How Putin has kept Russia’s billionaires on side in the war

During the war with Ukraine, the number of billionaires in Russia reached an all-time high. However, in the 25 years that Vladimir Putin has been in power, Russia’s rich and powerful segment, known as oligarchs, has lost almost all of its political influence.

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

Former banking billionaire Oleg Tinkov knows exactly how sticks work.

The day after criticizing the war as “crazy” in an Instagram post, he contacted Kremlin administrators. It was said that Tinkoff Bank, Russia’s second largest bank at the time, would be nationalized unless all ties with its founder were cut.

“I can’t discuss the price,” Tinkov told the New York Times. “It was like a hostage; you take what you’re offered. I couldn’t negotiate.”

Within a week, a company linked to Vladimir Potanin, now Russia’s fifth-richest businessman and a supplier of nickel to fighter jet engines, announced it would buy the bank. Tinkov says it sold for only 3% of its real value.

Eventually Tinkov lost almost $9bn (£6.5bn) of his once fortune and left Russia.

This is very different from the situation before Putin became president.

In the years following the collapse of the Soviet Union, some Russians became fabulously wealthy by taking ownership of huge previously state-owned businesses and taking advantage of the opportunities of their country’s nascent capitalism.

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

Boris Berezovsky, Russia’s most powerful oligarch, claimed that Putin masterminded his rise to the presidency in 2000 and years later asked for forgiveness for doing so: “I did not see in him the greedy tyrant and usurper of the future, a man who would trample freedom and stop the development of Russia,” he wrote in 2012.

Berezovsky may have exaggerated his role, but Russia’s oligarchs were certainly capable of maintaining control at the highest echelons of power.

Just over a year after his apology, Berezovsky was found dead under mysterious circumstances in exile in the United Kingdom. At that time, the Russian oligarchy was also completely dead.

So when Putin gathered Russia’s richest people in the Kremlin just hours after ordering an all-out invasion of Ukraine on February 24, 2022, there was little they could do to object, even though they knew their fortunes were about to take a major blow.

“I hope we can work together just as well and less effectively in these new circumstances,” he told them.

A reporter present at the meeting described the assembled billionaires as “pale and sleepless.”

The course of the invasion was very bad for Russia’s billionaires, and so was its immediate aftermath.

According to Forbes magazine, their number dropped from 117 to 83 by April 2022 due to the war, sanctions and the weakening of the ruble. In total, they lost $263 billion, or an average of 27 percent of their wealth each.

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

Lavish spending on war has spurred economic growth in Russia of more than 4% per year in 2023 and 2024. That was good even for those among Russia’s ultra-rich who don’t make billions directly from defense contracts.

Giacomo Tognini from Forbes’ Wealth team says that by 2024, more than half of Russia’s billionaires either played a role in supplying the army or benefited from the occupation.

“This excludes those who are not directly involved but need some sort of relationship with the Kremlin. And I think it’s fair to say that anyone doing business in Russia should have a relationship with the government,” he told the BBC.

This year, the highest number of billionaires in Russia (140) appeared on the Forbes list. Their total wealth ($580 billion) was only about $3 billion lower than the all-time high recorded in the year before the invasion.

Putin has consistently punished those who refuse to toe the line while allowing loyalists to profit.

Russians remember well what happened to oil tycoon Mikhail Khodorkovsky. Once Russia’s richest man, he spent 10 years in jail after launching a pro-democracy organization in 2001.

Since the invasion, almost all of Russia’s mega-rich have remained silent, and the few who openly oppose it have been forced to leave their country and most of their wealth.

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

But although the West wanted to impoverish them further and oppose the Kremlin, this failed, given continued wealth and the absence of opposition among Russian billionaires.

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

“The West has done everything possible to ensure that Russian billionaires rally around the flag,” says Alexander Kolyandr of the Center for European Policy Analysis (CEPA).

“There was absolutely no plan, no idea, no clear path for any of them to get off the ship. Assets were sanctioned, accounts were frozen, property was seized. All this effectively helped Putin mobilize billionaires, their assets and their money and use it 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 Kremlin-friendly businessmen who were allowed to buy high-earning assets cheaply.

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

“Their future prosperity depends on the ongoing conflict between Russia and the West,” he says, adding that their biggest fear is the return of the previous owner.

According to Giacomo Tognini, 11 new billionaires emerged in Russia in 2024 alone.

Russia’s leader has maintained tight control over the country’s key movers and shakers despite the war and Western sanctions, and in some ways even because of them.