Big Business and the Politics of Wealth Defense: the Case of Ukrainian Oligarchs

Abstract

What political strategies do the so-called business oligarchs in modern developing countries pursue to succeed in a turbulent environment? Is the instrumental power of big business more effective than its structural power in protecting the asset value against shocks such as populist revolutions or authoritarian takeovers? These questions form the center of a broad research program on the politics of extreme wealth stratification. However, systematic individual-level data on the super-wealthy has been notably absent from the literature. In this paper, I present a unique original database of 177 Ukrainian oligarchs. Rather than extrapolating from select cases, I examine the full cohort of the wealthiest elite members from 2006 to 2012. Rather than juxtaposing the winners with the losing public or a dictator, I explore the dynamics of intra-oligarchic competition. Theoretically, I propose a new logic of flexibility to understand oligarchic behavior. This logic stresses adaptability and deniability, in contrast to the existing paradigm of commitment compensation that maintains that the oligarchs are driven by the lack of institutionalized commitment from the politicians with access to coercion. I find that a quarter of Ukrainian plutocrats has been elected to national parliament. Over one half of the plutocrats support political parties. Close to 60 percent of the oligarchs are likely to have engaged in state capture or business capture. I also explore the determinants of oligarchic dominance. Oligarchs who had made their initial fortunes during privatization and those who own media assets achieve significantly higher levels of business wealth, while business wealth of the oligarchs who support political parties is significantly more resilient to shocks. Meanwhile, business wealth of the oligarchs who had made their fortunes from scratch or during Kuchma's presidency, as well as those who had served in the government before becoming super-rich, is significantly less resilient. Legislative terms in the Rada do not affect either the level or the resilience of business wealth.