How a handful of Soviet insiders became billionaires in Russia's wild nineties
When the Soviet Union collapsed, ownership of vast state assets was suddenly up for grabs. A few well-connected men bought key companies at a fraction of their value, bankrolled Boris Yeltsin's 1996 re-election, and by the late 1990s seven of them reportedly controlled between 50 and 70 percent of Russian finance.
The story starts under Mikhail Gorbachev's perestroika, from about 1985 to 1991, when limited private enterprise let traders import scarce goods such as personal computers, electronics and jeans and sell them at big margins. Many early fortunes had official help. Mikhail Khodorkovsky began importing computers in 1986 through a Komsomol-backed youth centre and moved into banking with support from Komsomol alumni in the Moscow city government. Boris Berezovsky, a mathematician and researcher, became the first widely recognised oligarch.
After 1991, voucher privatisation between 1992 and 1994 let a few young men become billionaires by exploiting the gap between low domestic prices for commodities like oil and gas and far higher world prices. The reformers Yegor Gaidar and Anatoly Chubais led the privatisation drive. Then came the loans-for-shares auctions before the 1996 election, where figures such as Roman Abramovich, Khodorkovsky and Vladimir Potanin gained major firms cheaply. Their defenders argue those firms were worth little at the time, still run on Soviet lines with bloated payrolls and no financial reporting.
The most powerful group, nicknamed the Semibankirschina or seven-banker outfit in an echo of the Seven Boyars, wielded heavy influence over Yeltsin's circle; the historian Edward L. Keenan compared them with the boyars of late-medieval Muscovy. The 1998 financial crisis hit them hard, especially those whose wealth rested on banks.
Under Vladimir Putin the Yeltsin-era magnates lost their grip: some, like Khodorkovsky, were imprisoned, while Vladimir Gusinsky and Berezovsky left Russia to avoid prosecution. Since 2014 hundreds of oligarchs and their companies have faced United States sanctions, and many more were sanctioned worldwide in 2022 after Russia's war in Ukraine began.
Source: Russian oligarchs
