Explained: Who Are Oligarchs And How Do They Rule

US President Joe Biden has said: “…I say to the Russian oligarchs and corrupt leaders who have bilked billions of dollars off this violent regime, no more. The US Department of Justice is assembling a dedicated task force to go after the crimes of Russian oligarchs.”

As the US and many countries are imposing economic sanctions on Russia for invading Ukraine, the oligarchs of Russia are affected badly.

AFP

According to a report published in BBC, More than 1,000 Russian individuals and businesses or oligarchs are restricted to Russia. Chelsea FC owner Roman Abramovich is one such name sanctioned by the UK.

What is an oligarchy?

The word oligarchy comes from Greek oligos means a few and arkho means to rule. The meaning of the oligarchy is the rule of the few.?

An oligarchy can be defined as a form of government characterized by the rule of a few persons or families or oligarchs.?

Famous Greek Philosopher and thinker Aristotle also used the term oligarchia to describe the rule of the few unjustly. He used the term in contrast to aristocracy to describe rule by a privileged few.??

Robert Michels coined the phrase “iron law of oligarchy”. He was a German-born, Italian sociologist. He said that there is an undeniable tendency of organisations to end up less democratic and more oligarchic.

The term is also used to describe a government in which rulers are selected from a small class of elites. However, the rule is for their benefit rather for a great cause.

Modern-day oligarchy

The term can be applied to countries like Russia, China, and Iran. Even though China characterised itself as a communist “people’s republic,” but is well known that the leadership of the country has been in hands of a few elected for several decades.

In Iran, the form of government is a theocracy and clerical oligarchy. Broadly, the power lies with the clerics and a supreme leader holds the most powerful post. A supreme leader rules the country with some 2,000 clerical field operatives. Since 1979, there have been only 2 supreme leaders.?

This system has helped the wealthy to become powerful and prosperous while providing relatively less power or freedom to most citizens.

Oligarchs of Russia

With the introduction of privatisation in the newly independent Russian Federation, oligarchy found its place and rules the country indirectly till today. After 1992, over 15,000 state-owned firms’ shares were sold to private buyers. The move was taken to allow ordinary Russians but a few businessmen acquired the shares and control over the firms.

Getty Images

According to a study done by International Monetary Fund in 1999, two-thirds of all privatized shares came to be held by company insiders under the voucher program.

In 1995, a scheme called loans-for-shares scheme by then-Russian President Boris Yeltsin resulted in the emergence of the country’s wealthiest oligarchs.?

A few wealthy businessmen were given shares of 12 state-owned energy and mining companies in the form of “leases.” The idea was that if Yeltsin wins, the leases would be converted into ownership.

According to Forbes, Russia had 8 billionaires worth a collective $12.4 billion in 2001 whereas 101 billionaires emerged worth $432.7 billion after a decade?

Silovarch, a new breed of oligarch?

The wealth of Russian oligarchs is conditional on obedience to Putin. A businessman Khodorkovsky had spent 10 years in prison for opposing Putin.

Treisman coined the term silovarch. The word comes from the portmanteau of oligarch and siloviki, a Russian word for the country’s military and security elite.?

A new type of Oligarch called silovarch emerged when Vladimir Putin consolidated power and asserted state control over more private businesses

Stanislav Markus, a professor of international business at the University of South Carolina writes “The so-called silovarchs are business elites who have leveraged their networks in the FSB (Russian Federal Security Service) or the military to amass extreme personal wealth,”?

He further writes,? “Since 2003, Putin’s friends and the silovarchs have steadily risen to control crony sectors of the economy and to hold important positions in the executive branch.”

Watch this video explainer:

For more on news and current affairs from around the world please visit Indiatimes News.