As Russia's tanks rolled into Ukraine last week, Vladimir Putin gathered the country's top businessmen in the Kremlin's ornate Hall of the Order of St Catherine to discuss their response to the economic shocks that would follow.
The Russian president, sitting about 20ft away in a conspicuous social-distancing measure, told them he had “no other choice” but to invade Ukraine – and, if they wanted to keep their businesses, neither did they, according to people briefed on the meeting.
“It was a pointless meeting. The main idea was to explain himself. The explanation was: ‘I get it, but I didn’t have any other way out.’ That’s really what he thinks,” one of them said.
The EU on Monday froze the assets and imposed travel bans on more than half a dozen of Russia’s most prominent businessmen in a move officials have said is aimed at compelling the country’s elite to demand Putin change course.
But the power dynamic of the meeting made for a much starker message to the assembled billionaires. He warned that anyone who avoided doing business with companies sanctioned by the West would face punishment under the law – implying that the oligarchs had to make a stand – while also stating Russia would help companies hit by western sanctions.
The comprehensive guest list for the meeting, where attendees sat in alphabetical order, showed that any form of dissent has become a distant prospect as Putin’s power becomes near-absolute, people close to some of the attendees said.
Though some, such as banker Petr Aven and Vladimir Yevtushenkov, owner of the Sistema conglomerate, were among the first to make a fortune in Russia's turbulent 1990s, they were outnumbered by the heads of the state-run banking and energy groups that now dominate Russia's economy – many of whom have ties to Putin's inner circle.
Mikhail Fridman, Aven's business partner, has criticised the war in general terms but told reporters on Tuesday he did not want to attack Putin directly because it "will not have any impact for political decisions in Russia" while endangering his employees.
“Nobody really wants to suffer. But the message is we will have to,” said a senior state banker. “Being on the US sanctions list used to be a status symbol of patriotism. But now it’s a requirement. If you’re not on it, it’s suspicious.”
The meeting showed how far Russia – and Putin himself – had come since his first meeting with the oligarchs a few months after he took office in 2000.
Then, the fledgling leader offered a deal to the wealthy business leaders: keep the gains they had made from privatising Russian state assets after the Soviet Union’s collapse in return for pledging fealty and staying out of politics.
Reprisals vs criticism
Since then, Putin has imposed his will on the oligarchs by responding to any criticism with reprisals, leaving them with vastly diminished influence – and some of them in prison, such as the former oil magnate Mikhail Khodorkovsky, who spent 10 years in prison on tax and fraud charges that were largely seen by international observers as politically motivated.
Some who built their fortunes before Putin came to power – such as Khodorkovsky and the banker Sergei Pugachev – have left the country. A few other more recently minted businessmen have left the country or been arrested.
“The smart oligarchs get how things work here and the dumb ones aren’t oligarchs any more,” a senior Kremlin official said. “Everyone who doesn’t like it is out, or in prison.”
Russia’s wealth is even more concentrated in the hands of a few people today than it was when Putin took power.
The 500 Russians with a net worth of more than $100 million control 40 per cent of the country's household wealth, according to a study by the Boston Consulting Group last year. That means Russia's super-rich are three times' wealthier than their average counterparts globally.
But those vast riches do not bring political power.
And even if Russia’s oligarchs were to demand changes from Putin, they would still be unable to change his mind, one of the people briefed on the meeting said.
“Imagine they go to complain to Putin,” said a diplomat from a European country where several Russian oligarchs own large assets. “They say, ‘Can you please revise your policy? I lost $4 billion of my $5 billion’. Putin says, ‘Do you want to keep the $1 billion?’” – Copyright The Financial Times Limited 2022