How Putin manages to maintain the loyalty of Russian oligarchs despite millions in sanctions from the West

Russian President Vladimir Putin leads a major economic meeting at the Kremlin in Moscow on February 24, 2022. — caption, Putin summoned business leaders to the Kremlin on the day he ordered the all-out invasion of Ukraine.

During the war with Ukraine, the number of billionaires in Russia reached an all-time high.

But in the 25 years that Vladimir Putin has been in power, the country’s rich and powerful, the so-called oligarchs, have lost almost all of their political influence.

Both are good news for the Russian president.

The West’s sanctions have failed to turn billionaires into their enemies; on the contrary, their reward and punishment policies have made them silent allies.

Former banking billionaire Oleg Tinkov knows exactly how punishments work.

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

“I couldn’t negotiate the price,” Tinkov said New York Times.

“I was a hostage: you just have to accept what they offer you. I couldn’t negotiate.”

Within a week, a company linked to Vladimir Potanin, currently Russia’s fifth-richest businessman, a supplier of nickel for fighter jet engines, announced its purchase of the bank. According to Tinkov, it was sold for only 3% of its actual value.

In the end, Tinkov lost almost $9 billion of his fortune and had to leave Russia.

A man wearing a white baseball cap and gray t-shirt smiles while standing under a tree. — caption, Oleg Tinkov lost billions and left Russia after criticizing the war against Ukraine

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

In the years following the collapse of the Soviet Union, some Russians gained enormous wealth by taking over large, formerly state-owned companies and taking advantage of the opportunities offered by their country’s emerging capitalism.

Their new wealth gave them influence and power at a time of political unrest and they became known as oligarchs.

“I didn’t see him as the future greedy tyrant.”

Russia’s most powerful oligarch, Boris Berezovsky, claimed to have orchestrated Putin’s rise to the presidency in 2000 and apologized for it years later:

“I did not see in him the future greedy and usurping tyrant, the man who would trample on freedom and slow down Russia’s development,” he wrote in 2012.

Berezovsky may have exaggerated his role, but Russian oligarchs were certainly able to pull the strings at the highest levels of power.

Just over a year after his apology, Berezovsky was found dead under mysterious circumstances in exile in Britain.

By this time the Russian oligarchy was also completely destroyed.

A man dressed in black stands on the stairs in front of a house. — caption, Boris Berezovsky went into exile in Britain, where he died under mysterious circumstances in 2013.

When Putin gathered Russia’s richest men in the Kremlin on February 24, 2022, hours after ordering a full-scale invasion of Ukraine, there was little they could do about it, even though they knew their fate would suffer a serious setback.

“I hope that we will work together just as well and effectively under these new conditions,” he told them.

A journalist present at the meeting described the assembled billionaires as “pale and depressed.”

The preparations for the invasion were very bad for Russian billionaires, as were its immediate consequences.

According to Forbes magazine, their number fell from 117 to 83 in April 2022 due to war, sanctions and the devaluation of the ruble. Together they lost $263 billion, an average of 27% of each individual’s wealth.

But the years that followed showed that being part of Putin’s war economy would bring enormous benefits.

Massive war spending led to economic growth of more than 4% annually in Russia in 2023 and 2024. Even the ultra-rich Russians, who did not directly earn billions from defense contracts, benefited from this.

supplying the army

By 2024, more than half of Russia’s billionaires were involved in supplying the military or profiting from the invasion, says Giacomo Tognini of the Forbes Wealth team.

“That doesn’t include those who are not directly involved but need a relationship with the Kremlin. And I think it’s fair to say that anyone who runs a business in Russia needs to have a relationship with the government,” he told the BBC.

This year, Russia had the largest number of billionaires on the Forbes list: 140. Their total wealth – about $580 billion – was just $3 billion below the all-time high set in the year before the invasion.

But while Putin allowed his loyalists to benefit, he also systematically punished those who refused to toe the line.

Russians still remember exactly what happened to oil tycoon Mikhail Khodorkovsky.

After becoming Russia’s richest man, he spent ten years in prison after founding a pro-democracy organization in 2001.

Russia's richest man and oil tycoon Mikhail Khodorkovsky appears in his prison cell "Matroska Tishina" on a television screen during a video conference at the Moscow courthouse on January 15, 2003. — caption, Mikhail Khodorkovsky was the richest man in Russia, but was sent to prison and his oil company Yukos was nationalized.

Since the invasion, almost all of Russia’s mega-rich have remained silent, and the few who have spoken out publicly have had to leave their country and much of their wealth.

Russia’s richest men 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 been targets of Western sanctions.

But if the West wanted to impoverish them and turn against the Kremlin, it has failed given the continued wealth and lack of dissent among Russian billionaires.

If any of them had considered moving their billions to the West, the sanctions would have made that impossible.

“What the West has done has led to Russian billionaires rallying around the flag,” says Alexander Kolyandr of the Center for European Political Analysis (CEPA).

“There was absolutely no plan, no idea, no clear path for any of them to abandon ship. Assets were sanctioned, accounts frozen, property confiscated. All of this helped Putin mobilize the billionaires, their assets and their money to support the Russian war economy,” he tells 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 purchase highly lucrative assets at a low price.

This has created a new “army of the loyal, influential and active,” argues Alexandra Prokopenko of the Carnegie Russia Eurasia Center.

“Its future well-being depends on the ongoing confrontation between Russia and the West,” while his biggest fear is the return of the former owner, he says.

According to Giacomo Tognini, eleven new billionaires will have been created in Russia in this way in 2024 alone.

Despite (and in some ways because of) the war and Western sanctions, Putin has maintained strong control over the country’s top politicians.