The age of oligarchs is over. Credit: Triangle of Sadness/Amazon Prime
Like the dozens of sanctioned superyachts lying abandoned in European harbours, the empty mansions gathering dust in Chelsea stand as mementoes to the West’s love affair with the Russian super-rich. This romance has soured with Western sanctions, which are based on a wildly naïve assumption: that Russia still has a powerful business elite that can influence President Putin and even change his handling of the war. The truth is, there are no powerful Russian oligarchs left.
The term “oligarchy” perfectly characterises Boris Yeltsin’s presidency in the Nineties, during which a small number of extremely wealthy men yielded massive influence. These men acquired key state assets, including major parts of the energy, telecommunications, and precious metal sectors, at a fraction of their real value after the Soviet Union fell. In return, these “businessmen” backed the ailing president and helped to ensure his re-election in 1996.
When Putin came to power, he set about dismantling this oligarchy and removing any threat business elites posed to his own political leadership. The deal was that oligarchs could keep their money if they stayed out of politics. Those that didn’t, risked everything — their wealth, their freedom, and their lives. Mikhail Khodorkovsky, once Russia’s richest man, spent 10 years in prison on tax charges after setting up a political organisation — Open Russia — to “build and strengthen civil society”. Rather than risk a similar fate, most of the other oligarchs stayed away from politics.
Of course, Putin reduced the Russian people’s political power as well as that of the oligarchs. But people were willing to accept a social contract of economic stability and growth in return for staying out of politics because they were so traumatised by the economic conditions and exploitations to which the oligarchs (and Western advisors and businessmen) contributed so substantially during the transition to capitalism and depredations of the wild Nineties.
In an oligarchy, great wealth guarantees political influence, but in Putin’s Russia, the opposite is true: business elites must suffer the tyranny of officials. State corruption winds its way through all Russian businesses, which require krysha — or protection — from powerful bureaucrats to ensure their company is not expropriated, subject to a hostile takeover, or slandered around the world via “black PR”. The bureaucrats can then exploit their powers of patronage to arrange business opportunities for their friends or family. No wonder so many young Russian professionals want to become bureaucrats, not businessmen.
In this system, wealthy Russians depend on political approval, not vice versa, which is where the UK’s misunderstanding lies. The business elites have close to zero political influence.
There are two types of super-rich Russians: both powerless to change the course of the war. The first are Putin’s men, for example, Igor Sechin, who derive their wealth exclusively from their proximity to Putin. If they were to abandon or criticise Putin, they would lose everything. The second group is made up of tamed erstwhile oligarchs, many of whom emit coded signals that they do not agree with the war. The sanctioned businessman Mikhail Fridman — who lives in London — is one such. He called the invasion of Ukraine a tragedy, but stopped short at outright condemnation of the war.
In some ways, the UK is to blame for the Russian elites’ lack of leverage. For decades, well-connected Russians kept their money and families safe in the UK, while maintaining their high positions in Russia. British accountants helped to stash their dubious incomes, lawyers settled their divorces and prosecuted libel trials, consultants lobbied politicians for their business associates’ interests, estate agents procured their mansions, private schools educated their children, and museums laundered their reputations.
Given the Russian super-rich had rights and the means to assert them in the UK, they never felt the need to promote — or defend — the rule of law at home. This double life often worked in their favour: if they wanted to bring down an enemy, they could hire a corrupt judge in Russia to ensure an unfair hearing. But when they needed real justice, they could fly to London.
This “Get out of Russia Free” card couldn’t last forever. In allowing Russians to live the high life away from home, the UK emboldened Putinism in its current form. With the UK offering a safe haven, rich Russians never felt the need to build or maintain strong legal institutions after the fall of the Soviet Union. As a result, there is now no realistic channel of non-centralised power, such as a strong judiciary or small and medium business constituency, that the business elites could use to influence the Kremlin — presuming they even wanted to.
Russia might have been better off following the lead of Poland or Ukraine. In Poland, which also underwent neoliberal “shock therapy” market reforms during the Nineties, measures were taken to guard against oligarchy and build up the SME sector. The Poles built millions of new businesses and gave a group of funds stakes in privatised state firms to prevent the asset-stripping characteristic of Russian oligarchs. Meanwhile, in Ukraine, the rivalries between different oligarchs created obstacles for any autocrats, allowing citizens more political freedom. In many ways, Russia has the worst of both worlds: the destructive economic legacy of oligarchy without any of the elite infighting.
