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University of Toronto Mississauga
Political Science

Oligarchs Origins Two types: ‘Nomenklatura’ – used party / state positions to acquire state financial, industrial wealth during privatization process; ‘New Oligarchs’ - used skills, connections to gain access to state property Oligarchs and Eltsin Links: • with / between state officials responsible for privatization and oligarchs; • Eltsin – control Presidency; part of Eltsin “family”; Build up economic empires in several ways:  Low purchase price of resource based companies;  Transfer pricing from producing companies to holding companies;  Defraud investors (e.g., pyramid schemes);  Massive dilution of capital (shares / equity);  Offshore transactions;  Strip companies of valuable assets. Dominate Russ public life through massive fraud & misappropriation, esp in oil sector. Acquired economic assets from state through loans-for-shares scheme, rigged auctions, untendered purchases—for very low prices, often funded with govt money entrusted to their banks. Results:  Russia deprived of investment;  Asset Stripping;  Massive capital outflows;  Restructuring of economy does not occur. Implications for Democracy. Oligarchs enjoy enormous pol power, derived from their money, media control, & direct & indirect participation in government decision-making:  Control appointments to key positions in Pres & Govt (“Eltsin Family”); Appointed to high pol positions (Potanin, Berezovsky, Chernomyrdin);  Financed Eltsin’s 1996 pres elec campaign in exchange for sell off of state assets;  Ensure appointment of many highly place proxies;  Secure loyalty of government officials through bribes, blackmail, corruption;  Infused all Russia’s major political movements, including KPRF, Yabloko;  Provide hand-picked candidates for Duma elections (including selves);  Use of violence against those who resist (politicians, judges, etc);  Handled Eltsin’s personal finances. Oligarchs’ ability to manipulate government is aided by several unique features:  Weak party system;  Underdeveloped civil society;  Oligarchic control of major media. Other impacts of oligarchic political control:  Centralization of power as regions are cheated of resources;  Control over regions through negotiation of taxes;  Repetition of pattern of oligarchic political – economic control at regional and local levels. Oligarchs & Putin Putin and the Oligarchs Putin’s accession to power accompanied by clear image of strategy of pol consolidation: • Putin will enhance power of state – build a strong state & use ‘dictatorship of laws’ to enforce his rule; • Putin will structure a hierarchy of power within the state, with the Presidency being the pinnacle & centre of power Putin meets with group of key oligarchs (August 2000) and sets parameters for their actions in relation to the state: • Putin is generally ready to allow oligarchs to retain their econ
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