The war in Ukraine and Russian capital: From military-economic to full military imperialism

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24 /
By Ilya Matveev
Volodymyr Ishchenko makes an important
contribution to the debate on the nature of
Russian imperialism and the war in Ukraine. He
postulates that behind the war, there is a class
conflict between, on the one hand, political
capitalists in Russia, and, on the other, an alliance
of transnational capital and the professional middle
classes in Ukraine.
According to Ishchenko, the Kremlin’s decision
to invade Ukraine corresponds with the collective
interests of the Russian ruling class, even if it
goes against the individual interests of this or that
political capitalist. While Ishchenko’s article is an
excellent starting point in the debate, it ultimately
misrepresents the nature of the ruling class in
Russia, as well as the causes of Russia’s aggression
in Ukraine. Ishchenko notes: “Some analysts
claim that the war may possess the autonomous
rationality of a ‘political’ or ‘cultural’ imperialism.
This is ultimately an eclectic explanation.”
Eclecticism might be a sin, but so is misconstruing
the evidence for the sake of theoretical purity. In
this article, I focus on the historical development
of Russian capital, its relationship to the Kremlin’s
imperialist policies and the divergence between
the economic expansion and the military
aggression since 2014.
Contra Ishchenko, I argue that Russian imperialism
does have its own logic that is not reducible to
the interests of the ruling class. The appearance
of the non-economic roots of Russia’s aggressive
expansionism since 2014 raises questions about
the contemporary validity of classical theories
of imperialism. I return to these questions in the
concluding section.
The fractions of the Russian
ruling class
Ishchenko defines the ruling class, or the most
influential fraction of the ruling class, in Russia
as political capitalists whose chief strategy is
“the exploitation of political office to accumulate
private wealth”. He refers to several key authors –
Steven Solnick, Ruslan Dzarasov, Iván Szelényi –
to describe the strategies of syphoning off public
resources and government-sanctioned plunder
characteristic of Russian capitalists.
All the researchers quoted by Ishchenko focus on
the period of the late 1980s and the 1990s, and
their conclusions – which are broadly similar –
are undoubtedly correct in relation to that period.

25 /
Ilya Matveev
Russia’s “primitive accumulation” certainly
involved massive appropriation of public wealth –
be it the privatisation of state property or profiting
off public money that was placed in private
banks by corrupt public officials. This is how
the “oligarchs”, or big businessmen, made their
fortunes.
The 1990s was a period of the “virtual economy”,
with almost zero investment and capital formation,
as opposed to frantic speculation and rent-
seeking by well-connected insiders. The dominant
corporate form that emerged in the second half
of the 1990s was the so-called “financial-industrial
group” – a conglomerate of financial, industrial
and media assets that essentially included
everything its owners could grab and seize –
most often from the state.
The 1998 economic crisis proved a turning
point in this dynamic, however. Many of the
opportunities for speculation and profiting off
state resources dried up, while the dramatic
devaluation of the ruble made commodity exports
particularly attractive. Restoring the centrality of
exports to the economy required investment in
Russia’s productive capacity.
Russian businessmen realised they could attract
the financing for such investments from the global
capital markets. This, in turn, required a change
in corporate governance practices and increased
transparency. The “financial-industrial groups” of
the 1990s were reorganised into more traditional
corporations.
The story of Mikhail Khodorkovsky, the oligarch
turned archfoe of Putin, illustrates this change.
He acquired his initial capital in the late 1980s
through his connections in the Komsomol
– the communist youth organisation that
Gorbachev turned into a launch pad for various
entrepreneurial initiatives.
Khodorkovsky’s bank Menatep engaged in all
manner of speculative and arbitrage activities in the
first half of the 1990s, and in 1995, he acquired
YUKOS, the biggest oil company in Russia, through
a shady loans-for-shares scheme for a fraction of its
true cost.
Khodorkovsky was the archetypical 1990s
“oligarch”, running an opaque, sprawling business,
harassing minority shareholders, and relying
on the threat and practice of criminal violence
as a measure of the last resort. However, in the
early 2000s, he introduced new accounting and
transparency standards and invited independent
members to the YUKOS board to secure
international legitimacy for his company and
increase its market value.
Of Bonapartists and oligarchs
The key part of the story of Russian business since
the early 2000s is one of internationalisation.
Russian corporations attracted capital from global
markets, staged initial public offerings on the key
international exchanges, acquired assets abroad,
and formed joint ventures with foreign transnational
corporations. In the words of political sociologist
Georgi Derluguian, they acted as “comprador
oligarchies that monopolise the nexus between
global economic flows and the local extraction of
resources”.
Internationalisation became an integral part of their
accumulation strategies. In their personal capacity,
Russia’s richest men acquired luxury properties in
London, the requisite superyachts, and sent their
children to the most expensive private schools
European countries had to offer. It is important to
factor in this dimension of ruling class activities as it
directly relates to the Kremlin’s foreign policy and,
as I argue, imperialist goals.

