Oligarchs vs businessmen

By Nina Bachkatov and Andrew Wilson

For Russians, the word ‘oligarchs’ is out of touch with reality and adversarial. Especially since they are nominally targeted by Western sanctions. In August 2017, President Trump signed Russia sanctions’ bill into law and in April 2018 extended the so-called “Kremlin-List” to 210 of people “close to president Putin”. The criteria for selection were obscure and they often reflect a worrying lack of knowledge concerning Russian power circles and the undercurrents of the Russian society.

The context of sanctions gave a political dimension to the word ‘oligarch’. For years now, Russians have argued that the West did not properly follow the evolution of their country’s economy, persisting in calling their businessmen “oligarchs” instead of “businessmen”, “entrepreneurs” or eventually “tycoons”. They have seen it as a way to segregate them internationally, hinting that a Russian entrepreneur has a dark side the others lack. Now they are suspected of meddling in the US 2016 elections, linked to operations in Ukraine and even in Syria, because they are “friends of Putin”.

In January, when Washington was alive with rumours of new sanctions, Russia’s Deputy Prime Minister Arkadi Dvorkovich declared that “1990’s-era oligarchs had been replaced by “responsible businessmen”.  In early April, when the Kremlin was bracing itself for new Western sanctions, its spokesman Dmitri Peskov went so far as to declare the term oligarch “inappropriate” as there were none such in Russia.

Indeed, the word became largely irrelevant as the asset-strippers of the 90s transformed themselves into more traditional managers and businessman, albeit closer to the Asiatic Chaebol than Western private companies. Of course, the means by which they got their first money and shares is something they prefer to forget. But after all, the hasty privatisation of the nineties in a country without market experience and private capital was saluted by the West in its utopian belief that private property will pave the way to liberal democracy.

Making politics

At the time, oligarchs were making politics in Russia because they literally rescued the federal budget of a bankrupted State and backed (financially and with their media empires) the re-election of Boris Yeltsin as president. Since the election of Putin, those who survived the financial crisis of 1998 have been in the reverse position, thanks to the deal Putin imposed to them a few weeks after his first election. What he wanted was to liberate himself of the oligarchs’ influence, without antagonising a class whose support he needed to face economic hardship. So he told them to stay out of politics and in return get the support of the authorities for doing their business.

So, the time of the oligarchs as they were known under Yeltsin, finished in 2000. Not only did they stop being king-makers, but they have since depended on the Kremlin to create good conditions and to bankroll them in times of crisis (notably in 2008 and in 2015 to resist Western sanctions). They also needed protection, as they all had skeletons in their cupboards. Often, those targeted by the judiciary or the administration sought escape abroad where they claimed to be liberal victims of the Mafiosi Putin’s regime, exchanging asylum rights for ‘inside information’ concerning the business climate and practice in Russia, as well as personal details of important people.

Since their appearance, Russian have oligarchs surrounded themselves with foreign experts, lawyers and PR companies in order to take on an international dimension, buy grotesquely expansive properties, mix with the international jet set, or invest in charities and sponsorships. They have been well received in countries which were never shy of accepting quick money from oil or political corruption, until once again, geopolitical rivalry between Russia and the West changed the picture.

Western blindness

Paradoxically, the West has been pretty blind to the reality of the role s of oligarchs, considering them a Russian version of Wild West American tycoons, and a necessary evil to kill state-directed economies and ensure that communism was dead. The recent campaign against Russian ‘oligarchs’ is the result of the Western conception that their industrial and financial activities allow President Putin to lead an anti-Western foreign policy and threaten global security.

Of course, the shady links between political and economic spheres, based on personal relations with Putin and his closest collaborators, is far away of the modern economy the West was hoping for. And this has favoured a protected national market, especially through a list of strategic sectors which run counter 20 years of Western hopes of free access to shares and natural resources.

These shady links, which characterise the “Putin regime”, led to the simplistic idea that if their closeness with the Kremlin explains their black-listing, the West can turn these ‘oligarchs’ against Putin or/and pressure him into changing his foreign policy.

The other simplistic idea is that sanctions will not hurt ‘ordinary Russians’ but only the authors and practitioners of the unfriendly role Russia plays in the world. But, as the Deripaska’s case demonstrates, one cannot create difficulties for a company employing hundreds of thousands of workers and financing the public services of an entire region without affecting so-called ordinary Russians. Of course, they do not like oligarchic system but they know where the money comes from that ensures them a comfortable life.

The risk is that those ordinary citizens will suffer more that the ‘oligarchs and friends of Putin” and that they will prefer to accuse the West of causing their misery, seeing the move as a sign of Russophobia, and sanctions as an attempt to replace Russian businessmen by foreign ones. They know that many politicians and businessmen are corrupted, monopolising resources and power, but they are ‘nashi’ (ours) and a triumphantly elected president Putin is preparing his new inauguration speech.


Leave a Reply

Your email address will not be published. Required fields are marked *