None of this is to say that the UK shouldn’t seize the assets of Kremlin-linked officials and businessmen. It’s just that the purpose of doing so should not be to encourage business elites to abandon or persuade or topple Putin — but to stop Russian money from corrupting our national interests and security.
Ironically, sanctions on oligarchs have given the UK some of its best PR in Russia for decades. Ordinary Russians hate the business elite and have celebrated the West’s sanctions on them. On Russian Telegram channels, announcements of new sanctions on bankers, Putin’s mistress Alina Kabaeva, and other wealthy individuals, are greeted with thousands of likes and jokey comments celebrating the UK: “Thanks London”, “More please!”, and “London is doing us a favour”. As Putin gloated during his State of the Nation speech last month: the West has seized rich Russians’ assets because it views them as “second-class strangers”, but “not a single ordinary citizen in our country feels sorry” for them.
When it comes to sanctions, the British establishment must be careful not to project its outdated historical conceptions onto Russia. The UK is no longer dealing with the influential oligarchs of the Nineties — but with powerless present-day business elites. And while the Kremlin could no doubt use Western business elites to influence our governments, the same is no longer true in reverse. The power of the Russian business elites is a phantom. The oligarchs are long dead. And we helped kill them.
Jade McGlynn is a Russia analyst. Her book Russia’s War will be published by Polity on 17 March.
DrJadeMcGlynn 
Join the discussion
Join like minded readers that support our journalism by becoming a paid subscriber
To join the discussion in the comments, become a paid subscriber.
Join like minded readers that support our journalism, read unlimited articles and enjoy other subscriber-only benefits.
SubscribeYou’ve got my vote, Niall but a quarter of the current price would be ok. My mother lived in the North of England. Very good train service (3 hours for 250+ miles)and for one person it makes financial sense to go by train but 2+ makes it a luxury. Alternative is a minimum 5 hour hellish motorway drive with all the inevitable hold ups. Pricing of railway journeys is farcical. Freeing up a bit of our horrendously clogged road network by a encouraging sensibly priced rail travel makes a lot of sense.
Like the NHS free at the point of delivery the Railways would develop a vast and expensive bureaucracy and service would be rationed and scarce.
I rember in my youth returning north by train from Bari in Italy where the carriage was so jammed with people that the toilet was full of cases and those wishing to use it had to be handed over the head of the crowds in the corridor and use the toilet with the door open as there was no room to move the cases. The journey was cheap but not one to be repeated.
Of course, health and safety would prevent this occurring today, instead you wouldn’t be able to travel when you wanted to unless you booked well in advance just as you have to book a GP appointment well ahead of need now.
Oh dear, we can’t have those plebs filling up the trains now, can we.
Have 1st class paying carriages: problem solved.
I’ve been on trains like that back in the 1980s.
These days in Europe you are far more likely to find a fast, comfortable, efficient, and reasonably priced rail network – outside the UK of course.
My experience was in the 1960s but even then I remember boarding an Italian express train in error whose level of comfort was superior to anything then available in England. Unfortunately, the extra cost of travel on this train was so high that as an impoverished student I had to make my excuses and exit at the next station.
Make travel to work a full tax break item.. that provide an immediate telief to the most affected..
Sounds like my one from Rome to Brindisi.
I’m always a bit dubious about “we should learn from (X policy n foreign country that’s only just been announced)”.
Germany has had a cut-price €9 (or something) special for most of the summer and trains have been mobbed, standing-room only. Not much scope for starting new novels, or love affairs, unless involuntary frottage counts.
I had a really wonderful experience of that kind in a London tube once: I had to apologise ..twice!
To my surprise she was AOK with the experience herself! Ah happy days: pre woke, pre me too etc..
As you type she was probably down the local nick filing a complaint
In the early 1980s the railway network had special offers on a few weekends when you could travel anywhere for a pound. I remember walking up the road to Brighton Station on morning and the crowds arriving and leaving looked like extras in a film fleeing a war.
The last time I traveled by train in the UK – almost five years ago – it was so crowded that one poor girl fainted. And that was in December. It must be even worse in the summer.
Not the FB of Quislington fame?
