War in Ukraine: Who are the Russian oligarchs and why some were involved in the conflict

Russian oligarchs are once again in the international spotlight as the crisis between Russia, Ukraine, Europe and the United States escalates.

When Russia invaded Ukraine, countries like the US and UK tightened sanctions against Russian banks and many individuals often described by the press as Putin’s “comrades”.

Here, we look at what oligarchs are, how the term originated, and why many Russian oligarchs are now being targeted by sanctions.

What is an oligarch?

The word “oligarch” has a long history, but in modern times it has acquired a much more specific meaning.

An oligarch in the traditional sense is a member or supporter of an oligarchy—a political system in which a small group of people rule.

But nowadays the term is used to refer to a group of extremely wealthy Russians who rose to prominence after the fall of the Soviet Union in 1991.

The word “oligarchy” comes from the Greek “oligoi”, which means “few”, and “arkhein”, which means “to rule”.

The system is different from a monarchy (the rule of one person, “monos”) or a democracy (the rule of the people, “demos”).

What defines an oligarch?

An oligarch may be a member of a ruling caste separated from the rest of society by their religion, parentage, prestige, economic status, and even language.

These elites tend to rule only in their own interests, often using dubious means.

Who are the oligarchs of today?

Today, an oligarch is an ultra-rich person who made money doing business with the state.

Perhaps the best-known oligarch in the UK is Russian businessman Roman Abramovich, owner of Chelsea Football Club. With an estimated net worth of $14.3 billion, he made his fortune selling assets after the fall of the Soviet Union that were previously owned by the Russian state.

On 26 February, two days after the Russian invasion of Ukraine began, Abramovich released a statement that said he had turned over “the management of Chelsea FC” to the club’s charitable foundation. But he will remain the owner of the club.

Another oligarch is Alexander Lebedev, a former KGB employee and banker, whose son Evgeny is the owner of the London Evening Standard. Evgeny is a British citizen and a member of the House of Lords.

Other countries also have oligarchs, but this term is not often used with the same frequency as when it comes to Russia.

The Ukrainian Institute for the Future (UIF), an independent organization based in Kiev, blames the country’s lack of development on the widespread influence of the oligarchs in Ukrainian society, industry and politics.

In a report, the FIU says that the country’s “former oligarchs” prospered under the presidency of Leonid Kuchma (1994-2005) after the Soviet collapse in the 1990s. “Ukrainian oligarchs received most of their assets because of collusion with authorities and via a non-transparent privatization process. Since then, control over the political system remains a key aspect to save their business.”

How did the oligarchs make money?

FIU Executive Director Victor Andrusiv said at an event at the Wilson Center in Washington in 2019 that oligarchs are “a special class” of people, with “a special way of doing business” and that they have a “special way of doing business”. to live and influence” the world.

“They’re not really businessmen. They’re rich people, but the way they got rich is absolutely different from what happens in a capitalist state. [funcional]”, said Andrusiv.

“They didn’t create the business: they hijacked the state business.”

Why are there so many Russian oligarchs?

Russian oligarchs are in the spotlight today because of what happened after the end of the Soviet Union in 1991.

At Christmas 1991, Mikhail Gorbachev resigned from the Soviet presidency and handed over power to Boris Yeltsin, who became president of newly independent Russia.

In communism there was no private property. But in capitalist Russia there has been large-scale privatization — particularly in the industrial, energy and financial sectors.

As a result, many people became incredibly rich during privatization in the early 1990s.

Well-positioned individuals with the right connections have been able to acquire entire slices of Russian industry — often dealing with raw materials such as ores or oil and gas, which are in demand around the world.

Some of them bribed public officials who allowed these privatizations — or gave them jobs as directors in their companies.

Oligarchs owned mass media, oil fields, steel mills, engineering companies, and often could pay little tax on profits.

They supported Yeltsin and funded his 1996 presidential campaign.

Putin and the oligarchs

When Putin succeeded Yeltsin, he began to control the oligarchs.

Those who remained politically aligned with Putin became even more successful. But some of the original oligarchs who refused to take that line, like banker Boris Berezovsky, were forced to flee the country. Mikhail Khodorkovsky, once considered the richest man in Russia, lives in London today.

When asked about oligarchs in 2019, Putin told the Financial Times: “We don’t have oligarchs anymore.”

But people with close ties to Putin managed to build real empires in the business world thanks to his patronage.

Boris Rotenberg, who attended the same judo club as Putin as a child, has been described by the UK government as “a prominent Russian businessman with close personal ties” to Putin.

According to Forbes, Rotenberg is worth $1.2 billion.

Both Rotenberg and his brother Arkady were targeted by UK sanctions after Putin recognized the two breakaway regions of Donetsk and Luhansk in eastern Ukraine as “people’s republics”.

Ukraine, the US, the European Union, Australia and Japan have also imposed sanctions on Russian oligarchs. After the Russian invasion of Ukraine, many of these restrictions are likely to be even stricter.

But some oligarchs remain without sanctions, as is the case of Roman Abramovich, owner of Chelsea.

After the invasion of Ukraine, UK lawmakers called for Abramovich’s assets to be sanctioned, citing the oligarch’s close ties to the Kremlin – something the billionaire denies.

Abramovich is not under any sanctions from the UK, the EU or the US.

British Prime Minister Boris Johnson had to correct himself after wrongly telling parliament that Abramovich was facing sanctions. UK Foreign Minister Liz Truss declined to say whether the government is considering sanctioning the Russian oligarch. Throughout the war in Ukraine, part of the British press has pointed to close ties between Russian businessmen and the conservatives, led by Johnson.

An industrialist with close ties to President Putin, Oleg Deripaska has been sanctioned in the US since April 2018,

The US Treasury says he was “investigated for money laundering and charged with threatening the lives of business rivals, illegally wiretapping a government official, and participating in racketeering and racketeering. There are also allegations that Deripaska bribed a government official, ordered the murder of a businessman and had ties to a Russian organized crime group.” He denies any wrongdoing.