Rise of Russian Business Elite

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Communist and Post-Communist Studies 38 (2005) 293e307 www.elsevier.com/locate/postcomstud

The rise of the Russian business elite
Olga Kryshtanovskaya a, Stephen White b,*
a

Institute of Sociology, Russian Academy of Sciences, Moscow, Russia b Department of Politics, University of Glasgow, Glasgow, UK Available online 24 August 2005

Abstract The early 1990s saw the formation of a new group of Russian property owners, often derivative of the late Soviet nomenklatura. The richest and most influential were known as oligarchs, and they established a dominant position in the later years of the Yeltsin presidency. Only 15% of the 1993 business elite still retained their position by 2001, after the 1998 devaluation of the currency. Those who took their place were younger, less metropolitan, better educated and more likely to have a background in government, including many who had enjoyed ministerial status. The new business elite is less personally ambitious, but its political influence is no less considerable and its representation in decision-making bodies has more than doubled over the post-communist period. The logic of development is towards a concentration of economic power in the hands of 20e25 large conglomerates in a politically subordinate association with government, along South Korean lines. Ó 2005 Published by Elsevier Ltd on behalf of The Regents of the University of California. Keywords: Business; Elite; Oligarchy; Russia

Introduction The Soviet system allowed differences of income and private accumulations of wealth. But it did not permit the private ownership of factories and farms, or even of * Corresponding author. Tel.: C44 141 330 5352; fax: C44 141 330 5071. E-mail address: s.white@socsci.gla.ac.uk (S. White). 0967-067X/$ - see front matter Ó 2005 Published by Elsevier Ltd on behalf of The Regents of the University of California. doi:10.1016/j.postcomstud.2005.06.002

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O. Kryshtanovskaya, S. White / Communist and Post-Communist Studies 38 (2005) 293e307

small businesses; living off the labour of others was ‘exploitation’, and a criminal offence. These restrictions were being relaxed even before the end of communist rule, and a central feature of the policies that were followed under Boris Yeltsin after his election as Russia’s first president in the summer of 1991 was the shift of productive resources from the state to private individuals. ‘We must’, Yeltsin insisted, ‘provide economic freedom, lift all barriers to the freedom of enterprises and of entrepreneurship and give people the opportunity to work and to receive as much as they can, casting off all bureaucratic constraints’ (Yeltsin, 1992: p. 6). In line with these policies, successive programmes of privatisation transferred state property into private hands; income differentials widened rapidly; and at the top, a new group of super-rich emerged, whose assets commanded respect not just within Russia itself but internationally. They became known as the ‘oligarchs’, with resources that typically combined banking, sections of industry and the mass media.1 There were 15 of these wealthy magnates, and every Russian knew their names: Rem Vyakhirev, Boris Berezovsky, Vladimir Gusinsky, Vagit Alekperov, Vladimir Potanin, Mikhail Fridman, Mikhail Khodorkovsky and others. For 3 years, from 1995 to 1998, their power and their ratings rose steadily. Within government itself they had their ‘own’ ministers, officials and deputies. Berezovsky claimed personally to have secured the re-election of Boris Yeltsin in 1996 through the media campaign he had sponsored (Financial Times 1 November 1996: p. 17). He was known to be a member of the ‘Family’, the inner group around Yeltsin’s younger daughter who appeared to exercise decisive influence in the presidential court. Indeed it began to appear as if the state itself had been ‘privatised’, and that all important decisions were being taken by a small group of financial magnates. It was certainly true that...
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