Day: August 5, 2008

Oligarchs in Britain

In the context of the news that London is now thought to be home to around 300,000 Russians, the majority of whom are members of the country’s pro-Putin/Medvedev elite, the Telegraph looks at the history of the rise of the “oligarchs”, the extremely rich state-sponsored ex-communists who¬†pose an increasing¬†threat to the UK’s economic stability:

The story of how the oligarchs made their money is hard to credit.

As former communists, many were permitted during Perestroika to set up co-operatives, which later became lucrative trading businesses.

In 1992 the government established a mass privatisation in which workers were given shares in their businesses and vouchers that enabled them to be bought and sold.

Unaccustomed to the ways of capitalism and enduring a difficult economic period, many were easily encouraged by the oligarchs to sell their vouchers for what now appear ludicrously small sums.

According to one estimate, the 140m vouchers issued by 1994 valued the entire Russian industrial sector at just $12bn. The folly was compounded in 1995 when Yeltsin’s government turned to the newly enriched and emboldened oligarchs for loans.

When the government defaulted, they cleaned up again, seizing mineral and oil assets.

It left them in a strong position to benefit from the recent oil and commodity boom.

And, the paper adds:

Previously, Russian oligarchs were a phenomenon to be admired (or despised, according to taste), but one that could be dismissed as an entertaining foreign curiosity.

With their intertwining links and increasing influence on the London stock market and corporate Britain, that is no longer the case.