Yes. I tried to subscribe today. No payment channels were offered to me but I am now allowed to comment again, which is all rather strange.
Funnily enough a new client of mine revealed that he loves Unherd and has an office in the same building. As such he often sees Freddy and co coming and going.
He lives!
Perhaps not for long. Entered debit card details but they sent something to my phone containing a link, and my phone is an old and battered Nokia. I do not have a ‘connected’ smartphone. If only I could just send a cheque!
I to have “an old battered Nokia “, perhaps these are the last two on the Planet?
I affectionately refer to mine as the ‘Nag’ phone.
While I’m here, can I be the first to point out that one rather wishes the Germans had thought of rationing gas 80 years go. Talk about a day late and a dollar short…
The fact the passengers don’t pay does not make train travel free. It means the tax payers pay for it, or as the taxpayers can take no more strain, they forego something to give a minority free travel by train.
In other words, it is a totally daft idea. Those who travel should and must pay. There is a case for “free” health care and I suppose maybe for “free” education, but none for free trains. Free in every case to the users remember, not no cost.
If we can find a way to reduce the costs of running a railway system, then so much the better. The best would be to privatise it, but as history of the last ten years shows, Whitehall will slowly erode that!
It’s not free, it’s never free. It’s about who pays. The individual passenger using the service or the rest of us through our taxes. Before 2019 the rail industry already had an annual taxpayer subsidy of £5 billion. Thanks to Covid, season tickets have fallen by 75%, total annual ticket sales have dropped from £11 billion to £5.9 billion. Facetime, Teams, Zoom and Google Teams have made working from home a real alternative that business management now accept. Don’t use taxpayers cash to subsidise the railways, use it to upgrade the broadband network. The RMT can’t hold the Government to ransom today any more than the NUM could in the 1980s. Welcome to the 21st century.
I think it needs a proper discussion with numbers to come to an informed view. National Rail state that train companies make 2% profit and that the UK actually had faster growth in rail use than comparable European companies. Would we actually save all the money on the road network or would we need to spend it anyway etc etc.
Current exorbitant prices in the UK slash the earnings of commuting workers. I would like to read an analysis outlining the reasons for huge train fares. I like the cultural point this article made. I expect more people travelling by trains and less cars on the road would help the environment too.
The Heritage Site | Adam McDermont | Substack
Rather than provide free rail travel, it might be more useful to spend money on replacing diesel buses with electric ones, and invest in railway electrification. Electric buses should make our cities quieter and cleaner and be more likely to wean people out of their cars.
As for the railways, it would make sense to electrify certain key freight routes (such as Felixstowe to the Midlands). Although cars and small vehicles can run off batteries, it is much more problematical to do this with HGVs, especially those operating over long distances. Use electric freight trains to connect the ports with major conurbations and use HGVs for the last few miles.
Why do some people think that “free” = “civilized” despite the extensive evidence that usually “free” = “poor quality”.
If there’s a serious problem with English citizens not being able to afford train tickets, there are vastly better ways to solve this than making all the trains free and open to anyone.
The point is well made except of course that nothing is really free apart from air, rain and sunshine (although govts are probably working taxing those as well!)
And since all money eventually makes it’s way back to the govt in taxes of various kinds it’s a question if choice.
But do we want to choose ourselves who pays how much for what: or do we let the govt choose on our behalf is all that is in question when you boil it all down.
Free train travel is of little use if the unions are preventing the trains from running.
E periculoso sporgesi
The management of the Railways have been yet another great British fiasco.
The 1955 so called Modernisation Plan was a shambles, and the much reviled Dr Richard Beeching was given the unenviable task of saving what he could of the wreck.
Sadly his bold plan was never fully implemented, and thus many miles of almost worthless track are still maintained.*
The final solution, hit apron by that latter day genius John Major was ‘Privatisation’.
Needless to say it is a contradiction in terms, as it has meant enormous public subsidies to notional private companies,
the overall ‘bill’ far exceeding that previously paid to the ossified British Rail. Genius indeed!
(* For example do we really need a railway between Newcastle and Edinburgh? Beeching didn’t think so.)
(For example do we really need a railway between Newcastle and Edinburgh? Beeching didn’t think so.)
Er, yes (was that a trick question?)
Beeching II and Sir David Serpells 1982 Report recommended closing the ECML from Newcastle northwards.