organization. He briefly served as a deputy secretary of the Komsomol for a Moscow district in 1987. His move into banking two years later was funded by Komsomol alumni working inside Moscow city government. Boris Berezovsky, a mathematician and former researcher, became the first widely recognized Russian business oligarch. He ran the Department of System Design at an Academy of Sciences research center, and his private company was formally established by that same institute as a joint venture. Vladimir Vinogradov had been chief economist of Promstroybank, one of only six banks operating in the entire Soviet Union, and had previously served as secretary of the Atommash plant's Komsomol organization. The pattern was consistent: the men who became oligarchs were not outsiders crashing the gate. They came from within the system and used its connections to build what would outlast it.

• 3. The Privatization Years

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  When the Soviet Union dissolved in 1991 and Boris Yeltsin became president of Russia in July of that year, the ownership of an entire country's assets became contested. The voucher privatization program of 1992-1994 handed ordinary citizens shares in state enterprises, but the mechanism also allowed a handful of well-connected men to become billionaires almost overnight. The key was arbitrage: the difference between old domestic prices for commodities like oil and natural gas and the prices those same commodities commanded on world markets.

  Economist Yegor Gaidar, who had worked in a Soviet Academy of Sciences think tank and later served as Prime Minister during 1991-1992, was one of the two architects of privatization alongside Anatoly Chubais. Together they were known as the Young Reformers. David Satter later described what drove their process: not a determination to build a system on universal values, but a drive to introduce private ownership which, in the absence of law, opened the way for the criminal pursuit of money and power.

  The most consequential mechanism was the loans for shares scheme, a set of auctions conducted in the run-up to Yeltsin's 1996 re-election campaign. Roman Abramovich, Mikhail Khodorkovsky, Boris Berezovsky, and Vladimir Potanin all acquired key state assets through these auctions at a fraction of their actual worth. Defenders of those who later fell from favor argued that the companies were not highly valued at the time because they still ran on Soviet principles: no stock control, enormous payrolls, no financial reporting, and virtually no regard for profit. Whether that argument holds up or not, the result was a concentration of wealth that historian Edward L. Keenan compared to the powerful boyars who had dominated late-medieval Muscovy.

• 4. The Semibankirschina

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  By the mid-1990s a specific group of seven had consolidated more influence than any other private actors in Russian history. Their collective name was the Semibankirschina, which translates roughly as the seven-banker outfit. Between 1996 and 2000 this group controlled somewhere between 50% and 70% of all Russian finances. They included Roman Abramovich, Boris Berezovsky, Vladimir Gusinsky, Mikhail Khodorkovsky, Vladimir Potanin, Alexander Smolensky, and Vladimir Vinogradov.

  They helped finance Yeltsin's re-election campaign in 1996, a move that bound their interests to the presidency and the presidency to them. The arrangement was not subtle. It created what became known as the wild nineties, a period in which elected government and private capital were so intertwined that distinguishing one from the other was difficult.

  The 1998 Russian financial crisis redistributed that power sharply. Those oligarchs whose holdings were concentrated in banking lost much of what they had built. The RTS Index would eventually lose 71% of its value in connection with capital flight following the Russo-Georgian War of August 2008, a later crisis that extended the financial damage for years. The Guardian reported in 2008 that oligarchs from the Yeltsin era had been purged by the Kremlin, a process that began much earlier when Vladimir Putin took power in 1999.

• 5. Putin's New Order

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  Vladimir Putin's arrival in the Kremlin ended the Yeltsin-era arrangement decisively. Some oligarchs were imprisoned: Mikhail Khodorkovsky of Yukos oil was arrested in October 2003 and sentenced to nine years, a term subsequently extended to 14 years. Mikhael Mirilashvili was also imprisoned. Others left Russia voluntarily to avoid legal proceedings: Vladimir Gusinsky of MediaMost and Boris Berezovsky both departed rather than face charges. Still others died under circumstances that were never fully explained, including Vladimir Vinogradov and Boris Berezovsky. Putin eventually pardoned Khodorkovsky, who was released on the 20th of December 2013.

  In place of the Yeltsin oligarchs, a second wave emerged. These were friends and former colleagues of Putin, drawn from two phases of his earlier life: his years in the St. Petersburg municipal administration and his time in Dresden working for the KGB. Vladimir Litvinenko, the director of the institute where Putin obtained a degree in 1996, was among them. Arkady Rotenberg, Putin's childhood friend and judo teacher, was another. Gennady Timchenko had been close friends with Putin since the early 1980s; Putin personally gave him an oil export license in 1991.