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The war in Ukraine and Russian capital: From military-economic to full military imperialism
I fully agree with Ishchenko’s characterisation
of Putin’s regime as Bonapartist. Similar to
Louis Bonaparte, Putin came to power with a
promise to “restore order”. While rhetorically
attacking the “oligarchs”, he had no intention of
ever redistributing their wealth or revising the
fundamental pillars of the post-Soviet political-
economic order to tackle extreme inequality.
Instead, he offered the business elite a new set
of rules: the deal was that it would relinquish its
influence over the media and political parties
in exchange for the opportunity to maintain and
multiply its riches.
For Russia’s leading businessmen,
this proved an excellent deal
as Putin’s personal popularity
compensated for their weak
legitimacy in society.
Furthermore, the state that Putin pledged to renew
and restore could protect them from industrial
conflicts and popular pressure for redistribution.
In turn, Putin saw Russian capitalists as a valuable
resource.
According to Vladislav Surkov, one of the
Kremlin’s most important political operatives at
the time, the group of Russian big businessmen
is “very thin and very precious... they are the
bearers of capital, of intellect, of technologies...
The oil men are no less important than the oil; the
state has to make the most of them both”.
The Kremlin considered the business elite to
be useful for ensuring economic development
at home, as well as providing the resources for
projecting power abroad. Of course, there was
the small matter of personal enrichment through
bribery and extortion as well.
If there is one quote that characterises the state of
Russian capital under Putin most accurately, it is to
be found in a passage from Marx’s 18th Brumaire
of Louis Bonaparte: “In order to save its purse [the
bourgeoisie] must forfeit the crown, and the sword
that is to safeguard it must at the same time be hung
over its own head as a sword of Damocles.”
From Marx’s analysis in the 18th Brumaire, we
can gather that a Bonapartist regime may serve
– and probably does serve – the interests of
the bourgeoisie, however, there is no guarantee
that it will place these interests above all other
considerations when making momentous decisions.
After all, the sword of Damocles might just fall on
the bourgeoisie one day.
Corrupt state managers
Despite relinquishing their influence over public
policy, the owners of Russia’s largest corporations
maintained individual informal ties to the top
government officials. As a result, they rarely had
problems with the state. Another part of Russia’s
capitalist class – mostly the owners of small and
medium enterprises – lacked these political ties.
In principle, the Kremlin had nothing against these
business owners, and they benefited from the same
policies that privileged the capitalist class as a
whole – not least, a highly favourable tax regime.
However, they often fell victim to the predatory
attacks of various government and security agencies.
The Kremlin proved in most cases unable or
unwilling to restrain state agents when they engaged
in predatory behaviour.
For these reasons, this fraction of the capitalist
class lacking the political connections of larger
businessmen could potentially benefit from
democratisation if it allowed them to restrain and
control Russia’s vast bureaucratic and repressive
apparatus. However, business owners have rarely
joined the opposition movement as they have been
unwilling to jeopardise their profits by taking a
political stand.

