Disposable oligarchs

Among the guests at the second inauguration of US President Donald Trump was the usual line-up of government officials, lawmakers and cabinet nominees. What was not so usual was a group of billionaires who also attended the ceremony — and took center stage. Facebook CEO Mark Zuckerberg, Amazon founder Jeff Bezos, Google CEO Sundar Pichai and Tesla and SpaceX CEO Elon Musk sat just a row behind Trump's children and in front of many of his cabinet nominees, including Pete Hegsett, Robert Kennedy Jr. and Kristi Noem.

For many, the prominence given to the billionaires—and the signals of rapprochement they seemed to be sending ahead of Trump’s inauguration—marked a new deal between America’s business elites and the president. Such a deal is dangerous not only for a country’s democracy but also for the business elites who make it. It also brings the United States much closer to countries where alliances between state leaders and business tycoons are more common.

For good reason, many observers in the United States saw Trump’s inauguration as the officialization of a new oligarchy. The term “oligarch” is more commonly associated with post-Soviet Russia. In the late 1980s, Soviet leader Mikhail Gorbachev’s sweeping economic reforms, known as perestroika, allowed industrial assets that had once been nationalized and state-run to increasingly pass into the hands of politically connected directors and a nascent entrepreneurial class of business executives.

The collapse of the Soviet Union accelerated this transition, as economic mismanagement by Kremlin officials led to chronic cash shortages and forced the government to borrow money from private banks. As collateral, private bankers sought stakes in large state-owned enterprises. When the government, almost invariably, could not repay its debt, the banks seized control of key levers of the Russian economy.

The owners of these banks—privileged insiders like Roman Abramovich, Boris Berezovsky, and Mikhail Khodorkovsky—used these bargain-basement takeovers to consolidate vast fortunes in the oil industry, banking, media, and other sectors. This allowed them to gain powerful influence over Russia’s new president, Boris Yeltsin, and over the Russian economy. While many of these firms operated successfully and even helped Russia emerge from the 1998 financial crisis, the arrangement led to a concentration of wealth and political power that stymied any genuine free-market reform in the country.

But almost as quickly as they emerged on the scene, Russian oligarchs themselves became political targets. In the first decade of this century, as the turmoil of the previous decade subsided, Russia developed what scholars call “authoritarian state capitalism”: a formally private economic system, imbued with state intervention designed to benefit the elite, but with institutions that the elite have not yet fully captured. In authoritarian state capitalism, political leaders exist in an uneasy balance, striving to secure levers of power in society that remain beyond their control. These leaders must overcome the most important counterbalance to political power: economic power. Powerful and independent economic actors then become targets, because their power prevents full authoritarian consolidation.

Russian oligarchs are the most famous in the world, but other countries with systems of authoritarian state capitalism, from Saudi Arabia to Turkey, have their own. Elites around the world imagine themselves immune to the upheavals that accompany major political changes, believing that their wealth and their networks will sustain them. But just as closeness to autocrats can help elites become richer and stronger, it can also lead to their downfall.

How the mighty fell

During the 1990s, Yeltsin increasingly relied on his oligarchs to govern effectively, and they, in turn, gained increasing influence over Russia’s economy, economic policy, and centers of political power. When Vladimir Putin became president of Russia in 2000, he set out on a mission to rein them in. The “mafia” of the 1990s, in the words of political scientist Jordan Gans-Morse, gave way to “the main man.”

During Putin's first term as president, Berezovsky, Vladimir Gusinsky and Vladimir Potanin faced investigations, and in many cases their assets were seized by the revamped state apparatus. In 2003, Putin jailed Khodorkovsky - who had bought an oil and gas company from the Russian government and was one of the richest men in the world - on charges of fraud and tax evasion.

Many interpreted the move as a “declaration of war” on the oligarchs and “a shock to those who believed in the 'new Russia,'” as economist Marshall Goldman wrote in Foreign Affairs in 2004. Businesses that had once manipulated the state began to fear it.

Elites around the world imagine they are immune to the upheavals that accompany major political changes, believing that their wealth and networks will sustain them. But just as closeness to autocrats can help elites grow richer and stronger, it can also lead to their downfall.

But it wasn’t the crime of the dark days of the 1990s that led Putin to seek to eliminate the oligarchs. After all, they were supporting the nascent system of authoritarian state capitalism, hoping to secure a role in its leadership. Berezovsky, for example, played a key role in Putin’s rise to power, providing public support and funding for the president’s party.

But Putin, a former KGB officer, was determined not to appear weak, as Yeltsin had, and immediately sought to restore the strength of the Russian state upon coming to power. A promise to stay out of politics was not enough to protect the oligarchs, as some had assumed. As political scientist Richard Sakwa wrote in 2008, “While business was now being pushed out of politics, politics was increasingly moving into business.” The only oligarchs who could survive were those whom the state allowed to do so.