  Daniel Treisman coined a specific term for this new category: silovarch, combining silovik, a person from the security services or military, with oligarch. An economic study counted 21 oligarchic groups as of 2003. By 2004, Forbes listed 36 billionaires of Russian citizenship. In 2005 that number dropped to 30, largely because of the Yukos case; Khodorkovsky's net worth fell from a top ranking of US$15.2 billion to US$2.0 billion, dropping him from first to 21st on the list. A 2013 Credit Suisse report found that 35% of Russia's wealth was owned by just 110 individuals.

• 6. Sanctions and Flight

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  Russia's 2022 invasion of Ukraine triggered an international response unlike anything the oligarchs had faced before. Canada, the United States, European nations, and Japan moved in coordination to sanction Putin and the oligarchs directly. On the 2nd of March 2022, the United States announced Task Force KleptoCapture, assembled specifically to target oligarchic assets. The task force drew officials from the FBI, the Marshals Service, the IRS, the Postal Inspection Service, Homeland Security Investigations, and the Secret Service. Its goal was to freeze and seize assets the U.S. government identified as proceeds of illegal involvement with the Russian government and the invasion.

  The response from the targeted oligarchs was immediate and practical. Since the invasion began, nine yachts belonging to Russian oligarchs turned off their navigation transponders and sailed toward ports where seizure was less likely. Russians spent over US$6.3 billion on Dubai property in 2022 as non-resident buyers. The UAE became a destination for relocated yachts, real estate, and private banking. In May 2022, the 118-metre Motor Yacht A, owned by oligarch Andrey Melnichenko, was anchored in Ras al-Khaimah in the UAE, apparently out of reach of Western enforcement.

  On the 21st of March 2022, the Organized Crime and Corruption Reporting Project launched Russian Asset Tracker to document the profiles and holdings of sanctioned individuals. The U.S. Treasury had already published a broader list in January 2018 under the CAATSA Act, which was criticized at the time for being indiscriminate; its criterion was simply being a Russian national with a net worth over $1 billion, and it included critics of Putin alongside his allies.

  The oligarchic network extended into the next generation as well. Putin's younger daughter Katerina Tikhonova, through her investment fund, received numerous large contracts from state-owned energy companies. Her former husband Kirill Shamalov ran Sibur, described as Russia's largest petrochemicals company. The son-in-law of Foreign Minister Sergei Lavrov ran an investment fund with assets exceeding $6 billion. Alexander Vinokurov was added to the EU Sanctions List on the 9th of March 2022 for providing substantial revenue to the Russian government during the war.

• 7. London and the West

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  Long before 2022, Russian oligarchs had been building footholds in Western cities, particularly London. British government policy actively encouraged this flow of foreign capital. The foreign investor visa route, introduced during John Major's premiership in 1994, had by 2008 given residency to a significant proportion of Russian citizens among its recipients: one in five of those admitted since 2008 were Russian nationals.

  The concentration of Russian wealth in London's most expensive neighborhoods earned the city nicknames: Moscow on Thames, and Londongrad. Roman Abramovich bought 16 Kensington Palace Gardens, a 15-bedroom mansion, for £120 million. Mikhail Fridman restored Athlone House as a primary residence in 2016. Eugene Shvidler, Alexander Knaster, Konstantin Kagalovsky, David Wilkowske, and Abram Reznikov took permanent residency in the city.

  Abramovich also bought Chelsea F.C. in 2003, spending record amounts on players' salaries. Alexander Mamut invested £100 million into the Waterstones bookstore chain after acquiring it in 2011 for £53 million. According to its managing director James Daunt, that intervention saved the chain. Waterstones made its first annual profit since 2008 in 2016. Daunt later stated that continued Russian ownership after 2022 would have been catastrophic for the business, a remark that illustrates how thoroughly the invasion of Ukraine changed the calculus for Western institutions that had welcomed Russian capital for decades.

• 8. Prigozhin and the Limits of Power

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  Yevgeny Prigozhin's trajectory illustrates where the boundary of oligarchic power actually ran under Putin. Prigozhin was the founder of the Wagner Group, a private paramilitary organization. In June 2023, Wagner launched a rebellion against the Russian military, seizing control of the port city of Rostov-on-Don. It was the most direct challenge to state authority any figure connected to the oligarchic world had attempted in the Putin era.

  Exactly two months after the rebellion, on the 23rd of August 2023, Prigozhin was killed in a plane crash. The source material notes that the crash is suspected to have been orchestrated by Nikolai Patrushev, the head of Russia's Security Council and widely described as Putin's right-hand man. Patrushev's own son, Andrey Patrushev, had by that point joined the ranks of the oligarchs, and some observers identified Nikolai Patrushev as one of the likeliest candidates to succeed Putin. The Prigozhin episode, and the Patrushev family's positioning within the same system, makes plain that the oligarchic order was never simply about money. It was always about proximity to a single center of power, and the price of challenging that center.