Russian Oligarchs: ‘The Best Strategy is to Walk the Tightrope to Preserve Their Fortunes’
April 3, 2023
Elisabeth Schimpfössl, sociologist and author of Rich Russians: From Oligarchs to Bourgeoisie, discusses how life has changed for the business elite since the start of the war, as well as the toxicity of Russian money, the situation with children of wealthy families and her new book looking at Russia’s central media figures.
Vladimir Potanin, a Russian billionaire, was sanctioned in 2022 by the UK, Canada and the US. Source: Wiki Commons
Before the war in Ukraine, Russian businessmen were very involved in philanthropy and charity. There are various interpretations as to why – from money laundering to sincere interest. What is your view?

Western cultural institutions, which received large amounts of money from Russian oligarchs, helped them to bolster their status in the West. One example is Vladimir Potanin, who was the first oligarch to get onto the board of directors of such a major museum as the Guggenheim.

Yet when choosing an institution, oligarchs were not necessarily guided by calculation. Individual preferences and tastes have always played a role. At the same time, they hoped that the status of a world-class philanthropist would provide them with security in the West in case something went wrong in Russia.

What at first glance may look like currying favor with Western elites is actually more complex and cunning. Oftentimes oligarchs killed two birds with one stone: they would give money to exhibitions and events that promoted Russia’s cultural heritage and art, be it the Russian Lounge at the Kennedy Center or the exhibition Russia!, the opening of which was attended by Vladimir Putin in 2005.

Patronage may be just one of the reasons why sanctions against Potanin were introduced relatively late: the UK and EU did so in June 2022, followed by the US in December 2022. Another reason was the fear that sanctions could provoke a serious shock to the global nickel market, since Potanin controls 14% of it. For the same reason, Nornickel itself is still not under sanctions.

With the outbreak of the war, cultural institutions acted faster than governments and swiftly kicked out oligarchs from their boards of directors.
“Potanin had to say goodbye to his position at the Guggenheim, but he switched to organizing patriotic events in his homeland – and that business is booming. Far from every oligarch has managed to make such a successful transition.”
In late 2022, Oleg Tinkov, a Russian-born entrepreneur and businessman, renounced his Russian citizenship, citing the Ukrainian war and "Putin’s fascism.” Source: Wiki Commons
Admiration for oligarch benefactors in London sometimes reached the point of absurdity. Take the example of Leonid Blavatnik. Some journalists even feared that they might be sued if they described him in the media as a Russian oligarch rather than something like an “American philanthropist of Ukrainian-Jewish origin.” Several times I experienced their extremely violent reactions myself when I pointed out that Blavatnik made his money in Russia in the 1990s.

The local media really lacks “good” oligarchs who could be clearly separated from the “bad” ones and with whom relations could be had. When there are not enough “good” ones, they are invented. After Oleg Deripaska wrote on his Telegram channel that war is not good, the West marveled at this move, even though Deripaska’s antiwar sentiments are simply an invention of the Western media.

While big money is being made in Russia, no oligarch wants to spoil relations with the Russian authorities. To preserve their fortunes, the best strategy is to walk the tightrope, as Roman Abramovich, Vladimir Potanin and Vladimir Lisin have done. You can, of course, like Oleg Tinkov, come to terms with the loss of your previous status in exchange for a calm and comfortable life in the West. But not everyone is ready for that. Mikhail Fridman, for example, never spoke out against the Kremlin’s Ukraine policy.

When a “good” oligarch is discovered, a narrative is built around him that he is an exception to the rule. There is an example from my native Austria. Dmitry Kalantyrsky made the Austrian region of Carinthia his second home. Carinthia loves hockey, and Kalantyrsky built a new stadium. At the opening, he stood in front of the cameras alongside the local political elite, and his photographs were published on the front page of the regional newspaper. Locals adore him, and the war in Ukraine has not affected that.

Some Russian oligarchs are rewriting their biographies. A striking example is Arkady Volozh, the former CEO of Yandex, who now presents himself as an Israeli entrepreneur born in Kazakhstan. The Wikipedia article about Pyotr Aven, ex-chairman of Alfa Bank, was edited more than 140 times after the start of the special operation. Does this make any real difference?

