How Putin got Russian billionaires to side in war

During the war with Ukraine, the number of Russian billionaires reached an all-time high. But during Vladimir Putin’s 25 years in power, Russia’s rich and powerful – known as the oligarchs – have lost almost all political influence.

All this is good news for the Russian president. Western sanctions have failed to turn the super-rich into his opponents, while his carrot-and-stick policies have turned them into silent supporters.

Former banking billionaire Oleg Tinkov knows exactly how those sticks work.

The Kremlin contacted his executives the day after he criticized the war as “crazy” in an Instagram post. They were told that his Tinkov Bank, then Russia’s second-largest bank, would be nationalized unless all ties with its founder were severed.

“I can’t discuss the price,” Tinkov told the New York Times. “It’s like a hostage – you take what you get. I can’t negotiate.”

Within a week, a company linked to Vladimir Potanin announced that it would acquire the bank. Vladimir Potanin is currently the fifth-richest businessman in Russia and supplies nickel for fighter jet engines. It sold for just 3 percent of its true value, Tinkov said.

Eventually, Tinkov lost the nearly $9bn (£6.5bn) fortune he once owned and left Russia.

This is a far cry from the situation before Putin became president.

In the years after the collapse of the Soviet Union, some Russians became extremely wealthy by owning large businesses that had previously been owned by the state and taking advantage of the opportunities of the country’s nascent capitalism.

Their newfound wealth gave them influence and power during times of political turmoil, and they became known as oligarchs.

Russia’s most powerful oligarch, Boris Berezovsky, claimed he engineered Putin’s ascension to the presidency in 2000 and years later appealed for forgiveness for his actions: “I do not see in him a future greedy tyrant and usurper who will trample freedoms and prevent Russia’s development,” he wrote in 2012.

Berezovsky may have exaggerated his role, but Russia’s oligarchs do have the ability to maneuver at the highest levels of power.

More than a year after the apology, Berezovsky was found dead under mysterious circumstances while living in exile in Britain. By then, the Russian oligarchy was indeed dead.

So when Putin brought Russia’s richest people to the Kremlin hours after ordering a full-scale invasion of Ukraine on February 24, 2022, they could hardly object, even though they knew their wealth was about to take a huge hit.

“I hope that under these new conditions we will be able to work together well and with no loss of efficiency,” he told them.

One reporter who attended the meeting described the assembled billionaires as “pale and sleep-deprived.”

The run-up to the invasion went very badly for Russian billionaires, as did its immediate aftermath.

According to Forbes magazine, the number of such people fell from 117 to 83 in the year to April 2022 due to war, sanctions and the depreciation of the ruble. They lost a total of $263 billion, an average of 27% of their wealth each.

But the ensuing years showed that there were huge benefits to be gained from becoming part of Putin’s war economy.

In 2023 and 2024, massive spending on the war spurred Russia’s economic growth to exceed 4% per year. That’s a good thing even for Russia’s super-rich who don’t make billions directly from defense contracts.

By 2024, more than half of Russia’s billionaires will have either played some role in military supply or benefited from the invasion, according to Giacomo Tognini of Forbes’ wealth team.

“That’s not even counting people who are not directly involved but do need to have some kind of relationship with the Kremlin. I think it’s fair to say that anyone running a business in Russia needs to have a relationship with the government,” he told the BBC.

This year, the number of Russian billionaires on Forbes’ list reached an all-time high – 140. Their total assets ($580 billion) were only $3 billion below their all-time high reached the year before the invasion.

Putin has allowed loyalists to profit while also punishing those who refuse to obey.

Russians still remember what happened to oil tycoon Mikhail Khodorkovsky. Once the richest man in Russia, he was jailed for 10 years after launching a pro-democracy group in 2001.

Almost all of Russia’s super-rich have remained silent since the invasion, while those few who spoke out against the invasion have had to give up their country and much of their wealth.

Russia’s richest people are clearly key to Putin’s war effort, and many of them, including the 37 businessmen summoned to the Kremlin on February 24, 2022, have become targets of Western sanctions.

But if the West wants to make them poorer and turn against the Kremlin, it has failed, given the continued wealth of Russian billionaires and the lack of dissent.

If any of them considered defecting to the West with billions of dollars, sanctions would make that impossible.

“The West is doing everything it can to ensure that Russian billionaires rally around the Russian flag,” said Alexander Kolyandr of the Center for European Policy Analysis (CEPA).

“There was no plan, no idea, no clear path for any of them to jump ship. Assets were sanctioned, accounts were frozen, properties were confiscated. All of this effectively helped Putin mobilize billionaires, their assets and money, and use them to support Russia’s war economy,” he told the BBC.

The exodus of foreign companies following the invasion of Ukraine created a vacuum that was quickly filled by pro-Kremlin businessmen who were allowed to buy up lucrative assets at low prices.

Alexandra Prokopenko of the Carnegie Russia-Eurasia Center believes this has created a new “influential and active army of loyalists.”

“Their future well-being depends on continued confrontation between Russia and the West,” she said, and their biggest concern is the return of their former masters.

According to Giacomo Tognini, 11 new billionaires will emerge in this way in Russia in 2024 alone.

Despite the war and Western sanctions, Russian leaders maintain a tight grip on key figures in the country — and in some ways because of them.