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By Kaye Foley
Russia is pretty much in the news on a daily basis lately, and the term “Russian oligarch” has been thrown out a time or two.
At the time of the collapse of the Soviet Union in 1991, the economy was sinking. Russia was desperate to shift quickly from communism to capitalism. How? By privatizing state-owned businesses.
Enter Russian oligarchs.
In Greek, “oligarchy” means “the few who rule.” Without any laws or regulations in place during this transition in Russia, a small group of politically — and sometimes criminally — connected businessmen had a free-for-all acquiring wealth and power.
In an effort to raise funds, the government auctioned off shares of Russia’s most valuable industries, like oil and other raw materials. The banks ran the auctions, and enterprising businessmen ran the banks. They more or less manipulated the outcome so they could gain control of companies for a fraction of their market value. These men made huge sums of money — the equivalent to billions and billions of dollars — and became the Russian oligarchs.
These uber-rich elites wielded a lot of political influence during Boris Yeltsin’s presidency and helped him get re-elected in 1996. While they filled their coffers many times over, everyone else was left to deal with a steep rise in poverty and corruption.
Vladimir Putin was appointed to be Yeltsin’s successor in 2000. It’s believed that Putin made a deal with Russia’s richest men — if they kept their noses out of politics, they could keep their money. Some oligarchs said nyet. Among them media tycoon Boris Berezovsky and Mikhail Khodorkovsky, who at the time was Russia’s richest man and CEO of the largest oil company, Yukos.
Both would end up paying a huge price for their defiance. Berezovsky would ultimately move to London in exile, where he was found dead in 2013 from an apparent suicide, which raised a lot of suspicions. Khodorkovsky would spend 10 years serving hard time in a Siberian prison, losing most of his wealth, and now he lives in exile as well.
It hasn’t been only smooth sailing in expensive yachts for the oligarchs who complied with Putin. The 2008 global recession hit many of them hard, with losses in the billions. And just a few years later in 2014, oligarchs were hit again by U.S. sanctions following Russia’s annexation of Crimea.
But don’t shed a tear for these high rollers yet. They can still afford to dine on fine caviar any night of the week. Today, Russia has 96 billionaires.
The focus now is on how many of them have ties to President Trump. Oligarchs like Roman Abramovich, who owns the Chelsea Football Club, has been a longtime friend of Jared Kushner and Ivanka Trump. Abramovich’s wife even attended the inauguration.
Russian oligarch Oleg Deripaska has just been linked to President Trump’s former campaign chairman Paul Manafort, paying him a reported $10 million a year to lobby on Putin’s behalf, which Manafort denies.
And then there’s arguably the world’s wealthiest oligarch, Vladimir Putin himself. There’s reports he’s worth hundreds of billions of dollars. But according to the Kremlin, in 2015, he earned the equivalent of $11,500 a month, roughly $137,000 a year.
So as Russia continues to make headlines, the next time you hear someone mention the Russian oligarchs, at least you can say, “Now I get it.”