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EDITOR POST: What is an Oligarch & How Did They Make There Fortunes ?

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#AceNewsDesk says running my own Finance & Management Consultancy Agency for many years l have known about the Russian Oligarch fraternity because that is what they are as they use gained there wealth from other peoples misery using them as slaves in places like the ‘ Siberia ‘ including in the ‘ Salt Mines ‘ and also being connected to Putin & his KGB Henchmen making sure that assets of Russia where shared unevenly with billions to Oligarchs and balance to Russian Citizens – Editor

VOA News

ABC News says that they are a circle of businessmen who made their wealth after the fall of the Soviet Union

Published: Thursday 14 Apr 2022 at 11:03pm

Boris Yeltsin with Mikhail Khodorkovsky
Mikhail Khodorkovsky (right) became an oligarch under the former Russian president Boris Yeltsin (middle).(Reuters: CVI/SB)none

Soon after Mikhail Khodorkovsky’s private jet landed at a Siberian airport in 2003, a convoy of dark vans arrived on the tarmac.

Masked Russian special forces agents stormed the cabin, pushing down doors and ordering passengers to put their “weapons on the floor or we’ll shoot”.

The richest man in Russia was swiftly arrested and sent to Moscow to face charges of fraud, tax evasion, and other economic crimes.

It was the start of what would be a rapid fall from grace for the head of the country’s largest oil company, Yukos.

Khodorkovsky had made his fortune in the 1990s when his bank Menatep acquired shares in companies that were privatised at cheaper prices. A decade later he was estimated to be worth $26 billion.

His vast wealth afforded him a life of luxury, the ire of the Russian public and the freedom to fund any political party of his choosing.

It also enabled him to openly oppose the newly elected President Vladimir Putin. And that’s exactly what Khodorkovsky did.

Just seven months before his arrest, the oligarch went head to head with Putin at a televised meeting at the Kremlin.

The billionaire challenged Russia’s leader, accusing government officials of taking huge bribes, as some of the wealthiest businessman in the country watched on.

Putin was reportedly livid. As the meeting wrapped up, he responded with a threat: a takeover of Khodorkovsky’s company.

Within months, the oligarch’s business partner and associates were under arrest. By October, Russia’s richest man was sitting in a prison cell awaiting trial.

A man with white hair and wearing glasses stares in the distance while behind bars.
Khodorkovsky was once Russia’s richest man until he says he earned the ire of the Kremlin by challenging President Vladimir Putin.(Reuters: Tatyana Makeyeva)none

The dramatic arrest and subsequent dismantling of Khodorkovsky’s oil company sent a chilling signal to other oligarchs.

In one move, Putin was able to consolidate his power and defy those who opposed him, according to analysts.

And Russia’s powerful oligarchs quickly fell into line.

Russia’s oligarchs emerged from Soviet collapse

The first wave of Russia’s oligarchs emerged in the decade after the fall of the Soviet Union.

Under then president Boris Yeltsin, Russia underwent ‘shock therapy’ — a speedy process of reforms designed to sell state-owned assets to private enterprises.

In the massive scramble that ensued for the Communist spoils, a circle of men who came from nothing or had links to big firms or the Kremlin emerged the biggest winners.

From 1992 to 1994, some 15,000 companies were transferred from state to private ownership.

These individuals saw an opportunity to buy blocks of privatisation cheques, which were freely available to all Russian citizens, to secure a larger share in the firms.

Their wealth continued to grow during Boris Yeltsin’s re-election bid in 1996 when they managed to acquire the crown jewels of the country’s economy in exchange for their support.

Under what became known as loans-for-shares, a few Kremlin-favoured banks lent the Government money in return for a chance to buy shares in some of the state’s most valuable assets at cheap prices, the New York Times reported at the time.

An elderly woman begs for money in Russia
Living standards and life expectancy in the former Soviet Union fell during the 1990s.(Reuters)none

With large swathes of the energy, telecommunications, and metallurgical sectors under their control and vast wealth at their disposal, the oligarchs held enormous power and influence.

But that all changed once Putin rose to power in 2000.

He accused Russia’s wealthy of having looted the country’s wealth and utilised the backlash against these individuals to strip them of their power.

“Over the years, any oligarch who stepped out of line and opposed Putin [has been] exiled or jailed in Russia,” says  corruption expert and visiting fellow at Chatham House Thomas Mayne.

In the case of Khodorkovsky, analysts say it was Putin’s act of revenge for defying him so publicly. It also delivered a warning to the country’s narrow circle of tycoons.

“[It] taught everybody a lesson, and made it clear who had a say in the new system under Putin,” author and Russia observer Elisabeth Schimpfoessl told the ABC.

“Putin, since then, has had the power in his hands,” she said.

While some oligarchs fled for distant shores, those who remained were only able to do so under a new bargain that required them to stay out of politics.

