In the midst of Russia's war with Ukraine, a surprising phenomenon has emerged: the number of billionaires in Russia has skyrocketed to an all-time high. However, this boom in wealth contrasts sharply with the loss of political influence experienced by Russia's elite, known as oligarchs, over the past 25 years of Vladimir Putin's rule.
Putin's strategy to maintain control over these powerful individuals has been a delicate dance of incentives and threats. Western sanctions, intended to turn the ultra-rich against him, have instead solidified their support. Take, for instance, the case of former banking billionaire Oleg Tinkov. After criticizing the war on Instagram, his bank, Tinkoff, faced nationalization unless all ties to its founder were severed. Tinkov's experience highlights the harsh reality of Putin's 'carrot-and-stick' approach.
But here's where it gets controversial: the war has proven to be a lucrative venture for many of Russia's billionaires. Despite the initial losses, the lavish spending on the war has spurred economic growth, benefiting even those not directly involved in defence contracts. In 2024, more than half of Russia's billionaires played a role in supplying the military or reaped benefits from the invasion, according to Giacomo Tognini from Forbes's Wealth team.
And this is the part most people miss: while some oligarchs have been targeted by Western sanctions, these measures have inadvertently strengthened Putin's grip on the country's wealthiest individuals. Alexander Kolyandr from the Center for European Policy Analysis (CEPA) argues that the West's actions have effectively rallied the billionaires around Putin, leaving them with no clear path to defect.
The invasion of Ukraine created a unique opportunity for Kremlin-friendly business people to step in and fill the void left by foreign companies. This exodus of foreign entities has resulted in a new breed of loyalists, whose future prosperity is tied to continued confrontation with the West.
In 2024 alone, 11 new billionaires emerged in Russia, showcasing the intricate web of loyalty and profit that Putin has woven. Despite the war and sanctions, Putin's firm grip on the country's movers and shakers remains unshaken.
So, the question remains: has Putin's strategy of keeping Russia's billionaires on side paid off? And what does this mean for the future of Russia's economy and its relationship with the West? We invite you to share your thoughts and opinions in the comments below.
