Loyalty at a Price: The Kremlin’s wartime mobilisation of Russian oligarchs11 min read
Oligarchs – a term used to denote ruling class figures who leverage significant wealth or social status to influence governmental decisions and grow their power base – first emerged in Russia after the collapse of the Soviet Union. Boris Yeltsin’s attempt to jolt Russia’s old Soviet economy into capitalism through a program known as “shock therapy”, led to select individuals accumulating extreme wealth through the exploitation of mass privatisation and the “Loans for Shares” scheme. By monopolising control of the post-Soviet economy, oligarchs infiltrated the political system by leveraging Yeltsin’s ailing presidency for personal gain and later propelling the meteoric rise of his successor, former KGB officer Vladimir Putin. An obscure figure with no public profile, oligarchs Vladimir Gusinsky and Boris Berezovsky deployed their media empires to transform Putin into a household name.
Far from pliable, Putin revealed himself to be a shrewder politician than they initially expected. He commenced his presidency by offering the oligarchs a deal: bend to my authority and you can keep your wealth. Those who reneged on this deal were thrown into Siberian prisons, forced into exile or died in suspicious circumstances. The loyalists who remained were forced to relinquish the remnants of their political influence in favour of exorbitant wealth on a global scale.
Russia’s full-scale invasion of Ukraine in 2022 has fundamentally altered this arrangement. Chastised by extensive sanctions, a sophisticated system of control has transformed Russian oligarchs from semi-autonomous globally integrated economic elites into instruments of wartime state policy.
Sanctions and the collapse of autonomy
Russia’s war against Ukraine triggered one of the most aggressive sanctions campaigns in modern history. Western governments moved swiftly to freeze assets, restrict financial flows, and target individuals deemed close to Vladimir Putin. A multinational coalition established the Russian Elites, Proxies and Oligarchs (REPO) task force, which froze EUR 21 billion of oligarchic assets in the EU and 22.7 billion pounds (EUR 26.6 billion) in the UK. The Biden Administration’s KleptoCapture initiative seized an additional USD 700 million (EUR 612 million) worth of US-based property. Individual sanctions also hit high-profile figures like Roman Abramovich, whose fortune shrunk by 57% to USD 7.7 billion (EUR 6.7 billion). In total, the number of Russian billionaires fell from 117 to 83 in the early months of the war, with the richest losing almost USD 95 billion (EUR 83 billion) in 2022 alone.
Western policymakers hoped these measures would weaken Putin’s war machine, but the outcome was more complex. Firstly, many oligarchs utilised creative wealth defence strategies: transferring shares to unsanctioned relatives, restructuring company ownership and rerouting supply chains through China, India, and other partners. Nevertheless, most were unable to escape the pariah status bestowed upon them. While sanctions undoubtedly damaged many oligarchs’ international interests, they also accelerated a process of dependence by reducing the viability of economic and political alternatives outside Russia. Cut off from lucrative networks, Russia’s wealthiest businessmen became increasingly reliant upon domestic opportunities controlled by the state. This allowed the Kremlin to not simply supervise private capital, but to mobilise it in support of wartime objectives.
Weapons of wealth
Warfare is costly, and Russia’s war in Ukraine is no exception. Despite devoting 7.5% of GDP to military spending in 2025, the Kremlin has increasingly utilised oligarchic investment to sustain the military-industrial complex. In return, loyalists receive lucrative state contracts and privileged access to wartime markets.
According to an investigation by Proekt, oligarch-owned companies secured nearly USD 3 billion (EUR 2.6 billion) in defence contracts between 2014 and 2023. These include the Tula‑based KBP Instrument Design Bureau, part of Rostec, which produces BMD‑4M vehicles, Kornet and Metis anti‑tank missile systems. KBP reportedly received components from the Tula Cartridge Plant and the Ulyanovsk Cartridge Plant, both owned by billionaire Igor Rotenberg. The Degtyaryov Plant, owned by Igor Kesaev (No.35 on Forbes’ Russian pre-war rich list), supplied missiles for the Kornet system. Even the explosives used in FAB‑500 bombs (dropped on the Mariupol Drama Theatre in 2022) were reportedly produced by subsidiaries of Uralchem, owned by Dmitry Mazepin, and Sibur, whose owners include Gennady Timchenko (No.6) and Leonid Mikhelson (No.5). By drawing oligarch-owned enterprises into the defence sector, the Kremlin has created a system in which commercial success increasingly depends upon wartime mobilisation.
