How 'shock therapy' created Russian oligarchs and paved the path for Putin

[Uncle Joe]

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Yeltsin Is Reelected With Oligarch Money

Holding up their end of the bargain, the oligarchs, who often fought with each other, united forces behind Yeltsin's reelection campaign. They donated millions of dollars to the effort. They hired the best political operatives they knew. They laundered government money with their banks, and fed it into the Yeltsin campaign machine. Two of the oligarchs, Boris Berezovsky and Vladimir Gusinsky, controlled two of the three major Russian television networks — and they blanketed the airwaves with pro-Yeltsin propaganda. Fueled by the immense power of the oligarchs, Yeltsin conducted Russia's first American-style presidential campaign.

As the election approached, Yeltsin made a cynical move to placate critics of his privatization scheme, publicly firing his super unpopular privatization czar Chubais. "He sold off a big industry for next to nothing," Yeltsin told the press. "We cannot forgive this."

Despite waving the banner of free markets and democracy, the reformers of the 1990s — perhaps ironically — did much of their reforms undemocratically, often by presidential decrees that were hammered out through backroom deals with the rich and powerful. Thanks in no small part to the oligarchic beneficiaries of these deals, Yeltsin beat the odds and won reelection. Russian-style crony capitalism was here to stay.

Weeks after the victory, Boris Berezovsky bragged to The Financial Times that he and six other Russian oligarchs controlled half of Russia's economy. That number seems to have been significantly inflated. Nonetheless, by 1996, the world could see that Russia had a new class of industrialists and bankers who wielded enormous power. A class that made their fortunes not through society-improving ideas, consumer-pleasing products, or technological innovations — but rather through corruption, skullduggery, and the plunder of Russia's raw materials. Many Russians would come to resent the oligarchs and the liberal reformers who empowered them.

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https://www.npr.org/sections/money/2022/03/22/1087654279/how-shock-therapy-created-russian-oligarchs-and-paved-the-path-for-putin