Oligarchs are the wealthy few who benefit from the government and for all intents and purposes call the shots behind the scenes. Oilprice.com considers five key oligarchs and oligarch families who will shape the future.
They may not be the most powerful, or even the richest, but their influence is undeniable. Oh, and they are not all Russians. Turkey’s oligarchs deserve a place on the list because of the geopolitics of energy and conflict, and you’ve probably never heard of them. America has its own oligarchs, too; they are just less romanticized and devoid of the newsworthy “bling”, but their political power is no less formidable and the November presidential vote is arguably their playground.
The Koc Family, Courtesy Turkey
Let’s start with the most benign, the one you might not have heard of, but which is nonetheless extremely powerful by way of being the owners of the largest conglomerate in a country that holds many keys to near-future geopolitical energy dynamics. Koc Holdings has its hand in everything from oil refining and banking to car manufacturing and electronics, among other things. This is Turkey’s wealthiest family, which has always enjoyed government benefits, not the least from the ruling AKP party elite. Three generations of Koc’s have continued to amass wealth in Turkey, beginning with the family’s founder, Verbi Koc, in the 1920s.
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Most notably, the Koc family own the Tupras refinery, which holds a dominant position in Europe’s fuel market, has managed amazing performance even in the midst of a global economic crisis. Tupras is also Turkey’s only refinery and it also controls most of the logistics, including major ports and storage facilities. Tupras also owns 40% of the country’s second-largest fuel retail chain. It also sets prices, where its European-Middle East-Africa colleagues do not enjoy this advantage. Middle Eastern and Russian suppliers favor Tupras for these reasons, though Iran has in recent years out-maneuvered Russian to this end. That said, sanctions against Iran have forced Tupras to diversify somewhat into Saudi, Libyan and Iraqi supplies.
Are they oligarchs or just billionaires? They are oligarchs who refrain from directly interfering in the work of the government, while the government agrees to ensure a certain amount of regulatory liberality that will not interfere with the Koc’s continued accumulation of wealth. To be more specific, Tupras gets to set fuel prices, with the acquiescence of the government, but at the same time, the government makes sure that Tupras supplies the domestic economy first.
If you are a foreign investor, you enter Turkey only through one its oligarch families. Still, these are not your typical Russian oligarchs; they are more concerned about their reputation and cannot afford to be blatant. They take care of their minority shareholders, and make plenty of investments in the country’s social welfare—from hospitals to nursing homes.
Roman Abramovich, Courtesy Russia
Russian oligarchs are of course the most colorful. They have rarely been able to resist the lure of over-the-top luxury as they fleeced the country of uncounted trillions, fleeing to resort islands here and there to run their fiefdoms from beach palaces or yachts. Or, alternatively, ending up behind bars for misunderstanding the consequences of biting the official hand that fed them.
While there are plenty of colorful Russian oligarchs to choose from, we’ll settle for now on Abramovich, largely because he just won a major legal battle with our favorite fleecer of post-Soviet Russia, Boris Berezovsky, his one-time mentor.
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Abramovich is the owner of the Chelsea Football Club (Chelsea FC) and the Millhouse LLC private investment company, and is much the darling of oligarchs, especially when compared to Berezovsky, whose external appearance is just too sinisterly “mafia”. Last week, Abramovich won a $1.3 billion legal battle with Berezovsky, who had accused him of “intimidating” him into selling his shares of Sibneft oil—a company the two started together, now Gazprom Neft—at an undervalued price. This is what happens when you fall out of favor with on-again-off-again Russian President Vladimir Putin. Berezovsky fell out with Putin, and Abramovich took advantage of this. Berezovsky said it was extortion. A London court disagreed, of course.