Beyond armaments manufacturing, many Kremlin-aligned oligarchs have diversified their contributions to the war effort. Alfa-Bank, co-founded by business tycoon Mikhail Fridman, reportedly provided loans to Igor Rotenberg’s Tula Cartridge Plan. An investigation by IStories revealed that billionaires including Oleg Deripaska, Mikhelson and Timchenko, are purportedly using their companies to recruit private mercenaries. Through their media holdings, oligarchs also indirectly propagate the continuation of the war. Channel One and REN-TV – key pillars of Russia’s state-aligned media apparatus – are part of the National Media Group, which at the start of the war was owned by Yuri Kovalchuk, Vladimir Bogdanov and Alexei Mordashov. Here, not only is oligarchic wealth used to finance military operations, but it also helps shape the information environment in which the war is fought.
Vacuum of opportunity
Aside from mobilising existing oligarchs; the war has also provided opportunities to reconfigure the composition of Russia’s business elite in line with wartime objectives. Following the exodus of foreign companies out of the Russian market, a lucrative vacuum of investment opportunities emerged. By redistributing these valuable foreign-owned assets to loyal backers on the cheap and promoting import substitution industries, the Kremlin has channelled private capital into sustaining the wartime economy. In doing so, it has created a new class of beneficiaries whose financial success is increasingly reliant on the continuation of state policy.
The nationalisation and redistribution of assets abandoned by Western firms became one of the Kremlin’s most powerful tools for rewarding loyalty. Among the most symbolic deals was the seizure of Danone’s Russian subsidiaries in 2023. Following a presidential decree placing its assets under state management, Danone’s billion-dollar empire was handed to industry outsider Yakub Zakriev, nephew of Chechen leader Ramzan Kadyrov. The message was explicit: lucrative sectors are awarded to individuals aligned with the state’s wartime objectives.
Among those also profiting from the arrangement included Vladimir Potanin, who purchased Société Générale’s Russian subsidiary Rosbank. Kaspersky Lab and Astra Group, founded by Eugene Kasperky and Denis Frolov respectively, were the main beneficiaries from the withdrawal of major technology companies Microsoft, IBM, Intel, Google, and Apple. The acquisition reflected a broader strategic objective: reducing dependence on foreign technology while strengthening domestic capabilities deemed essential to Russia’s long-term economic and geopolitical resilience.
Import substitution also presented loyal oligarchs with enticing opportunities for enrichment, with agriculture proving particularly lucrative. Alexander Lutsenko substantially increased his wealth by purchasing Sodrugestvo Group’s Russian and Belarusian assets, while Prodimex Group’s owner Igor Khudokormov emerged as one of Russia’s leading sugar producers as domestic demand shifted towards local suppliers. In streamlining oligarchic investment into domestic production, the Kremlin sought to reduce dependence on foreign entities and create a self-sufficient wartime economy.
By redistributing profitable foreign-owned assets to loyal actors, allocating defence contracts and promoting import-substitution industries, the state has incentivised private capital into sectors that enhance Russia’s ability to withstand sanctions, maintain economic stability and sustain the war. The lucrative arrangement has resulted in a record total of 140 Russian billionaires, whose collective wealth in 2025 was just shy of pre-war highs. Even sanctions regimes pose little threat under state protection, with 40% of sanctioned oligarchs actually increasing their wealth. Together, the beneficiaries form a new loyalist wartime elite class of veteran oligarchs, mid‑level industrialists, and regional figures whose investments, profits and commercial interests are increasingly aligned with the Kremlin’s broader wartime ambitions.
The cost of defiance
While participation in the wartime economy can be highly profitable, defiance carries significant risks. Alongside lucrative incentives, the Kremlin has developed a range of coercive mechanisms to leverage authority. What emerges is a system designed to bind oligarchs closer to the state, fusing property, wealth and loyalty into a single instrument of control.
In wartime Russia, the assets of oligarchs deemed politically unreliable are routinely seized through administrative action, legal proceedings or outright force. The seized assets are subsequently transferred to individuals viewed as dependable partners, allowing the Kremlin to both punish dissent and subsidise its wartime economy. Former banking billionaire Oleg Tinkov illustrated the risks associated with public opposition. After criticising the war on social media, executives at Tinkoff Bank were reportedly threatened with nationalisation unless all ties with its founder were cut. Shortly afterwards, a company linked to loyalist Vladimir Potanin acquired the bank for a fraction of its true value. Tinkov subsequently lost almost USD 9 billion (EUR 7.9 billion) of his fortune, was declared a “foreign agent” and fled the country.