27 /
Olena Lyubchenko
We can identify two more fractions of the Russian
capitalist class. Putin’s policy of renationalisation
and expansion of the public sector created a
layer of state managers, who form one of the
stronger bases of support for the government,
often with a background in the security services.
They tended to abuse their positions by enriching
themselves through various corrupt practices,
however, and this is an important point, in terms
of internationalisation, Russia’s largest state
corporations did not differ much from its biggest
private businesses. They too actively sought access
to export markets, by raising money abroad and
forming joint ventures with foreign corporations.
Like their “entrepreneurial counterparts”, these
corrupt state managers pursued a particular
type of gaudy lifestyle: properties in Miami,
London and Dubai and sending their children
to the same elite private schools in Europe. The
major difference is that state managers are even
more dependent on the Kremlin than private
businessmen, as they can be dismissed from their
positions with the mere stroke of a pen.
Finally, there is another group of businessmen
in Putin’s Russia that could be termed political
capitalists in a straightforward Weberian sense,
as their chief activity is servicing government
contracts. Members of this group, identified by
Forbes as the “The Kings of State Contracts”
[changed from “the kings of government
Contracts” to the full name Forbes uses] (with a
special ranking published every year), are often
Putin’s closest associates as well as individuals
connected to various influential state managers.
Their business model is less internationalised than
most Russian corporations. However, the services
of technologically advanced foreign suppliers
are often required for the biggest government
contracts to be completed. Furthermore, these
political capitalists depend on the overall “size of
the pie” available to the state, and thus, indirectly,
on other, globally integrated industries.
Russian capital and the global
economy
In relation to the global economy, Russian capital
played two roles simultaneously, reflecting the
paradox of a dependent, semi-peripheral country
that is nonetheless imperialist. As members of a
“comprador bourgeoisie”, the biggest business
owners have exploited Russia’s natural resources
and domestic markets, often in partnership with
foreign corporations, while transferring money
to offshore accounts and luxury real estate in the
Western “metropole”.
As vehicles for a “metropolitan bourgeoisie” in
the post-Soviet successor states pace, Russian
corporations aggressively expanded into regional
markets and reconstructed Soviet-era supply
chains under their control. The Kremlin tolerated
the “comprador” element and actively supported
the “metropolitan” element. Coercive measures,
such as oil and gas cut-offs, were used to
acquire assets in countries like Ukraine, Moldova,
Georgia, and Armenia.
Political and economic motives were often
hopelessly intertwined. For instance, in Ukraine,
Russian state-owned Vneshekonombank acquired
multiple industrial assets in Donbas to the tune
of $10 billion in the late 2000s and early 2010s.
Vnesheconombank money was used both to take
control over coal and metal factories in Eastern
Ukraine and to finance Ukrainian politicians such
as Yulia Tymoshenko in the hopes of increasing
the Kremlin’s influence over Ukrainian affairs.
Overall, Putin’s vision for the post-
Soviet space invariably involved Russia’s
political and economic dominance,
solidified by its own integration project
– the Eurasian Economic Union. Within
this vision, political and economic
expansion fuelled one another.

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The war in Ukraine and Russian capital: From military-economic to full military imperialism
The Achilles heel for the Kremlin, in its imperialist
advance, was its lack of international hegemonic
appeal. Putin’s preferred method of operation
was doing backroom deals with the post-Soviet
political and economic elites, and he often
succeeded, particularly in the case of his fellow
autocrats in neighbouring states. However,
for the populations of the post-Soviet states,
Russia represented, at best, “more of the same”
– the same poverty, inequality and cynicism
characteristic of the post-Soviet condition as a
whole.
At worst, it was an authoritarian incursion into
fledgling democracies with an arrogant sense
of entitlement to its “sphere of influence” and
military intervention always kept as an option –
as seen in Georgia in 2008. While making loud
demands on the countries in its “near abroad”
and the United States as a global hegemon,
the Kremlin could never articulate the positive
vision it had on offer. Its constant calls for
“multipolarity” rang hollow, as they amounted
to nothing more than a desire to dominate
the region for post-Soviet space entirely to
the Kremlin’s benefit and without the West’s
interference.
The invasion of Ukraine
Coincidentally, Russia’s latest round of
confrontations with Ukraine began in 2013
as a conflict over trade, as Ukraine could not
simultaneously be a part of the free trade
agreement with both Russia and the EU.
Putin’s later reflections (in his interviews with
Oliver Stone, for example) reveal his clear
understanding of the economic stakes at play.
However, what happened next marked a sharp
divergence between the economic logic and the
political logic of Russian imperialism.
Whatever motivated the Kremlin to annex
Crimea, it was not economic considerations:
the question, discussed by Putin with his
advisors, was not how much Russia would gain
economically, but rather, would it be able to
withstand Western sanctions in response to the
annexation. Ukrainian assets (public and private)
that Russia expropriated in Crimea were more
than matched by lost or devalued Russian assets
in the rest of Ukraine.
Furthermore, the fighting in Donbas
between 2014-2015 resulted in the physical
destruction of some significant Russian
investments. For example, the Ukrainian
artillery’s shelling of an oil refinery in Lisichansk
(Luhansk region) cost its owner, the Russian
state-controlled oil company Rosneft, up to
$300 million in lost value. More importantly, the
confrontation with the West that ensued after the
annexation of Crimea has put into question the
whole strategy of internationalisation of Russian
business.
Russian corporations partly lost access to
Western technologies, export and capital
markets, a few Russian businessmen were
sanctioned, while others lived under the constant
threat of sanctions and asset freezes. The
number of Russian billionaires on the Forbes
list stagnated after 2014 and the GDP growth
averaged just 1% between 2014-2021. Russia’s
economic slowdown is crucial to setting the
stage for Russia’s invasion of Ukraine.
I agree with Ishchenko that, up until 2014, Putin’s
regime was acting by and large in the collective
interest of the Russian ruling class, especially the
three of its most powerful fractions: the biggest
private corporations, corrupt managers in the
state sector, and political capitalists (“The Kings
of State Contracts”). And indeed, the conflict in
Ukraine had economic roots.

