This is my first post here so please bear with me!

The answer to this question has its roots in the collapse of the Soviet Union, the collapse of the centralized economy that was a key element of the Soviet Union, and the privatization of the economy that was suggested as a remedy to the economic woes of Russia after it split from the USSR. As Olga Kryshtanovskaya and Stephen White note in "The Rise of the Russian Business Elite" published in Communist and Post-Communist Studies, this process of privatization was ongoing during 1991, before the end of the communist rule and was a key part of Boris Yeltsin's presidential campaign (see page 294). As part of Yeltsin's planned policies, he implemented rapid privatization, which allowed for an increased income gap and the creation of a "super-rich" oligarchy, which held the majority of what used to be the state's enterprises (Krushtanovskaya & White, 294).

In Sergei Guriev and Andrei Rachinsky's paper "The Role of Oligarch's in Russian Capitalism," they address the common conception that most oligarchs came to power because of the "loans-for-shares" scheme held in the mid-1990s. Guriev and Rachinsky note that "in the classical loans-for-shares scenario, the government appointed a commercial banker to run an auction that would allocate a controlling stake of a large natural resource enterprise in exchange for a loan to the federal government that the latter never intended to repay. Not surprisingly, the auctioneer always awarded the stake to himself for a nominal bid..." (see page 138). However, Guriev and Rachinsky note that this "loans-for-shares" explanation only works to explain how the older oligarchs came to power, those who were part of the older Soviet nomenklatura. However, a vast number of current oligarchs are younger and would therefore not have gained their shares in this manner. Guriev and Rachinsky argue that these younger oligarchs were involved in the financial sector or entrepreneurship during the Glasnost/Perestroika era, and would have had enough financial capital to buy their shares.

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I hope this is a good enough explanation! I will cite the two articles I used below in full. Also for reference, I am currently writing a thesis on 1960s Soviet music and culture on the Holocaust, so I am pretty familiar with Soviet/Russian history in general.

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Guriev, Sergei and Andrei Rachinsky. "The Role of Oligarchs in Russian Capitalism." Journal of Economic Perspectives 19, no. 1 (2005). 131-150.

Kryshtanovskaya, Olga and Stephen White. "The Rise of the Russian Business Elite." Communist and Post-Communist Studies 38 (2005). 293-307.

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