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What is a Russian oligarch and why are they being sanctioned?https://www.businessinsider.in/politics/world/news/what-is-a-russian-oligarch-and-why-are-they-being-sanctioned/slidelist/90173466.cms2022-03-12T20:19:09+05:30

What is a Russian oligarch and why are they being sanctioned?

Hannah Towey,Linette LopezMar 12, 2022, 20:19 IST

The word "oligarch" has been used interchangeably with billionaire in recent days, as wealthy Russian elites continue to be targeted by US and EU sanctions.

But what does it really mean to be a Russian oligarch, besides having enough money to own a super-yacht?

Generally, an oligarch is defined as a ruling member of an "oligarchy," or a small group of people with power.

But in Russian politics, the term first came about in the 1990s to describe a dozen or so powerful men who amassed immense wealth following the collapse of the Soviet Union.

Here's how that happened:

After the fall of the USSR, the Russian economy was in disarray. The government, led by President Boris Yeltsin at the time, wanted to privatize badly managed state-owned companies in an effort to move towards capitalism.

The plan to achieve this was called "loans for shares," an idea introduced by Onexim Bank in 1994.

Russian banks lent the government money in exchange for temporary stakes in state-owned companies, which were sold to investors for dirt-cheap during rigged auctions. If the government defaulted on its loan, the banks got to keep their stakes.

Spoiler alert: they did. This made investors like Vladimir Potanin, Oneksim Bank's then-president (who is now the richest man in Russia), become wealthy beyond belief.

Oligarchs like Potanin maintained massive political and financial influence before Putin came to power in 1999. The most influential "Yeltsin-era" oligarchs include the now-sanctioned businessmen, Mikhail Fridman and Pyotr Aven.

Then Putin became president and vowed to rid the government of corruption. This strong man stance led to the arrest or exile of oligarchs like Mikhail Khodorkovsky and Leonid Nevzlin.

The elites who remained were forced to support Putin's government. Meanwhile, a new generation of oligarchs began amassing wealth through personal relationships with the Putin administration.

In many cases, government officials — or their children — took control of state-backed companies. For example, the CEO of Russia's diamond mining giant Alrosa is the son of Sergei Ivanov, a presidential representative.

Some of the most well-known "Putin-era oligarchs" include Roman Abramovich, Oleg Deripaska, and Alisher Usmanov.

By sanctioning Russia's oligarchs, the US and its allies are attempting to cut off "Putin's wallet." Ultimately, the hope is that a disgruntled elite class might put pressure on Putin to end the war.

So far, a handful of sanctioned oligarchs have called for peace in Ukraine as their Western assets come under seizure.

But how much influence the oligarchs actually wield over military decisions is up for debate. Some experts argue that they're incapable of something as drastic as a coup.

In the meantime, the sanctioned oligarch list is growing every day. In the words of President Biden: "We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets. We are coming for your ill-begotten gains."

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