The elevation of Putin’s inner circle

With the Soviet-era oligarchs either gone or under Putin’s arrangement, the Russian leader soon turned his attention to creating a new generation.

Putin’s close allies and friends now make up a second cohort of oligarchs, according to Schimpfoessl.

Vladimir Putin looking sombre, dressed in a black coat while standing in the snow
Putin allows oligarchs to prosper provided that they stay out of politics.(Sputnik via Reuters: Aleksey Nikolskyi/)none

In return, these oligarchs provide useful backing for the Kremlin.

“So the oligarchs kind of maintain perhaps a lot of the hidden wealth of Russia, and in some cases use that wealth to support the Kremlin’s foreign policy goals,” Mayne said.

Nowadays oligarchs tend to fall into three types, analysts say: They are either Putin’s friends, leaders of Russia’s security services — the police and the military — or they are outsiders who have no personal ties to the Russian President.

But oligarchs do not act as a collective. In fact, these billionaires have mostly sought to outcompete their rivals for access to government money.

Each one seeks to maintain a relationship with the Kremlin in order to retain his position, according to Mayne.

“Some of them will maintain close relationships to the Kremlin, and some will perhaps have a more distant relationship now, and perhaps have not been as involved with the actual internal machinations of Russian politics for years,” he said.

Whatever their relationship might be, few have been willing to speak out against the Kremlin.

Since the war in Ukraine began only a few oligarchs — such as Mikhail Fridman — have criticised the invasion. The majority have kept silent.

“As long as Putin retains his control over the siloviki – the current and former military and intelligence officers close to Putin – the other oligarchs, in my view, will remain hostages to his regime,” Stanislav Markus writes for The Conversation.

The oligarchs have also found little favour among the broader Russian public.

The disparity between Russia’s rich and poor

The former Soviet Union’s uber-wealthy are not viewed favourably by the masses, who resent them for their power and wealth, according to analysts.

In her book Rich Russians, Schimpfoessl writes of how the large majority of Russians regard the accumulation of wealth by a small circle of individuals in the 1990s as “highly illegitimate”.

Tens of millions of Russians were left impoverished during the country’s disorderly transition to a market economy.

A woman wears a black fur coat surrounded by two women as an elderly woman walks by with a cane.
After the Russian currency collapsed in the 1990s, the situation of old and poor people has become critical.(Reuters: MF)none

Only a select few were able to benefit from the opportunities at the time. And Putin has been able to use it to his advantage, according to Schimpfoessl. 

“Putin can tap into widespread popular opposition against Russia’s rich elite if it suits his interests,” she writes.

On the other hand, he can win the favour of oligarchs by helping “shore up their position by using his authority to protect their property rights”.

Perhaps in recognition of the precariousness of their position, Russia’s wealthy have also sought to legitimise their status outside of the Kremlin.

For a time in post-Soviet Russia, the fashion was to find some “blue blood” in one’s family lineage. But by the 2000s, it shifted toward combining — if not replacing — noble ancestors with intelligentsia ancestors, according to Schimpfoessl.

This was a particular social elite that is hard to define but in Soviet times came to describe people “engaged in mental labour”.

“[They were] professionals or white-collar workers who defied Marxist social classification, such as engineers, teachers, educationalists, cultural workers, medical doctors, scientists, researchers, writers, and artists, as well as state and party functionaries,” Schimpfoessl writes.

Those who could trace their origins to the Soviet intelligentsia were able to accelerate their journey from the “middle class”.

But as oligarchs have been attempting to rewrite their own histories, their links to the Kremlin have drawn global attention.

Why are we obsessed with oligarchs?

The world is fascinated with the lavish lifestyles of Russia’s uber-rich.

Oligarchs conjure images of wealthy families hitting Europe’s famous ski slopes or spending big at luxury stores.

People like Roman Abramovich — who has been targeted in both UK and EU sanction lists over alleged ties to the Russian leader, though he has repeatedly denied having close links to Putin — have become household names because of their associations with sporting clubs.

Others have developed reputations in the business world.

And as sanctions have targeted the prized assets of Russia’s tycoons, a small corner of the internet has been obsessed with tracing the journey of these assets in real-time.

A three-storey super yacht sailing down a river in canal
The superyacht community insist the Graceful belongs to Vladimir Putin.(Reuters: Steffen Mayer)none

Yet oligarchs aren’t unique to Russia. They operate in many countries, including the United States, according to Brooke Harrington, a professor of sociology at Dartmouth College.

It appears as if a “glamorous mythology” has been built around Russia’s elite, Rachel Dodes writes in an article for Vanity Fair.

Now, she says, that fairytale is being punctured before our eyes.

As global sanctions start to take effect, perhaps the wealth and influence of oligarchs will face a similar fate.

#AceNewsDesk report ………..Published: Apr.18: 2022:

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