Business oligarch

From Academic Kids

Business oligarch, a synonym of "business magnate", describes wealthy people that significantly influence the life of a state. The term came into wide circulation after the collapse of the Soviet Union in application to the people that became extremely wealthy in some post-Soviet republics. In particular, the term Russian oligarch describes Russian businessmen who came to prominence during the presidency of Boris Yeltsin.

Russian oligarchs

The oligarchs started under Gorbachev during his period of market liberalization. Under the market liberalization, many smuggled rare goods into the country, such as PCs, and jeans, for a hefty profit margin, an unforeseen consequence of partial market liberalization with still excessive trade restrictions, and the willingness of some, less savory characters, to smuggle goods into the country and sell them on the black market.

Post-Soviet business oligarchs tended to achieve vast wealth by acquiring state assets very cheaply during the privatization process started by the Yeltsin government. Specific blame for their ascent to power is often levied on Anatoly Chubais and Yegor Gaidar, two of the 'Young Reformers' chiefly responsible for 'shock therapy' privatization in the early 1990's. According to David Satter, author of Darkness at Dawn, "what drove the process was not the determination to create a system based on universal values but rather the will to introduce a system of private ownership, which, in the absence of law, opened the way for the criminal pursuit of money and power."

As Yeltsin's power weakened, oligarchs became increasingly influential in politics and played a significant role in financing the re-election of Yeltsin in 1996. The 1998 financial crisis hit the oligarchs hard, however, and those whose holdings were based on banking lost much of their fortunes. In the Putin era, the remaining oligarchs have come under fire for various alleged and real illegal activities, particularly the underpayment of taxes in the businesses they acquired. Vladimir Gusinsky (MediaMost) and Boris Berezovsky were both effectively exiled, and the most prominent, Mikhail Khodorkovsky (Yukos oil), was arrested in October 2003 and (as of 12/04) is in jail, with his company trying desperately to protect itself from being dismantled.

Their defenders (often associated with Chubais's party—the Union of Right Forces) argue the companies they acquired were not highly valued at the time because they were still run on Soviet principles, with non-existent stock controls, huge payrolls, no financial reporting and scant regard for profit. They turned the businesses—often vast—around and made them deliver value for shareholders. They obtain little sympathy from the Russian public, though, due to resentment over the economic disparity they represent aggravated by the fact that many prominent oligarchs are of Jewish descent.

The oligarchs who remain include Roman Abramovich (Sibneft Oil and Chelsea Football Club), Vagit Alekperov (LUKoil), Vladimir Bogdanov (Surgutneftegaz), Chubais himself (United Energy Sources), Oleg Deripaska (Russian Aluminium), Mikhail Fridman (Alfa Group), Yuri Luzhkov (Mayor of Moscow) and Vladimir Potanin (Norilsk Nickel).

Ukrainian oligarchs

According to the Wall Street Journal of 11/26/2004, Ukrainian Prime Minister and presidential candidate Viktor Yanukovych "is closely associated with a number of Ukrainian oligarchs, such as Rinat Akhmetov". Viktor Pinchuk, the son-in-law of ex-president Leonid Kuchma, is the second wealthiest man in Ukraine and controls much of the nation's media.

Yuliya Tymoshenko, the Prime Minister of Ukraine, and a close ally of President Viktor Yushchenko, is also one of the wealthiest persons in Ukraine. She is said to have acquired her wealth when former Prime Minister Pavlo Lazarenko let her set up a company that sold Russian natural gas for shares in Ukrainian businesses.

Related articles

fi:Oligarkki ja:ロシアの新興財閥

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