The nationalisation of private companies in “strategic” sectors has similarly emerged as an instrument of both coercion and wartime economic management. Businesses involved in mining, metallurgy, transport and defence-related industries have increasingly been brought under state control, even in the absence of anti-war statements by their owners. The nationalisation of Dalpolimetall, Russia’s largest lead producer previously owned by former United Russia deputy Eduard Yanakov, provides one notable example. More broadly, reports suggest that 1.2 trillion roubles (EUR 13.7 billion) worth of industrial assets have been returned to state ownership, reversing elements of the privatisation policy initiated in the 1990s. Beyond political intimidation, these measures allow the state to stimulate the military-industrial complex and strengthen domestic production without conventional budget allocations.
The Kremlin also routinely uses supposed ties to Ukraine as grounds for nationalisation. Vodka magnate Yuri Shefler and Denis Shtengelov, owner of KDV Group, were both accused of supporting Ukraine, resulting in their companies being designated “extremist organisations” and subsequently nationalised. These instances illustrate the broadening discretion available to the state when deciding matters of seizures and redistributions.
The uncertainty created by these draconian measures, coupled with an environment where anti-war protesters are routinely detained, has encouraged widespread self-censorship among Russian oligarchs. While a few hawkish billionaires, like Federation Council senator Suleiman Kerimov, openly endorse the war, most business magnates have opted for silent support. Igor Altushkin’s reportedly quiet sponsorship of the Ural Battalion assault unit in the Luhansk region exemplifies this approach. In such cases, oligarchic resources continue to serve state objectives while their owners avoid overt political endorsement. The result is a system in which loyalty to the Kremlin and its wartime policies is demonstrated not through public declarations but muted economic cooperation.
Loyalty as capital
While loyalty is frequently incentivised and rewarded, participation in the wartime economy also carries obligations. For the Kremlin, oligarchic fortunes have become an additional source of income through which mounting fiscal pressures can be offset.
In 2023, Russia unveiled a windfall tax on major businesses, with the aim of raising 300 billion roubles (EUR 3.4 billion) from corporate profits. The measure came amid falling energy revenues, the impact of Western sanctions and rising defence spending, which contributed to a budget deficit of 3.41 trillion roubles (EUR 39 billion) in 2023.
While reports claimed that Russia’s oligarchs had voluntarily surrendered their profits in a patriotic gesture, many businessmen allegedly opposed the initiative in private. Nevertheless, according to RBC, oligarch-led companies contributed 225.5 billion rubles (EUR 2.6 billion) in “voluntary contributions” by May 2026, with total collections expected to reach 300 billion (EUR 3.4 billion) by year-end. The windfall reportedly followed a meeting between Putin and key business leaders, demonstrating the extent to which economic cooperation has become an expectation rather than a choice.
The future of Russia’s wartime elite
Since the full-scale invasion of Ukraine, Russian oligarchs increasingly resemble instruments of wartime governance rather than independent capitalists. Through defence contracts, military financing, asset redistribution, import-substitution programmes, and direct financial contributions, the Kremlin has successfully harnessed oligarchic loyalty and mobilised private wealth in support of various wartime objectives.
This shift has strengthened the Kremlin’s leverage over the country’s elite. Sanctions, economic isolation and the expansion of state-directed opportunities have reduced oligarchic autonomy while increasing dependence on domestic markets and government patronage. Simultaneously, the threat of asset seizures and nationalisation has allowed the Kremlin to extract vital strategic resources while inciting subservient compliance.
Yet the long-term implications of this system remain ambiguous. While the redistribution of assets and expansion of state patronage have created a new loyal business elite whose wealth largely depends on the continuation of such policies, the erosion of property rights may disincentivise investment and lead to market stagnation over time. Likewise, a system built on selective rewards and coercive pressure risks manifesting in unstable elite loyalty based on fear rather than confidence.
The war in Ukraine has therefore not eliminated oligarchic wealth and influence but repurposed it in the name of state policy. The significance of this transformation lies not simply in the expansion of Putin’s leverage over the elite, but in the scale to which private capital has been converted into a strategic resource for wartime governance. Whether such a model remains politically and economically viable once the pressures of war recede remains one of the defining questions facing Russia’s future.
