Mon, June 05, 2023

Why Some Rich People Are Called Oligarchs

Russia and its oligarchs

Even before the war in Ukraine, many people knew at least something about Russian oligarchs. Since Russia’s invasion of Ukraine, many governments imposed various sanctions on them. Let’s learn more about the situation. 

People should keep in mind that the term “oligarch” derives from “oligarchy”, which is a system of government in which a small number of people maintain power. In many cases, oligarchies connote tyrannical or despotic rule which controls or limits the political agency of the majority not in control. Rulers in an oligarchy may establish power via economic status, nobility, etc. 

In the modern world, an “oligarch” most commonly refers to an individual who is a member of an elite economic group. We are talking about an elite economic group that maintains power through extreme wealth, important business ties, etc.

Russia is a country commonly referred to as an oligarchy, but it is not the only one. Other countries also have oligarchs.

People hear about various oligarchs on a regular basis. Interestingly, the term “oligarchy” is commonly associated with a group of powerful business leaders in Russia. Many Russian oligarchs consolidated their wealth following the dissolution of the Soviet Union in the 1990s. 

As the Soviet Union ceased to exist, the future of state-owned enterprises, as well as resources, became unclear. A small group of well-connected businessmen jumped at the chance to privatize state-owned enterprises. As a result, they became the owners of various enterprises. For example,  Russian oligarchs include owners of mining and steel operations, media conglomerates, and similar operations which were formerly state-run. 

Oligarchs and the country’s government 

The relationship between oligarchs and the country’s government has been extremely volatile. While Boris Yeltsin was president of the Russian Federation in the 1990s, they became heavily involved in the country’s politics. A small group of business tycoons played an important role in the 1990s. This group known as the “Semibankirshchina” or “seven-banker outfit” served as informal advisors to Yeltsin and steered his policies. 

When Vladimir Putin became the country’s leader in 2000, Putin drew attention for his efforts to crack down on oligarchs. The country’s new president made efforts to break up some of these individuals’ companies and imprison some of the oligarchs themselves. 

Nevertheless, some have argued that this punishment was intended primarily to exert control over oligarchs, rather than to rid the Russian government of corruption. During his presidency, a significant number of oligarchs consolidated wealth and power. These include individuals with long-standing ties with the country’s longtime leader. Apart from businessmen, high-ranking officers from various organizations also gained power and money. Usually, these new oligarchs have close ties with Putin’s government. 

Ukraine and Putin’s inner circle 

As stated above, many governments imposed sanctions on Russian oligarchs. However, one Russian billionaire argues that billionaires are not capable of influencing Putin’s decisions. 

Mikhail Fridman had not thought Vladimir Putin would launch a full-scale invasion. Fridman’s parents are Ukrainian citizens who until recently lived part of the year in an apartment in Lviv, a city known for anti-Russian sentiment and leadership in Ukrainian nationalism. 

Even though the U.S. has not sanctioned Mikhail Fridman, the European Union and the United Kingdom took measures against him. As a result, he is unable to spend his money. 

The European Union imposed sanctions on Mikhail Fridman at the end of February. The bloc sanctioned Fridman and his longtime business partner, Petr Aven. According to Fridman, the European Union doesn’t get how power actually works in Russia. If the point of sanctions is to motivate people like him to apply pressure on Russia’s leader, he says that’s worse than unrealistic. 


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