Russia’s unprovoked attack on Ukraine has prompted numerous Western sanctions against top Kremlin politicians and wealthy Russian businessmen.
The European Union recently drew up a list of sanctions against Russian oligarchs, including Alexei Mordashov. According to “Forbes” magazine, he is the richest person in Russia. Roman Abramovich is also under special observation.
The United States has also imposed sanctions on oligarchs and others, including the daughter of Putin’s spokesman, Dmitry Peskov.
Daniel Treisman, a political science professor at the University of California, Los Angeles, told Insiders that most of Russia’s top businessmen made billions early in Putin’s term. At the time, the Russian economy was recovering and the stock market soared.
Says Treisman: “The original oligarchs of the early 1990s, the ones that survived, are a relatively small minority. There are many that emerged after the 1998 financial crisis.”
However, in the space left vacant by the departing oligarchs, a new business elite has emerged: the siloarchs. This is a generic term coined by Treisman combining the words oligarch and siloviki. The latter translates as “people of power” and includes senior officials from the security and law enforcement services.
The oligarchs cannot put pressure on Putin
According to Treisman, the title of oligarch was initially given to the big businessmen who emerged from privatization in Russia in the 1990s. “The most notorious oligarch, Boris Berezovsky, claimed in the mid-1990s that only seven big businessmen controlled half of the Russian economy”, says the professor.
That’s not true, says Treisman, but the image stuck. He adds: “They amassed capital, mainly through speculation and other types of arbitrage, in the first hyperinflationary years of the post-communist collapse, which they then used to buy stakes in the state-owned companies that were sold.”
Today, Russia’s top businessmen depend on the Kremlin to keep making money, Treisman said. Although Western countries impose sanctions on oligarchs to put pressure on Putin, “none of them can put pressure on him,” Treisman said.
Why are silo shelters important?
Treisman, who coined the term in 2006, says that in the mid-2000s, Putin’s close associates, mostly from the security services, became very wealthy. “They benefited from government contracts. Sometimes they used the powers of law enforcement to harass private businessmen and expropriate their businesses,” he says. This distinguishes them from the powers of the oligarchs. There are also silo arches in other countries, including South Korea and Indonesia.
Oligarchs, on the other hand, have always been less powerful politically than many believed, Treisman said. He points out that in the 1990s some thought they had a strong influence on Boris Yeltsin, who served as the first president of the Russian Federation from 1991 to 1999.
Says Treisman: “Indeed, that was an image they cultivated, but it was greatly exaggerated. Since the mid-2000s, the surviving oligarchs have been respectful of the Kremlin and carried out tasks for Putin when asked, such as building infrastructure for the Olympic Games in Sochi”.
The siloarchs are “hostages of their politicized enforcement apparatus”
According to Treisman, many oligarchs benefited from government contracts and other government benefits. Many also had influence over law enforcement and security officials at lower levels of the hierarchy, but were not allowed to play any political role without permission from the Kremlin.
It remains questionable whether silo arches will continue to wield as much power in the future.
As Treisman pointed out in his 2006 research paper, siloarchies often face severe succession crises. This is because “the inner circle of siloarcas, as they get richer, become hostages of their politicized enforcement apparatus. Rivals could use this to dispossess them if they quit,” Treisman explains in the document.
This text was translated from English by Leo Ginsburg. You can find the original here.