Putin is «privatizing» the oligarchs and making them hostages of his regime

The British news agency Reuters has published the article «Putin asks oligarchs to donate to Russia’s budget as cost of Ukraine war soars, The Bell media».

It states in particular: «Russian President Vladimir Putin has asked oligarchs to stabilize the country’s finances as he continues his invasion of Ukraine, the online publication The Bell reported late on Thursday, citing unnamed sources. It says that Putin met with leading Russian businessmen behind closed doors.

The Bell, citing sources, reported that Putin discussed military financing and the continuation of the war, which has been going on for five years since Russia’s full-scale invasion in February 2022. «Russia will continue to fight», «Putin said, «until it seizes the remaining areas of eastern Donbass Ukraine that are not under its control», the report added.

Now, a Reuters report based on data from The Bell captures a critical transformation of the Russian political and economic system. The dictator Putin’s demand for big business to directly finance the state budget, which is camouflaged as a «voluntary contribution», is an indicator of the Russian Federation’s final transition to a mobilization economy model and a radical reformatting of relations between the state and the elites.

First, this step means the destruction of the «social contract» that existed between the Kremlin and the oligarchy since the early 2000s. Its formula of «non-interference in politics in exchange for the inviolability of assets and the possibility of enrichment» no longer works. In the conditions of budget deficit caused by a protracted war and sanctions pressure, private property in Russia loses its autonomous status and turns into conditional ownership. Now the loyalty of the elites is measured not just by the absence of opposition, but also by the readiness to directly expropriate their profits in favor of the war machine.

Secondly, the transition to direct expropriation testifies to the Kremlin’s strategic bet on a war of attrition. Since traditional market mechanisms and export revenues from energy carriers no longer cover the costs of conducting hostilities, the criminal Moscow state resorts to fiscal cannibalism. And this is a sign of the formation of a «command-administrative superstructure» on top of the market foundation, where economic expediency gives way to military needs.

Third, such pressure on the oligarchs creates a new dynamic within the ruling elite. On the one hand, it increases the dependence of business on the state, since the survival of assets now depends entirely on the regime’s favor. On the other, it creates hidden tension, since big capital is deprived of the remnants of investment attractiveness and global integration. Putin is effectively “nationalizing the elites” through financial complicity in the war, which makes their fates inextricably linked to the outcome of the bloody invasion of Ukraine.

The process of Russia’s final transformation into a militarized totalitarianism is being launched, where the private sector becomes a resource appendage to the defense sector. After all, the requirement for oligarchs to make donations to the Russian budget is not just a temporary measure to patch budget holes, but a fundamental change in the architecture of Russian state capitalism. A change that confirms the readiness of the Putin system for a multi-year exhausting conflict at the cost of the complete subordination of the economy to the survival interests of the political leadership.

We are talking about a turning point in the transformation of the Russian political and economic model: the transition from rigid «state capitalism» to militarized totalitarianism. What was previously perceived as extreme wartime measures is crystallizing into a new systemic architecture, where private property and market mechanisms finally lose their autonomy, becoming only tools for servicing the «war economy».

And if earlier Russian oligarchs and big business enjoyed relative freedom of disposal of profits in exchange for political loyalty, now the regime has moved to direct expropriation of resources through mechanisms of «voluntary-compulsory» contributions, tax surcharges and nationalization of assets.

This is a sign that the Kremlin no longer considers the private sector as an engine of development, but sees it only as a resource to be burned in the furnace of a long-term war. And the economy is turning into a «monolith», where the line between the state budget and the capital of private corporations is erased in favor of the military-industrial complex.

This process confirms the regime’s strategic bet on a war of attrition. The subordination of the economy to the survival interests of the political leadership means that the logic of profitability and investment attractiveness is replaced by the logic of mobilization expediency.

Russia is consciously degrading civilian sectors and technological primitivization in order to ensure the smooth functioning of the military machine. In fact, we are seeing the resuscitation of the Soviet model, but based on modern methods of digital control and fiscal pressure.

This transition indicates that the political survival of Putin and his entourage is now inextricably linked to a state of permanent conflict. Since peace or even a «freezing» of the war would be a threat to the created structure, which simply cannot function in the absence of a military order.

In this case, the «sacrifices» of the oligarchs are not a financial injection, but an act of final vassalage. This is a signal to the system that the internal resource now belongs exclusively to the leviathan state, which is ready to exhaust the country for decades in order to maintain its monopoly on power and ideological course in confrontation with the outside world.

Therefore, the current situation of the Russian business elite can be characterized as a state of a «golden cage», where bars are gradually being replaced by blades. Russian oligarchs do not just feel danger – they are in the process of trying to painfully adapt to the new reality, where the concept of private property has been completely eliminated.

Putin’s vertical has moved from the «equidistant» model of the early 2000s to a model of full incorporation of capital into the needs of the military-political machine. Today, the oligarchs’ assets are viewed by the Kremlin not as their property, but as temporary management of a state resource that can be terminated at any time through mechanisms of «deprivatization» or nationalization under the pretext of inefficiency or disloyalty.

The question of choosing between «takeover by the security forces» and resistance is crucial for them, but the room for maneuver is very small. The security forces, a voracious pack of hungry «piranhas», successfully use war as a legitimate tool for redistributing resources, where any hint of business autonomy is interpreted as a betrayal of national interests.

The oligarchs feel that resistance in the classical sense (through political lobbying or financing the opposition) has become impossible due to the total control of the special services. When any collective demarche is blocked at the stage of its inception due to an atmosphere of deep mutual distrust: each oligarch hopes that it is his loyalty that will allow him to «eat up» the assets of a neighbor who will be less compliant.

In essence, the process of transforming the oligarchs into «state serfs» of the highest rank is underway. They are forced not only to finance military needs, but also to become part of a system that destroys their ties with the Western world and their long-standing efforts to legalize capital.

Putin does not care at all what will happen to them next. Because the economy is increasingly moving to mobilization tracks, where business interest and private property lose all meaning and become a relic of the past.

Those who do not dare to escape or play complex backroom games now will ultimately become a resource that the regime will consume in parts to maintain its viability in conditions of prolonged isolation.

But do Russian oligarchs realize the danger that Putin is «privatizing» not only their capital, but actually themselves, for his own benefit?

However, the lack of mechanisms for collective action and the fear of repression make them passive participants in the process of their own absorption by the totalitarian state. The oligarchs are no longer partners in power, as they were until recently, but have become service personnel with a high income.

Now they must choose for themselves whether to voluntarily agree to be eaten by the «piranhas of Putin’s security forces» or to dare to resist. After all, they have very little time left to make a final decision.