The West has never been particularly interested in the background of business players from Russia and how exactly they accumulated their huge fortunes. There were different priorities, and a simple, pretty narrative is created for the public about a “good” oligarch.
Mikhail Fridman, a Russian-Israeli tycoon. In February 2022, the EU blacklisted Fridman and froze all his assets as part of a package of sanctions in response to Russia’s invasion of Ukraine.
Source: Wiki Commons
In this regard, businessmen like Aven or Fridman seemed ideal. I was surprised that they were the first who were subject to sanctions and with such wide media coverage – after all they had integrated into the Western establishment.

Of course, Aven’s interview in the FT with complaints about being unable to pay for a cleaner and a driver turned out to be a less than successful PR move – just like Fridman’s interview with Bloomberg, where he complained that “those who are making this decision [to impose sanctions on him] understand nothing about how Russia works.”

Andrey Melnichenko also did not look great in an interview when he was asked whether he feels any guilt for the war, firmly replying, “I absolutely do not consider myself personally responsible for the tragedies that have happened,” before adding, “trying to work out who is guilty and not guilty is very dangerous.”

But Roman Abramovich’s PR moves, on the contrary, have been extremely successful. He still remains afloat, acting as a mediator and peacemaker on the world stage.

Sometimes even those at the top of the Forbes billionaires list, like Lisin, for example, manage to avoid sanctions. Lisin still goes about supplying steel to Europe, with the same steel actively used by Russia’s military-industrial complex.

Did sanctions in some way affect the role and structure of wealthy Russian families, their internal processes and dynamics?

Their families now play a bigger role than before.
“For the first time, due to sanctions, fathers have to rely on their children. Serious men suddenly became persona non grata, but this did not affect their children.”
The West has punished few of the heirs, especially in the EU or UK. Moreover, many of the children bear their mother’s surname and can “hide” behind it. But some of them became billionaires by receiving their inheritance early, such as Abramovich’s children.

A The New York Times journalist, in an article about Dasha Zhukova (the ex-wife of Roman Abramovich – RP), showed how the narrative about “good” rich Russians is built. New York high society spoke out in defense of Zhukova, including such figures as the editor-in-chief of the American edition of Vogue, Anna Wintour, and the director of the Museum of Modern Art in New York.
Until 2022, Vagit Alekperov was president and co-owner of Lukoil, one of the biggest oil companies in Russia. Following Russia's invasion of Ukraine, he was sanctioned by Australia, the UK, Canada and New Zealand. Source: Wiki Commons
You write in your book that Putin and Russian oligarchs have a mutually beneficial relationship. Oligarchs get the assets of foreign companies that have left Russia, and Putin in return gets their management experience and support. But how long will this mutually beneficial relationship last?

Generally speaking, repression is directed against a certain group of people or [carried out] to establish control over society. Today, there is no reason to repress oligarchs, and there never will be. But in terms of their businesses, selective attacks are already happening. The assets of departed Western companies are transferred to the most loyal oligarchs, such as Potanin and Vagit Alekperov. At the same time, the Prosecutor General is initiating cases to nationalize enterprises (see RP on this), with disloyal businessmen living abroad being the first included on that [hit] list.

The general director of Transparency International Russia, Ilya Shumanov, has already counted about 30 cases in which enterprises have passed from private hands to the state. This applies primarily to strategic infrastructure, for example, port assets in Perm, the Kaliningrad Sea Commercial Port and the Far Eastern Shipping Company. A high-profile case is the claim of the Prosecutor General against Melnichenko to seize Kuzbassenergo’s stake in Sibeco. So far everything has gone in favor of Melnichenko, but others were less fortunate.

According to Henley & Partners calculations, Russia in 2022 ranked second after China in terms of the number of millionaires who emigrated. If the political situation becomes more favorable, do you think they will try to return to the country?

Now, for the first time we are seeing a situation where capital from a certain country has become toxic. If we compare Russia with Qatar, the latter was the subject of severe criticism during a soccer tournament in January 2023. As soon as it ended, everything went back to how it was, and now you can again cooperate with the country and use Qatari money.

The situation with Russian oligarchs is different.
“When, a few months after the start of the war, it became clear that the blitzkrieg had definitely failed, almost all Russian money became toxic in the public’s perception.”
How long will the West’s “crusade” against Russian oligarchs last? And what will be the grounds for them to again become acceptable partners for Western elites?

