Oligarchs, Argh
On Punishing Those Russian Billionaires
An oligarch is one of the select few people who rule or influence leaders in an oligarchy --a government in which power is held by a select few individuals or a small class of powerful people.
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The two masterworks are The Oligarchs: Wealth and Power in the New Russia by David E. Hoffman, published in 2002 by PublicAffairs and updated in 2011. Hoffman, a former Washington Post Moscow correspondent, describes the first decade in post-Soviet Russia in which the system had to be reinvented almost overnight from socialism to capitalism with consequences of chaos and corruption and for a small group of men, vast wealth.
Catherine Belton’s Putin’s People: How the KGB Took Back Russia and then Took on the West published in 2020 brings The Oligarchs up to date and Belton, who was a Moscow correspondent for the Financial Times, fended off an array of defamation suits in Britain by individuals and companies, now sanctioned since the invasion of Ukraine. Belton received valuable support from her publisher HarperCollins.
Why use sanctions against businessmen to stop a war?
Because it is believed that the relationship between the oligarchs and Putin is a significant pressure point. Take away their wealth and cripple Russia’s economy and the Kremlin may be forced to reconsider the brutality of its military activity.
Will that work?
Sebastian Mallaby, in his Washington Post columns (paywall), makes the case persuasively for their impact and the need to continue strengthing them. Other experts are skeptical they can ever have the neccesary effect. The oligarchs are certainly scrambling. Their mansions, super yachts, bank accounts and other global assets are being seized and or frozen. Even Putin’s daughters have been targeted. One measure of today’s world is that after one daughter, a middle-aged endocrinologist, was sanctioned, London’s Daily Mail ran a picture of her in a bikini.
There is no doubt that having so much of your wealth confiscated is a very big deal. Can it stop Putin’s aggression? Not yet.
Have you ever encountered an oligarch?
I have personal experiences with two.
Boris Berezovsky was an early billionaire buying up privatized assets for pennies on the dollar. He was a major backer of Boris Yeltsin’s political rise in the 1990s and took over huge and lucrative industrial enterprises. He also played a role in elevating Putin to be Yeltsin’s chosen successor. I met him in New York where he was being feted. In 2002, I asked Putin about him in a session with journalists I joined. “He doesn’t pay taxes to Russia,” Putin snarled, “and he doesn’t pay taxes to Israel…” Berezovsky died by suicide in British exile.
Vladimir Gusinsky also made his fortune in the Yeltsin decade and was respected for the range and quality of his media holdings. When Putin turned on him, he moved to Greenwich Connecticut where I would pass his mansion under construction, pillars, balustrades, a Monticello-styled dome and armed guards. Recently he was said to be Israel and struggling to pay his bills.
Are all the oligarchs Russian?
In the Soviet era there were fifteen republics in the USSR. Oligarchy went well beyond Russian borders after the implosion of the Kremlin, including a number in Ukraine and Central Asia where political leaders enriched their families. To be clear, what are called “Russians” are not all actually Russian nationals. One Ukrainian oligarch, Viktor Medvechuk, considerd close to Putin was detained in Kyiv this week.
Where did the oligarchs come from?
At my request, David Hoffman provided this summary. They were young men who had excelled at hustling and street commerce. They were generally not the old Communist Party bosses, major figures from the KGB or the collapsing Soviet industrial archipelago. They were the fleet-footed, quick thinking outsiders of their day.
Catherine Belton’s book shows how the composition of the oligarchy changed in the Putin era. Putin said would wipe out the oligarchs. In fact, he just replaced them with his own friends and cronies, shaped, as he was, by their KGB backgrounds.
Where are the oligarchs now?
While some have been sighted in Moscow, none seems to have taken refuge there. Over the years, London was especially welcoming to the oligarchs. They bought up many of the fanciest mansions in the city. Roman Abramovich, bought Chelsea, a top team in Britain’s Premier League. London’s Evening Standard, the leading commuter newspaper is owned by the Lebedevs, and Evgeny Lebedev, son and heir of Alexander, became a member of the House of Lords in 2020.
Other oligarchs are shifting their whereabouts. Israel is a relatively safe harbor. Most are on the run. Not all. The Financial Times (paywall) has a thorough explanation of why certain oligarchs have so far been exempted, for reasons both tactical (avoiding price surges on some goods) and perhaps because holding them in reserve is a means of maintaining pressure.
What about the influence of the oligarchs in the U.S.?
A report by the Anti-Corruption Data Collective of George Washington University showed the scale of oligarch-related money being donated to “more than 200 of the most prestigious non-profits in the U.S.” including Harvard, the Brookings Institution and New York’s Museum of Modern Art. The 2020 report estimated the total range of donations at between $372 million and $435 million, and probably more.
The recurring question is whether that money has to be considered the benefit of corruption in Russia and a malign attachment to Putin. That is what the sanctions in the United States and Europe are intended to punish. There is scant evidence of funds being returned.
Can tainted money be put to good purpose? After all, the fortunes of Henry Ford, John D. Rockefeller and Andrew Carnegie were all made in an era of cutthroat American capitalism. Today, the foundations in their names are pillars of philanthropic responsibility.
What is the likely destiny of the sanctioned oligarchs?
It will doubtless vary. Abramovich turned up at peace negotiations in Turkey. His role, if any, was unclear. Ukraine’s president Volodymyr Zelensky had asked the U.S. not to sanction him, while in Britain, billions of his assets have been frozen. The suggestion is that he might be a mediator between the warring parties. Wherever they find themselves, each oligarch needs to be pursuing a strategy of salvation one way or another. When the war finally is over, will they be able to recover their wealth? Too early to predict.
The name of Len Blavatnik is on many major Anglo-American institutions: There is the Blavatnik Building at the Tate Museum in London, there is a Blavatnik School of Government at Oxford. At Harvard, there is a Blavatnik Biomedical Accelerator, and he is a member of the university’s medical school Board of Fellows. And there’s more.
His family came to the U.S. in 1978, but his fortune of about $35 billion is even on casual examination inextricably based on his post-Soviet financial activity. As to whether he can be considered an oligarch, neither the definitive Hoffman nor Belton books have any mention of him. So respectability is attainable. Blavatnik was among major Harvard donors at a session with the university’s president as recently as last week.
What about our home-grown oligarchs ?