Putin has not yet started executing people around him, but he has shown that politically they do not matter at all. Stalin was able, through skilful manoeuvring, to move from being a ‘grey blur’ (as his assassinated adversary Leon Trotsky put it) to acquisition of complete power - including, in his final years, over the Communist Party’s Politburo.ĭuring the early privatisations in the 1990s, it was typically asserted that no matter who got the privatised assets, they would have an incentive to fight for the rule of law, simply to protect their gains. Consider just the similarities with Josef Stalin’s regime. The conclusion that billionaires and people close to power will draw is one that was drawn a few times in Russian/Soviet history - only to be forgotten.īut let’s leave aside the ancient conflicts between the boyars of the feudal nobility and the tsar. What are the likely implications for Russia? Here we have to take a longer-term view, and to look past the Putin regime. Financial fragmentation would be driven not only by the fears of billionaires but by those of potential US adversaries, such as China, that their governments’ and central banks’ assets might too prove to be just pieces of paper. We can thus expect the growth of other financial centres, perhaps in Gulf states and India. Under such conditions, they would be very unwise to keep their money in places where it may be as insecure as at home.
The frequent use of economic and financial coercion means that if there are political tensions between the West and (say) Nigeria or South Africa or Venezuela, the same recipe will be applied to the billionaires from these countries, whether simply as a punishment or out of an expectation that they should influence the policy of their governments. This applies in the most obvious way to the Chinese billionaires who might experience the same fate as their Russian counterparts. The global implication is that plutocrats who in the past often moved their money from their own countries to the ‘safe havens’ of the US, the United Kingdom, and Europe will be much less sure that such decisions make sense. As to the implications of the seizure of assets, these are of two kinds: global and Russia-specific. This is the lesson as to the nature of the Russian political system. It did so precisely because it thought, probably not accurately in all cases, that these billionaires were ‘state oligarchs’. As it happened, it was not the Russian state which seized these but the American one (along with some others). The more recent oligarchs have by contrast been treated as custodians of assets which the state might, by political fiat, take from them at any time. The late Boris Berezovsky, who gained control of the main public television channel, brought Putin to the attention of his predecessor, Boris Yeltsin, because he thought Putin could be easily manipulated. The former, beneficiaries of the privatisations when the Soviet Union collapsed, controlled the political system. There is a distinction to be made between the early and more recent Russian billionaires.
If their sway over such an important matter, on which their entire assets and lifestyle depended, was nil, then the system was clearly not a plutocracy, but a dictatorship. So, ironically and perhaps paradoxically, they were punished not because they were powerful but because they were not.
But if so their influence was, as we now know, zero. We can assume that 99 per cent, perhaps all, of the targeted oligarchs (and those who feared they might be) realised the stakes and were against the war. The US government ventured the idea before the war and with the expectation that the oligarchs, faced with the prospect of losing most of their money, would exert pressure on the Russian president, Vladimir Putin, not to invade. To draw this (rather obvious) conclusion, we need to go back to the initial rationale given for the threat of asset seizure. Rather than being ruled by a few rich people, it was ruled by one person. The first lesson we can learn from the confiscations is that before 24 February Russia was not an oligarchy, as many people believed, but an autocracy.
The assets were then ‘frozen’ (or even confiscated) by the US and a number of mostly European countries after the Russian invasion began on 24 February. The threat of confiscation of Russian oligarchs’ assets has been floated since at least December of 2021, around the time Russia issued its ultimatum to the United States and began the military manoeuvres around Ukraine’s borders.