Rehabilitation is already underway. As I said,the narrative about the “good oligarch “ is already adapting to the new circumstances. The narratives that were built in the West previously had little to do with a person’s biography, and certainly not with the sources of his money or business practices. No one particularly tried to explain why this or that oligarch is an exception to the rule, how he differs from others who are perceived as crooks. Everything indicates that things will return to normal.

It was clear even before the war how easy it would be for them to rehabilitate themselves. On February 22, 2022, then-Prime Minister Boris Johnson announced the names of the first three oligarchs to be included on the UK sanctions list. How difficult do you think it is to find “local” Russian oligarchs here in London? It turned out to be difficult [in fact], and in the first days they found only the Rotenberg brothers [Arkady and Boris] and Gennady Timchenko, who had no special connection to London.

They tried not to touch “their own.” The establishment loves Abramovich, and they tried to protect him to the very end, but then internal problems began in Great Britain – in particular, the “partygate” scandal about gatherings of senior officials during Covid, when ordinary people were prohibited from even attending the funerals of their loved ones. Attention needed to be diverted from this sensational scandal, and that was partially accomplished by adding new oligarchs to the sanctions list.

It will be very interesting to see how PR will be structured and what sacrifices will have to be made for Russian oligarchs to come out into the world again. Let’s see... I would not be surprised if, during the rehabilitation of a “worthy” candidate, the question of whether he made money on the war will not be considered of primary importance.

Do you think Russian billionaires will continue to take part in the political transformations that will happen sooner or later?

Definitely. They have never strayed far from politics, and in the future they will participate no less. The only question is what kind of policies we are talking about and in whose favor they are. In the West there has always been a superficial and arrogant idea that since oligarchs and their children were accustomed to good, “developed” practices and the rule of law in business, they would begin to transmit the right values and thus become important builders of democracy in Russia. Under Tony Blair in the late 90s, rich people from all over the world were actively invited to the country, regardless of whether they were corrupt or not. The idea was that since the children of these oligarchs studied at local universities, when they went back home, already knowing how democracy works, they would use their knowledge for the benefit of their countries.

That did not work out. Indeed, the children of wealthy foreigners studying in Western schools have adapted: the kind of open homophobia, sexism and racism of their parents can no longer be found. But, firstly, political correctness is not the same as democratic principles.
“And secondly, we should really not expect those who benefit from the status quo to strive to become the vanguard of political changes in Russia.”
All their lives, the children of oligarchs saw more and more money accruing to their fathers alongside less and less democracy in Russia. Why should they risk and sacrifice their well-being for the sake of a political experiment, even a democratic one?

We like to attribute superhuman powers to the super rich. In reality, they inherently pursue their own interests and support policies that help maintain their status and property. The reformers of the 90s still believe solely in [the power of] private capital: if private capital grows, then everything else will follow. If that requires authoritarian measures, then so be it. In the 2000s, Aven suggested that Putin follow the “Chilean” path. Chile under Pinochet was a capitalist economy. Democracy had nothing to do with it. Others may be less concerned with historical examples, but the goal is the same. Mikhail Prokhorov advocates privatizing everything from health care to education.

You are writing your next book together with Ilya Yablokov from the University of Sheffield about Russian media. What media figures will be the “heroes” of your new research?

The idea of our book is to show, through the biographies of major representatives of the media sphere, how Russia slipped into authoritarianism.

In the West there is an idea that in the 90s the Russian media was liberal, but then, with the arrival of Putin, it gradually ceased to be so. In our book we will show that this process was more complicated.

I found it interesting that journalists, TV presenters and media managers in Russia at some point started talking about “properness” (adekvatnost’) as one of the principles of professionalism. A “proper” person is one who does everything according to unwritten rules – while perhaps even working creatively and conscientiously – but knows exactly how not to cross the line. Such a person does not even need to be told who to invite to a discussion on air and who not to – he senses these shifts in the Kremlin’s mood. Thus, “properness” is a form of self-censorship. Meanwhile, if you simply follow the rules, the media product will be uninteresting and the publication will lose credibility. We analyze who managed to walk this line – following the “rules” but remaining interesting to the audience – and who did not, and how they balanced to survive.
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