Reuters: war in Ukraine creates a new type of Russian oligarchs
Kyiv • UNN
Putin is creating a new generation of Russian billionaires by appointing tycoons to own and manage assets confiscated from Western companies that are leaving Russia because of the war in Ukraine.
Dictator Vladimir Putin is creating a new generation of Russian billionaires. In Russia, there are now tycoons chosen by Putin to own and manage assets confiscated from Western companies. This is reported by Reuters,reports UNN.
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The publication writes that when the Russian dictator came to power a quarter of a century ago, he first got rid of the oligarchs of the 1990s, and then appointed a new generation of tycoons-most often chosen among his old colleagues from the Russian special services.
"Now there is a third wave of potential oligarchs: tycoons chosen by Putin to own and manage assets confiscated from Western companies. They may be more business-savvy, but they will be just as subordinate to the Russian leader as their predecessors.
The first oligarchs made their fortunes on wild privatisations in the early 1990s under then-President Boris Yeltsin. Some of them were allowed to continue managing their vast fortunes as long as they followed Putin's dictates, as happened to Vladimir Potanin, the owner of the металург 24 billion Norilsk Nickel steel giant, and Oleg Deripaska, the head of a huge industrial empire based on his aluminum assets.
During the second wave of billionaires, Putin promoted his friends and former colleagues from his time as a KGB agent, and they benefited from the redistribution of energy assets. Among them: Igor Sechin, whom Putin appointed deputy prime minister and then put at the head of the state-owned oil giant Rosneft; Nikolai Tokarev, another KGB agent who became president of the world's largest pipeline company Transneft in 2007, and Alexey Miller, head of the Russian gas giant Gazprom.
According to the publication, a few months ago, few people outside of Russia heard about businessmen Alexander Varshavsky and Alexander Govor. The first, the owner of Volkswagen dealerships, is now the owner of a plant that the German carmaker has long operated in the north of oosia, and also took over the assets of the Korean automaker Hyundai. According to the Russian independent news site The Bell, the confiscated assets it now manages generated about.7 billion in revenue in 2021.
Govor was the owner of McDonald's franchises in Russia. Together with his partner Arsen Kanokov, he inherited the restaurant chain of the American fast food group, as well as, among others, Starbucks and Domino's Pizza. These assets generated about річного 3 billion in pre-war annual revenue.
The list of expropriated assets may increase in the coming months, as companies will struggle to leave Russia, writes Reuters.
The publication notes that the new wave of potential oligarchs differs from their predecessors in many ways. Most of them have business experience. They even demonstrated some competence in their respective fields. And they understand the basics of profit and loss and market competition as well as the shadowy and corrupt architecture of the system.
There are, of course, exceptions. Ramzan Kadyrov's nephew Yakub Zakrolev can thank routine for inheriting the Russian assets of French food giant Danone. Previously, he was not known for his expertise in yogurt production or mineral water marketing.
Another difference from the billionaires of the 1990s and noughties is that they work in the consumer goods, services, and retail sectors. Mineral resources and energy, for which Putin holds a firm grip, have already been distributed among the elders.
But the main distinguishing feature of the new generation is that they operate in a radically new context. The former business elite depended on the domestic economy, which participated in global trade and was immersed in the global financial system. Russia is now cut off from foreign loans, and Putin is seeking to increase his country's self-sufficiency in a range of consumer goods that it once imported or produced locally under Western leadership.
Last year, the Russian president introduced a 50% discount on assets sold by companies leaving Russia if they find a buyer. Last month, he took larger measures that will take effect if Western industrial powers agree next month to use Moscow's заморожені 300 billion frozen assets to help Ukraine.
"The new Russian business magnates do not participate in power, as the previous oligarchs did. None of them reached the weight that would allow them to fight for influence over the Kremlin. In the short term, they can grow rapidly, benefiting from Putin's overheated military economy, with salaries, pensions, and social benefits boosted by government spending. In the future, they will receive economic isolation," the newspaper writes.
It is noted that their ambitions will also be limited by the understanding that everything that Putin gave, he can take away. They will not be able, like the old guard, to balance between the dictates of the Kremlin and the demands of a free global market. They will have to work in a system where most of the resources are mobilized for military needs, and the rest of the economy is forced to share the loot.
