The way to do it, they said, was to sell state assets to them because they knew how to create wealth under the countries’ new capitalist system. This wealth would spread across the country and trickle down, raising the standard of living of all citizens, they said.
Many of the leaders took the bait, selling the assets for a fraction of their worth – and the oligarchs were born.
They are still a major force in the former Soviet Union, and it is the worse for it. It is high time that ex-Soviet countries replace oligarchs with captains of industry who are top managers and can create wealth for the entire country, not just themselves.
Karl Marx, the father of communism, fulminated against a handful of fat cats controlling most of the wealth in capitalist countries. The irony is that that is what has happened in many former Soviet countries.
By the late 1990s, a handful of oligarchs controlled huge swaths of industries in many nations in the Commonwealth of Independent States.
Many were not good business people, so they did not manage the properties well. That means that the properties contributed less to the economy than they should have. But they enriched the oligarchs who owned them – and that was what counted with the swashbucklers.
The oligarchs have become so powerful that in many cases they have become a law unto themselves, taking property not by buying it but by stealing it — and daring those they took it from to try to get it back. In many cases, they have sent thugs to rough up and even murder those who stood in their way. These excesses continue today.
Recently Armenian oligarch Ruben Hayrapetian’s bodyguards beat businessman Arsen Avetisian so badly that they broke his nose and sent him to the hospital. News reports suggested that Avetisian, a major shareholder in Air Armenia, owed Hayrapetian money.
Three years before, Hayrapetian’s bodyguards beat to death one of several army medics who were eating eat at the oligarch’s restaurant. Six men were sentenced in the death of 35-year-old Vahe Avetian. Hayrapetian, a force in Armenian politics whom President Serzh Sargisyan kowtows to, was never charged in the murder.
Although most oligarchs would not think twice about resorting to thuggery to get their way, more have been involved in billion-dollar thefts than physical assaults.
The Kazakh oligarch Mukhtar Ablyazov is the all-time champ in that department.
He stole up to $10 billion from BTA, the bank he chaired, before fleeing overseas to escape justice in Kazakhstan, prosecutors in a number of countries say. He is now in prison in southern France, awaiting extradition to Russia, where he is alleged to have stolen $4 billion from Russia’s BTA operation.
Ablyazov has also made headlines as the secret owner – through money laundering – of a number of trophy real-estate properties in Britain.
At one time, Russia had the most billionaires in the world – 100, according to Forbes magazine.
Several refused to pledge their allegiance to Vladimir Putin, and he chased them overseas or imprisoned them. A big name who fled was Boris Berezovsky, who killed himself in Britain two years ago after becoming near-penniless. The most famous oligarch prisoner was Mikhail Khodorkovsky, whom Putin finally pardoned.
Putin did not scrap the oligarch system, however. He simply replaced some oligarchs with others.
Unfortunately, the buddies he put at the helm of Gazprom, Rosneft and Russian Railways have run those operations into the ground.
Recently, he fired the head of Russian Railways, Vladimir Yakunin, in favor of a talented young technocrat whom Putin hopes will revive the company. The head of Gazprom, Alexei Miller, and Rosneft, Igor Sechin, are worried about being fired, too.
Ukraine has had a golden opportunity since the EuroMaidan Revolution to get rid of its oligarchs, who have long wielded too much economic and political power. It has yet to do so – although it is not too late. In the current reform mood that has enveloped the country, most Ukrainians would welcome the oligarchs’ neutering.
Putting the best people in corporate leadership positions is the way to achieve the most wealth for both a corporation and a country’s economy. If Putin can revive Russian Railways, Gazprom and Rosneft with leaders selected on merit rather than friendship, then it may be the beginning of the end for the oligarchs in Russia and elsewhere.
The winners in such a move will be the companies, economies and people of those countries.
Armine Sahakyan is a human rights activist based in Armenia.