By seizing the assets of post-Soviet oligarchs, Putin was able to fill state coffers and distribute the newly acquired spoils to his new ruling elite, creating a new oligarchy that was entirely at his whims and desires. After the 2012 presidential election, which was marked by widespread allegations of electoral fraud and mass protests against the regime, this system became hypercentralized and even more dependent on Putin. Loyalty to Putin, rather than managerial expertise, became—and remains—the key criterion for success.

The consequences of violating that pact can be deadly. It seems that for a prominent Russian business executive, there is nothing more dangerous than an open window. The list of suspicious deaths since the 2022 invasion of Ukraine alone, when Putin began further narrowing his inner circle, deserves its own Wikipedia page. In September 2022, Ravil Maganov, chairman of the board of directors of oil giant Lukoil, fell out of a hospital window from a room where, by a chilling coincidence, the security cameras were not working. Three months later, Pavel Antov, the owner of one of Russia’s largest meat-processing companies, fell out of a hotel window in India. Since the start of Russia’s war in Ukraine, dozens of members of Russia’s business elite have died under unusual circumstances.

No one is safe.

The decline of Russian oligarchs is extreme, but not entirely unique. In systems of authoritarian state capitalism, such as those in Saudi Arabia and Turkey, the state has cracked down on business leaders—through investigations, regulatory pressure, asset seizures, forced sales, or political isolation—when they were suspected of disloyalty to the regime. In 2009, the Turkish government fined one of the country’s largest media companies, Dogan Media Group, $2,5 billion for tax violations—a move that The New York Times later described as “widely interpreted as an attempt by the Turkish government to punish (the company) for its criticism” of Recep Tayyip Erdogan, then prime minister and now president.

Aydin Dogan, the group’s owner, was forced to sell two of the company’s newspapers, and in 2018, after continued scrutiny and pressure, he sold the entire company to a pro-government conglomerate. After the 2016 coup attempt against Erdogan, the Turkish government seized the assets of more than 1.000 companies whose leaders were suspected of being pro-opposition. Since then, and especially in the past two years, the practice has only expanded. The future of the oligarchs in Turkey, as in Russia, depends entirely on the whims of the authorities.

In Saudi Arabia, the monarchy carefully manages business activities to align them with its goals. In 2017, as many as 500 business executives, former government officials, and princes gathered at the Ritz-Carlton Hotel in Riyadh for meetings with Crown Prince Mohammed bin Salman, known as MBS. The hotel became their prison. Many were held in separate hotel rooms, interrogated, and in some cases tortured. Some were forced to transfer their assets to the state treasury. Prominent investor Prince Alwaleed bin Talal, who worked with journalist Jamal Khashoggi (who was killed by Saudi agents the following year), was detained for 83 days before reaching a multibillion-dollar settlement with the monarchy. The Saudi government presented the operation as part of an anti-corruption campaign, which it continued until 2019. However, many observers argued that its real goal was to consolidate MBS’s rule and power.

The fate of these men should serve as a warning to business leaders who choose to ally themselves with authoritarians—or to those who simply choose to operate comfortably at a safe distance. Such a gamble can bring great short-term benefits, but it can backfire spectacularly in the long run. Some American business leaders are coming dangerously close to the same fate.

American oligarchy

The US is not Russia, Turkey or Saudi Arabia, but, as numerous civil society organizations and democracy researchers have noted, it is undergoing a gradual democratic regression - a process marked by sharp political polarization, the widespread use of executive power and pressures on freedom of speech and dissent.

This trend is partly manifested in what has become known in the US as “lawfare” – the abuse of legal proceedings for political purposes, where leaders use criminal prosecutions as political punishment against certain individuals or institutions they deem disloyal. While such practices have increased in the US over the past two decades, they have escalated sharply under Trump.

The president has launched broad attacks on his political opponents, business leaders and media outlets he sees as too critical of his administration. Trump has repeatedly called the media “the enemy of the people” since 2017. His first administration often attacked Bezos, who also owns The Washington Post; Les Moonves, who was president of CBS News until 2018; and Bob Iger, CEO of The Walt Disney Company, which owns ABC News, for reporting it saw as unfair to Trump.

As Trump's second term began, many prominent business and media leaders have tried to reach out to the president. Silicon Valley's tech giants are the clearest example. During Trump's first administration, most of these leaders kept their distance from him or even criticized him. But before he returned to power, they began to change their tune.

Musk was the largest single donor to Trump’s campaign and its associated super PACs during the 2024 election cycle. Just before the Washington Post’s editorial board planned to endorse Kamala Harris for president, the paper ended its practice of endorsing presidential candidates, a move that 21 of the paper’s columnists condemned as “abandoning the paper’s core editorial beliefs.” A few months later, Zuckerberg announced that he would end the company’s social media fact-checking program, launched in 2016. Zuckerberg said the fact-checking system was “too politically biased” and there was “too much censorship”; Trump, when asked by a reporter whether the changes were a response to his earlier threats, said, “Probably.”

