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Overview of How Oligarchs Obtained Power in Russia

Explain how the super-rich oligarchs came to be in Russia? How has Putin treated the oligarchs and how has their position changed in Russia?

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The Russian oligarchs came to power in the wake of the breakup of the USSR. Keep in mind that the Soviet economy was driven in part by the black market, which, even during the Soviet era, created some wealthy, semi-legal entrepreneurs.

When the USSR collapsed in 1990-1991, Gorbachev was incapable of handling the situation. Boris Yeltsin came to power both bureaucratically and popularly. He was named the Chief of the Presidium, but in June of 1991, he was elected in a popular election where he earned 57% of the popular vote. Yeltsin was a radical, he believed in "shock therapy." This means that Russian industry, banking and the entire structure of prices was to be liberalized and left to the market. With a small army of American advisers, Yeltsin began selling off Soviet era assets. The problem was that the process had nothing to do with markets. Privatization of assets went to a handful of well-connected politicians and bureaucrats who came to control the economy as a whole. They had amassed a huge number of shares by 1995, and hence, the post-Soviet oligarchy was born. The fact is that the work of 70 years of Soviet labor went to the pockets of two or three dozen people (Kotz, 1998 and Hoffman, 2011).

The oligarchs were able to amass such great wealth largely because the institutions of civil society were non-existent. Russia did not privatize in a vacuum, but ...

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An overview of how Oligarchs obtain power in Russia is determined in the solution.