29 /
Olena Lyubchenko
However, the annexation of Crimea and Russia’s
covert intervention in Eastern Ukraine were
not dictated by economic logic; in fact, they
significantly undermined the position of Russian
capital. The contradictions of Russian capitalism
could not produce such an outcome; it was
rooted in something else. From Putin’s own
subsequent explanations, one could gather that
the annexation of Crimea was the product of a
deeply held belief in the inevitability of an all-
out confrontation with the West in which even
the most fantastical scenarios - such as nuclear
weapons in Crimea targeted at Russia being
considered real threats - could become a reality.
This belief could partly be explained by the
unilateral actions of the US in the preceding
period, such as the withdrawal from the Anti-
Ballistic Missile (ABM) Treaty in 2002. However,
it was also rooted in Putin’s denial of the very
possibility of popular revolutions (including the
2013-2014 Maidan revolution) which he invariably
saw as coups orchestrated by the West against
Russia (with an ultimate plan to stage such a coup
in Russia itself).
Putin’s actions were also driven by the deep fear
and mistrust of popular mobilisation. His inability
to comprehend the existence of power in the
Arendtian sense, that is, collective social power,
ultimately led him to rely on force – repression at
home, military aggression abroad.
This strategic orientation was certainly not Putin’s
alone – it was shared by the large part of
Russia’s national security establishment. Driven
by fear and mistrust, the Kremlin engaged in
what international relations scholar Jack Snyder
termed the “myths of empire” – that is, strategic
orientations that dictate that the best defence
is a good offence. This logic led the Kremlin
to break its own promise to respect Ukraine’s
national borders (enshrined in the 1994 Budapest
memorandum), annexing part of its territory.
Putin’s decision to launch the full-scale invasion of
Ukraine in 2022 reflects recognition of the failure
of the Kremlin’s own policy of hybrid aggression
towards Ukraine in the previous period. The
twin daggers thrust into Ukraine’s body – the
annexation of Crimea and the occupation of
Donbas through the Kremlin-controlled proxies –
failed to destabilise the country enough to prevent
it from acquiring a solidly pro-Western and anti-
Russian direction.
‘Myths of empire’
When Vladimir Zelensky failed to implement
the Minsk agreements in a way preferred by the
Kremlin, and closed down three TV channels
associated with the pro-Putin businessman and
politician Viktor Medvedchuk, Putin realised that
he had no veto power over Ukrainian affairs. After
that, he tried to persuade the West to pressure
Ukraine into accepting his demands, and, when
this did not work, he settled on an outright
invasion.
The “myths of empire” resulted in an
abject failure in 2014-2022, but instead of
abandoning them, the Kremlin doubled down
on the same logic of preventive aggression.
Unsurprisingly, it failed again, this time with
even more tragic consequences.
Marxist theories of imperialism emphasise its
connection to the process of capital accumulation
and the interests of the ruling class or its fractions.
However, Russian imperialism since 2014 does
not easily lend itself to such an explanation.
Russia’s military aggression in Ukraine since 2014
has resulted in the significant loss of capital and
export markets, as well as investments abroad,
diminished cooperation with transnational
corporations, and personal sanctions against
many prominent representatives of Russian capital.

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The war in Ukraine and Russian capital: From military-economic to full military imperialism
The gains from Russian corporations’ increasing
monopolisation of the domestic market and plundering
of occupied territories do not nearly compensate for
the losses. The discrepancy between the economic
interests of the ruling class and military aggression is
not unique to Russia: David Harvey has captured it by
studying the dynamic interaction between “capitalist
logic” and “territorial logic” across different historic and
contemporary examples of imperialism, and Michael
Mann has described it in relation to the United States as
an “incoherent empire”.
This discrepancy in Russia is rooted in the ideology
and strategic orientation of the national security
establishment. Clearly, more work needs to be done
to identify the particular cliques and coalitions in the
Russian elite that were supporting and encouraging
Putin’s belligerent impulses; another task would be to
understand the role of irredentist Russian nationalism.
However, the attempts to find a direct causal link
between the contradictions of capital accumulation
and Russia’s military aggression should be abandoned,
as they conceal the real origins of the terrible war in
Ukraine.
Imperialism does not need to be a simple extension
of capitalism to be deserving of normative critique. To
quote historian Salar Mohandesi’s broad revision of the
Marxist approach to the subject: “Imperialism… has to
be broadly understood as a relationship of domination
between states, rather than as a synonym for capitalist
expansion.”
As a form of violence and domination driven by an
unaccountable political class and, as usually is in the
case of these things, its victims are predominantly the
working classes – both in the aggressor state and in the
countries that fell victim to it – imperialism should be
opposed and fought on its own.

* Ilya Matveev is a researcher with the Public Sociology
Laboratory (Russia) and an Alameda affiliate.