A benign interpretation of these business leaders' moves would suggest that they were merely trying to insure themselves against a routine change of government. But given the president's willingness to launch retaliatory attacks on a wide variety of targets in the year that followed, these tycoons have now become complicit in the rise of a new authoritarian state capitalism.

The prominent presence of Bezos, Musk, and Zuckerberg at Trump’s inauguration underscored their close ties to the president, with Musk even becoming a “special government official” selected to lead the Office of Government Efficiency. But as political leaders personalize and centralize power, independent wealth can become a threat. In return, political leaders demand ever greater loyalty from their protégés, often requiring them to compromise themselves more and more—and to suffer the consequences when they decide that such concessions are no longer worth the price.

Concerned business leaders should seek to coordinate responses to government abuses. By sending messages of resistance or alarm through business associations, for example, individuals can reduce the risk of targeted state retaliation.

As Russian oligarchs have learned, flattery to political leaders provides only short-term protection. The second Trump administration has stepped up its attacks on those Trump sees as critics of his administration. Since 2018, Trump has sued ABC News, the Wall Street Journal, the New York Times, the BBC, CNN, and the Des Moines Register, among others. The takeover of CBS in 2025 by David Ellison, a Trump ally, and his recent acquisition of Warner Bros. Discovery, which includes broadcaster CNN, have reinforced the impression that the president is determined to use relationships with powerful business leaders to consolidate control over the country.

But such alliances can prove to be tricky. Musk fell out of favor just five months into Trump’s second term when he criticized Trump’s key spending bill. He ultimately escaped largely unscathed, but Trump has made it clear he is willing to put serious financial pressure on the entrepreneur, threatening to cut off government contracts for Musk’s companies, sending Tesla shares down 14 percent.

There is no doubt that Trump appreciates signals of favor from business leaders and might even reward them in a tangible way. However, the leaders of authoritarian state capitalism are more concerned with enriching themselves and their ruling clique than with helping friendly oligarchs. Such leaders tolerate private enterprise only as long as it does not interfere with their efforts to accumulate and maintain their own political and economic power.

Course correction

Why raise the alarm about elites who have contributed to their country’s democratic decline? Because economic elites are key actors in reversing that decline. While countries that begin to slide toward authoritarian state capitalism may continue to slide toward outright authoritarianism, as Russia did, that path is not inevitable. Economic actors can pull a country away from authoritarianism and back toward democracy in one of two ways: if elites strengthen their commitment to democratic institutions, thereby helping those institutions to rein in both public and private power; or if the excesses of power and the enrichment of elites provoke popular resistance, which then provides business leaders with an opportunity to change course and support democratic institutions and forces.

When the rule of law is replaced by the rule of one man, everyone’s future depends on their closeness to that man. As property rights and the rule of law weaken, instability becomes the norm – investment slows, financing becomes more expensive, and supply chains are disrupted. Business leaders are well-positioned to publicly warn of the dangers of such dynamics.

In the US, prominent business leaders have occasionally managed to persuade Trump to back down on certain policies. After a series of executives, including JPMorgan Chase CEO Jamie Dimon, warned of the potential harm from the president’s tariffs, Trump announced a 90-day pause in their implementation and praised Dimon as “a very smart and… financial genius.”

Concerned business leaders should seek to coordinate responses to abuses of power. By sending messages of resistance or alarm through business associations, for example, individuals can reduce the risk of targeted state retaliation. They could also forge connections with business leaders in other industries and sectors who have a similar interest in preserving economic stability and growth; such a broader network could help protect individuals from accusations of political motives. These networks, however, should not limit their activities to economic issues. They must also use their influence and expertise to defend key democratic practices, such as free and fair elections and freedom of the press.

The system of Western democratic capitalism has lost many of its advocates, with the persistent focus on its shortcomings often overshadowing its successes. Many across the ideological spectrum might rejoice in the fall of some capitalist titans. But this cautionary tale is not about ideology, left or right, but about the erosion of institutions and the rise of competitive authoritarianism. It is in everyone’s interest for business leaders to commit to democratic practices and institutions, regardless of which party is in power. The alternative is a political environment in which everyone has fewer rights and fewer freedoms—including, sooner or later, the oligarchs. That is the real lesson of Russia, where the oligarchs are gone, but the disastrous consequences of their choice to support an unjust system persist.

Hartwell is Professor of International Business Policy and Director of the Institute for International Management at the School of Management and Law at the University of Applied Sciences in Zurich.

Olsen is a professor of global public policy and political science at the Humphrey School of Public Affairs at the University of Minnesota.

The article was published in the magazine "Foreign Affairs"

Prepared by: A. Š.