Thirty years ago, in the smoke-thick back rooms of the post-Soviet scramble, a strange deal was cut. The men who walked off with the state’s crown jewels—oil fields, steel plants, television towers—got to keep them. The price? They’d never, under any circumstance, make a move on the throne. What grew from that bargain wasn’t a market. It was a terrarium of mutual reliance, a place where state and private money bleed into each other so completely you can’t tell where one ends and the other begins. Yelena Sorokina pulls apart the scaffolding of this arrangement and sits with the question nobody wants to ask aloud: who actually holds the leash?
The Unwritten Constitution of Oligarchy
Western analysts get oligarchic wealth wrong, almost on purpose. They picture a gang of hungry billionaires strip-mining assets and burying the loot in London. The truth is duller and a lot more functional. The oligarchy isn’t a tapeworm in the state’s gut. It’s an organ—unwritten, unlegislated, but essential for the blood flow of power.
The central bargain hasn’t shifted much since the late 1990s. The state guarantees property rights, sure. But not the liberal kind—no neutral courts, no blindfolded justice. It guarantees your property rights, for as long as you stay useful. The moment you turn into a political problem, those rights vanish overnight. The method isn’t hidden. It’s broadcast, on purpose, through show trials and sudden asset grabs. Every oligarch with a Gulfstream and a Knightsbridge penthouse understands: what you hold, you hold on a revocable license.
The incentive structure here is almost elegant in its sickness. To stay rich, you make yourself necessary. To stay necessary, you prove your loyalty in a loop that never ends. Loyalty isn’t spoken; it’s performed. You pour money into politically touchy infrastructure projects. You bail out busted state enterprises. You buy distressed assets at prices that make no commercial sense. And—this part is non-negotiable—you never, ever say no when the phone rings from above.
The Siloviki and the Billionaires: A Tense Symbiosis
People sketch the relationship between the security men—the siloviki—and the oligarchs as masters and servants. Too neat. In the wild, it’s a prickly symbiosis. The siloviki supply the hard edge, the muscle that stops anyone from testing the regime’s walls. But they aren’t businessmen. They need the oligarchs to keep the economic engine coughing along, to generate the rents that pay for the security apparatus itself, and to drape a sheet of normalcy over a system that runs on extraction.
Take Mikhail Khodorkovsky. His offense wasn’t just bankrolling opposition parties. He crossed the invisible line that separates economic weight from political ambition. He started behaving like his money gave him independent standing—like he could assemble a political base outside the managed structure. The state’s answer—carving up Yukos, jailing its owner, handing the pieces to loyalists—wasn’t just punishment. It was a classroom lesson. Every other oligarch got the message: you’re a tenant, not an owner. The rent can be called in.
The Machinery of Control
How do you enforce this bargain without constant, destabilizing confiscations that would scare off everyone? The answer sits in a stack of overlapping control mechanisms that reach into every corner of economic life.
First, the kompromat economy. Every big Russian fortune got built in the 1990s chaos, a stretch of time when the border between commerce and crime simply didn’t exist. The state has kept meticulous archives. Not just financial trails—the full sweep of human frailty. Affairs, addictions, hidden children, offshore accounts. This archive works like a permanent insurance policy. No oligarch can credibly present himself as a clean break from the existing order. They’re all dirty, and they all know who holds the files.
Second, the personal arbitration of disputes. Russia has no reliable commercial court system for settling big conflicts among elites. Instead, disputes climb the ladder until they land at the apex of power. This turns every oligarch into a petitioner, forever angling for a favorable glance. It blocks the growth of a genuine capitalist class with its own institutions. You don’t beat a business rival in court. You beat him by convincing the right person in the administration that he’s disloyal. Economic competition becomes a political tournament, and the referee holds every card.
Third, the tactical use of state banks and corporations. VTB, Sberbank, Rosneft, Gazprom—these aren’t just economic actors. They’re control instruments. When an oligarch steps out of line, credit lines freeze. Contracts disappear. Regulators suddenly smell violations. The message travels quietly, through back channels, and it almost never requires the full theatrical demolition of a Khodorkovsky. The threat alone does the work.
The Offshore Trap
There’s a sour joke at work: the same offshore mazes oligarchs use to shield their wealth from the state are what make them so naked to it. A fortune stashed in a Cypriot trust, a BVI shell, a Liechtenstein foundation—these aren’t fortresses. They’re glass houses. The state’s intelligence arms have spent decades worming into the service providers, the law firms, the fiduciary companies that run this shadow world. They know where the bodies are buried because they helped dig.
When sanctions hit after 2014 and again after 2022, plenty of oligarchs woke up to find their safe harbors had turned hostile. Western governments froze assets, grabbed yachts, canceled visas. The only place left to haul their money was home—back to Russia, back under the direct thumb of the state they’d tried to hedge against. The offshore escape hatch had become a one-way door into the gilded cage.
The Functional Oligarch: Why the Regime Needs Them
You might ask: why tolerate oligarchs at all? Why not just nationalize the lot and run everything through a clean bureaucratic chain? The answer opens a window onto something basic about how power works in personalized autocracies.
