Sanctions are one of the key ways the US and Europe are retaliating against Russia for its invasion of Ukraine. These sanctions are suffocating the Russian economy, and they have made life and business particularly difficult for the Russian oligarchs, an elite group of super-rich people who began to wield enormous influence in Russian politics after becoming rich during the privatization of the post-Soviet space. condition.
Foreign governments around the world are seizing the assets and yachts of many oligarchs, banning them from travel and preventing them from doing much of their business with the US and Europe. The goal is to pin down, denounce, and force Russia’s richest citizens to put pressure on Russian President Vladimir Putin to end his campaign against Ukraine.
“This is the trillion dollar question,” said Oliver Bullough, a journalist who writes a newsletter about the oligarchy at Coda. “Can these people contain Putin?”
But it’s important to understand that since Putin was elected in 2000, the oligarchy in Russia hasn’t worked the way it used to; its members have far less power and influence than they once did. These punitive sanctions have so far elicited only reserved comments about Ukraine from a few oligarchs, many of whom are based outside of Russia.
“Putin brought an oligarchy to power,” Bullough told Recode. “And now we have a system much more like the Tudor court of Henry VIII, with the king and then next to him a series of aristocrats who own their property as long as he is willing to tolerate them.”
“The word ‘oligarchy’ is strangely outdated, but we don’t have a better one,” Bullough added.
The limited power of Putin’s oligarchs 2.0
Ever since Russia’s invasion of Ukraine last month, the world has wondered how the conflict might end and whether Putin’s advisers or the country’s once-powerful elite in the Kremlin could play a role.
But the idea that individual oligarchs can influence Putin now is a misunderstanding of contemporary Russia, said Ben Judah, senior fellow at the Atlantic Council and author of A Fragile Empire: How Russia Fell in and Out of Love with Vladimir Putin. “This is how Russia acted 15 or 20 years ago,” Judah said, “not the way it is today.”
Putin promised to rein in Russian oligarchs during his first presidential campaign, and he didn’t wait long to get started. In 2003, Putin arrested and imprisoned Mikhail Khodorkovsky, who owned a 78 percent stake in Russia’s major oil company Yukos and was at the time the richest man in Russia. Khodorkovsky was officially charged with financial crimes, but he also financed Putin’s opposition parties.
The example Putin set by arresting Khodorkovsky is clear: “The oligarchs have basically realized that they only own their wealth as long as [Putin] wanted them to own it. It changed their whole approach to politics. It also increased their motivation to get more wealth outside of Russia, to get as much as possible offshore where it would be safe,” Bullough told Recode.
In the meantime, a new type of oligarch has come to power: the security forces, who are mainly referred to as businessmen with ties to the FSB, the police and the army. The siloviki played an important role in consolidating Putin’s power, serving as his muscle. They have become extraordinarily wealthy thanks to their closeness to the president, creating a class of “silovarchs” who are even more dependent on Putin than the oligarchs who amassed their fortunes in the 1990s.
The power and wealth of all Russian oligarchs are negligible, and they know it. That is why so far only a limited number of people who have foreign passports or live outside of Russia have spoken about the war. Some oligarchs and even their children are calling for peace, but without explicit condemnation of Putin.
Oleg Deripaska, a Russian industrialist currently worth just over $2 billion, called peace “very important,” according to Forbes. “After these events, the whole world will be different, and Russia will be different,” he wrote on Telegram. He was sanctioned by the US government back in 2018 for links to Putin following allegations of Russian interference in the 2016 US election.
Alfa Bank founder Mikhail Fridman called the invasion a tragedy during a press conference. But when asked about using his influence to pressure the Kremlin, Friedman replied: “You have to understand that this is a very sensitive issue,” and said he could not put his partners and staff at risk by commenting on Putin. On February 28, he came under EU sanctions.
Yevgeny Lebedev, who owns the British newspapers Independent and Evening Standard, wrote an article in the Standard pleading with Putin to end the war. Lebedev has dual Russian and British citizenship; he is also a member of the British Peerage. He was not authorized.
Again, such a reserved reaction from the oligarchs should come as no surprise. Stanislav Markus, a professor at the University of South Carolina who has done extensive research on Russian oligarchs, told Recode that direct criticism of Putin would be “a pretty dangerous position.”
“When it came to the decision to go all-in in Ukraine, Putin made the decision, essentially, on his own,” said Judah, a senior fellow at the Atlantic Council. “Over the past few years, Putin has become increasingly distant from the old so-called inner circle and the Russian elite in general.”
Judah quoted a scene from a Security Council meeting that Putin called on Feb. 21, shortly before the invasion of Ukraine. Sergei Naryshkin, director of Russia’s foreign intelligence service, faltered when Putin asked if he supported recognizing the independence of Donetsk and Luhansk, two Ukrainian territories that have been controlled by pro-Russian rebels for nearly a decade.
“The way Putin spoke to him scared him so much that he forgot what the topic was,” Judah said. “Therefore, if Sergey Naryshkin is so afraid of Putin, seemingly so distant from him, there is very little chance for these businessmen to simply come and stop him.”
The story that Putin’s security officials — or other oligarchs — can meaningfully disagree is “wishful thinking,” Judah said.
“[The sanctions] can really cause grumbling, discontent and fear in the political system,” he continued. But when it comes to what might happen to Putin, he said we should think about “what happens to dictators, not what happens to powerful people with governments.”
How Putin’s war could affect power in the long run
If this war was indeed Putin’s sole decision, then he is both in control and in isolation.
Pressure on the Russian oligarchs may not lead Putin to change course towards the war for which he has already signaled that he is willing to sacrifice so much. But that doesn’t necessarily mean it won’t have an impact later on. These sanctions will have consequences; if anything, they are revealing to the Russian oligarchy the limits of their power and how their fortunes are linked to an authoritarian regime that has begun to fence them off from almost the rest of the world in pursuit of war.
How they will react is an open question.
Marcus, whose research examines what Russian oligarchs want and how they try to influence the government, told Recode that part of the reason they don’t resist their government is because the current global financial marketplace allows them to keep so much capital offshore. . Since so much of their wealth is hidden outside the Kremlin’s power, there is no need to demand that the Kremlin reform.
Sustained sanctions could increase the desire of the Russian elite for institutional change, even though it remains difficult to achieve. Over the years, Putin has shown them how easy it is to fall out of favor and the dire consequences of doing so.
“Where before they thought, ‘No matter what the Kremlin does, I still have profitable trade with the US or Europe or whatever, I don’t need to do politics in Russia’, now more and more they have pushed towards wall,” Marcus said.