Teaching Comparative Government and Politics

Sunday, April 08, 2018

Revisions

You might want to pencil in some edits to your textbook's chapter on Russia.

This is from The Washington Post Opinion section.

Is Russia all out of oligarchs? It says it is.

Newly announced U.S. sanctions on Russia aim to target not only its political elite but also its financial elite: the “oligarchs.”

“Russian oligarchs and elites who profit from this corrupt system will no longer be insulated from the consequences of their government’s destabilizing activities,” Treasury Secretary Steven Mnuchin said…

But what if Russia doesn't have oligarchs? That may seem like a radical position, but that's the apparent stance of the Russian government.

“There are no oligarchs in Russia,” Kremlin spokesman Dmitry Peskov told reporters… The term that the Russian presidential spokesman said he would prefer was “representatives of big business.” …

Such remarks may cause many in the West to scoff, but there is a kernel of truth to the idea. The term “oligarch” first came to be used in Russian politics in the 1990s, when enterprising but often corrupt Russian businessmen used a chaotic period of privatization after the collapse of the Soviet Union to acquire vast fortunes. With their wealth, these business executives gained serious political influence in Russia's fledgling democracy.

As David Hoffman, former Moscow correspondent for The Washington Post, put it in his 2001 book on these men, “as their power grew, the tycoons became known as simply the oligarchs, the men who owned and ruled the new Russia.”

But times change. After Vladimir Putin came to power… he took to dismantling the power of the oligarchs — using the power of the state to go after the business executives who had used their companies to influence the state. It was one of the major policy threads during the first period of Putin's rule and was largely popular with the Russian public, which was sick of billionaires influencing politics.

Most of the six tycoons whom Hoffman profiled in his book “The Oligarchs” are no longer in positions of political power. Some ended up stuck in lengthy legal disputes with the Russian state: Mikhail Khodorkovsky, perhaps the most famous of all oligarchs, spent 10 years in prison before being released in 2013. Another, Boris Berezovsky, ended up in exile before dying in England in 2013 in unclear circumstances.

Chubias

Of the six, Anatoly Chubais remains closest to the Kremlin as head of the Russian state nanotechnology company Rusnano. However, when the United States issued a list of politicians and business leaders linked to the Russian president in January, Chubais was not included. In response, he issued a mock apology on Facebook for failing his nation…

Of the seven business executives listed, Viktor Vekselberg is probably the wealthiest… with a net worth of $14.5 billion.

Other notable names include Kirill Shamalov, another major player in Russia's energy sector who is also reported to be Putin's son-in-law, and Oleg Deripaska, an aluminum magnate with alleged ties to President Trump's former campaign chairman, Paul Manafort.

These men are wealthy, yes, and powerful, but they do not hold the same position as the oligarchs of the 1990s. The first generation of Russia's tycoons not only drew their wealth largely from the state, but they were also able to influence the state dramatically, even using their vast power to save Russian President Boris Yeltsin during his flailing 1996 reelection campaign.

In modern Russia, wealthy business executives hold much less influence over the state: They own Russia, but they do not rule it. In fact, they are well aware that their own fortunes can be taken away by the state with little notice. Just last week, construction tycoon Ziyavudin Magomedov — whose estimated net worth is $1.4 billion — was arrested on embezzlement charges in a move many saw as a result of political infighting…

In modern Russia, wealthy business executives hold much less influence over the state: They own Russia, but they do not rule it. In fact, they are well aware that their own fortunes can be taken away by the state with little notice. Just last week, construction tycoon Ziyavudin Magomedov — whose estimated net worth is $1.4 billion — was arrested on embezzlement charges in a move many saw as a result of political infighting.

Indeed, some analysts argue that sanctioning Russian business executives helps the Kremlin control them. Dmitri Trenin, director of the Carnegie Moscow Center, wrote on Twitter that the U.S. sanctions could result in a “win-win” situation for Washington and Moscow. The Trump administration gets to say it is striking a blow at the Putin regime, Trenin wrote, but “Putin sees his hand strengthened in his effort to 'nationalize' the Russian elites.”