The arrest of one of Russia’s wealthiest tycoons, Ziyavudin Magomedov, and his brother Magomed, is one of the biggest scandals to hit Russia’s business community. Not only does this case provide another example of Russian power plays, used to secure political power and control over resource distribution, but it is also likely to affect the dynamics within one of Russia’s most lucrative sectors – infrastructure construction.
Oleg Deripaska and Viktor Vekselberg are the main victims of the new round of U.S. sanctions imposed last month. The two long-time commercial rivals and known Kremlin’s loyalists have found themselves in the same boat; relying on their ties to elite networks for the survival of their business empires. Shadow Governance Intel analyses what political and societal networks Deripaska and Vekselberg can look to, to stay afloat amid the new round of U.S. sanctions, explaining why their stories are important to monitor.
Russia’s top echelons of elite – political and commercial – secure their position based on their ability to navigate layers of patronage. The ultimate patronage being that which emanates from the President himself. The profiles of those in Putin’s innermost circle, in some cases named through the latest round of Russian sanctions, highlight just how important patronage remains for financial survival, particularly in a sanction-heavy
Last month Naftogaz celebrated a big victory in a lawsuit against Gazprom. However, its domestic battles have been far less victorious. One major stumbling point is the system of gas supplies dominated by oligarch Dmitry Firtash. Despite international pressure, and the obvious economic benefits of unbundling the system of gas supply and distribution, the government has been reluctant to challenge Firtash’s monopoly. Shadow Governance Intel analyses the standoff between Naftogaz and the Firtash-controlled regional gas suppliers, and explains why the government continues to resist change.
The scandal around Cambridge Analytica (more specifically, its dealings with LUKOIL) has demonstrated that it is not only state-owned companies that the Kremlin uses for political purposes. Large private companies in Russia face an interesting conundrum: although they need well-connected shareholders to ensure stability and compensate for institutional weakness, these very shareholders often present commercial, investment and reputational risks.
Under the tenure of President Poroshenko in Ukraine's Post Euro-Maidan environment, there are strong indications that the country's 'old' oligarch class are faltering. Once noted for the commercial and political influence they held, the likes of Akhmetov, Firtash, Pinchuk and Kolomoysky have been faced with a succession of closing doors in Kyiv.
Despite the progress made by Ukraine towards the liberalisation of the gas market, its reform efforts have been marred by the political headwinds and interference of powerful elite networks. Overcoming this inertia will determine Ukraine’s future financial prosperity; however, the window of opportunity is closing. The break-up of Naftogaz is a very undesirable thing from the perspective of key stakeholders, in the sense that it would create significant competition in the marketplace – a market they have controlled both in terms of production and marketing.
The marriage between Tajikistan President Rahmon's second oldest daughter, Ozoda, and Jamoliddin Nuraliev, has created an emerging 'power couple' that is slowly consolidating significant political and commercial capital. Their initial rise may not appear spectacular, but their swift rise through the ranks of government has given them considerable leverage, with Nuraliev now considered a 'grey cardinal' of the economy.
Uzbekistan's expatriate oligarchs have been welcomed back by President Mirziyoyev as part of his bid to open the country to foreign investment. Personalities including Usmanov, Makhmudov and Shodiyev have been offered many lucrative projects, circumventing open competition. Viewed as agents of influence, they are aligning their personal interests with those of Moscow, with concerns that they will soon be in a position to influence decision-making in Tashkent.
An obscure provision tucked inside the CAATSA sanctions law, signed in August 2017, is sending many Russian oligarchs into a tail spin as they wait – with bated breath – to see if their names will appear on an official US Treasury blacklist due to be published next week. Although largely a subjective exercise, certain metrics have been stipulated to identify oligarchs favored by Putin. Whatever the result, the impact is already becoming evident.
In 2018, Putin is expected to be re-elected for his 4th presidential term. He will do so against the background of eroding institutions and underhand elite infighting. The transition of power in 2018 and the changes in the ruling elite will happen in the context of slowing economic growth and depleting financial reserves, weak institutions, negative foreign policy inertia, and a risk of social tensions.
A month after the Saudi King’s landmark visit to Moscow, the courtship between Russia and the Saudis is yet to show signs of a slowdown. While a lot of the discussion revolves around the geopolitical dividends for the Kremlin, the new partnership has more pragmatic business implications for key power players. Shadow Governance looks beyond the headlines to uncover the key Russian benefactors of the new friendship between Moscow and Riyadh.
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