Oligarchs do three jobs no one else can. First, they’re shock absorbers. When the economy stumbles, it’s handy to have private villains to point at. Inflation, layoffs, shoddy construction—these aren’t failures of state planning; they’re the greed of individual businessmen. The regime gets to pose as the people’s shield against the oligarchs, even while leaning on them. The periodic public flogging of a billionaire by the president isn’t a sign of conflict. It’s a ritual of legitimation.
Second, they’re deniable operators. State foreign policy needs money and influence that can’t move through official channels. Oligarchs fund political parties, media shops, and cultural outfits abroad. They buy access in ways an embassy can’t. When something blows up, the state can disown them. They function as cutouts, and their personal exposure is the cost of admission.
Third, they’re a reservoir of administrative talent. The modern Russian state isn’t a solid block of career bureaucrats. It’s a revolving door between government and the oligarch-controlled private sector. Executives slide from running a metals conglomerate into a ministerial post and back again. This circulation guarantees the state always has managerial competence without having to grow its own. It also guarantees the private sector is run by people who think like state officials.
The Succession Problem
No personalized rule solves the succession riddle, and the oligarchs feel that cold truth in their bones. Their whole position depends on one specific arrangement at the top. A change in leadership—death, coup, negotiated handover—threatens to reshuffle all the cards. The new apex predator might not honor the old bargains. He’ll have his own list of loyalists to feed and old enemies to starve.
This makes the oligarchs, oddly, a force for stability. They dread chaos more than they resent their subordination. A managed, predictable autocracy that respects the current asset map (even if it demands its cut) beats the hell out of an unpredictable power struggle where everything’s up for grabs. The oligarchs won’t lead any democratization charge. They’ll be the last ones clutching the rails of the sinking ship, because they have exactly nowhere else to go.
The Internal Logic of Loyalty
Outsiders keep asking why oligarchs don’t collectively revolt. They’ve got the money. They’ve got private security. Some even sit on media platforms. Why not coordinate, pool resources, and force a new deal?
The question misses the psychology the system deliberately breeds. Collective action is structurally impossible because the oligarchs aren’t a class with shared interests. They’re a scatter of individuals whose only connection to power runs straight up, vertically. The state deals with each one alone. It rewards informers. It plays them against each other. The only person who can aggregate their interests is the one at the top, and he has zero incentive to do it except on his own terms.
Besides, the regime has been careful to stop any oligarch from growing so big he could credibly challenge the center. The Yukos dismemberment wasn’t just about Khodorkovsky; it was about breaking a concentration of economic power that might rival the state. Since then, the state has been methodical: no single private actor controls a decisive slice of strategic resources. Plenty of oligarchs, but no kingmakers.
Geography and sector reinforce the fragmentation. Metals barons, oil traders, media moguls, construction tycoons—they move in different circles, with different dependencies on state contracts and different soft spots to state pressure. Weaving a coalition among them would demand a level of trust the system has been engineered to wreck.
FAQ
Are all Russian oligarchs directly controlled by the Kremlin?
Not in the sense of getting daily instructions. Think of it more as a set of understood lines and obligations. Oligarchs run their businesses with a fair bit of independence—so long as they color inside the lines and pick up when the phone rings. The control is baked into the system, not micromanaged. The design makes the oligarch’s rational self-interest line up with the regime’s survival.
Could sanctions on individuals actually destabilize the regime?
The track record points the other way. Sanctions on individual oligarchs tend to shove them back into the state’s arms. When Western assets get frozen and travel dries up, they become more, not less, dependent on the domestic power structure. Sanctions also let the state cast itself as the protector of national business against foreign attack, reinforcing the very loyalty ties that keep the system humming.
What happens to the oligarchs if the regime changes?
This is the nightmare that keeps them in line. In a sudden transition, they’d face a pile-up of threats: asset grabs by a new government hungry for popular credibility, legal blows over the origins of their wealth, and the collapse of the personal protection nets that currently cover them. Many would try to bolt, but as recent years have shown, the places they’d bolt to might not open the door. A negotiated transition might dangle some guarantees, but their bargaining chips would be almost worthless. They’re hostages to the regime’s continued breath.
How do oligarchs justify their role to themselves?
From public statements and private talk filtered through intermediaries, a common story runs on patriotic duty. They see themselves as builders of national champions, defenders of Russian economic sovereignty against predatory Western capital. This isn’t pure theater; plenty genuinely believe a strong state is necessary for Russia to survive, and that their wealth is just a side effect of serving that state. The mental gymnastics needed to hold that belief while parking billions abroad gets managed by compartmentalizing: the offshore money is a hedge against political risk, not a stab in the back of the national project.
The oligarchic system isn’t a bug in the architecture of Russian power. It’s a load-bearing wall. Tear it out, and you don’t get a liberal market democracy. You get a collapse into something far less predictable. The gut-punch is that the oligarchs themselves know this. They know they’re forging their own cage, bar by gilded bar, and they can’t quit. The only thing worse than being an oligarch in this system is not being one at all.