What to Expect When You’re Expecting an Oligarchy

by | Apr 7, 2025 | The Atlantic

When tech billionaires and crypto moguls hailed Donald Trump’s reelection and flocked to his inauguration ceremony and ball, million-dollar donations in hand, some were abandoning previous liberal affiliations and all were now lining up behind an openly authoritarian president. The surface rationale is that megabusiness leaders such as Mark Zuckerberg, Jeff Bezos, Tim Cook, and Marc Andreessen are safeguarding their companies and their shareholders’ interests. The underlying explanation is that America is being reborn as an oligarchy.

This new class—with Trump megadonor Elon Musk as its self-appointed tribune—has thrown its support behind a libertarian economic agenda that maximizes private power and minimizes public accountability. Whether the billionaires’ alignment with Trump and Musk is merely pragmatic or sincerely ideological, they stand to gain from the new administration’s crash program of dismantling government and regulatory agencies. For Trump, allying with such concentrated economic power helps him consolidate political control, at the expense of democracy. This fusion of money and power is nothing new. I saw something similar take shape in my native Russia. But three decades later, the Russian oligarchs’ bargain has ended up with only one true beneficiary: Vladimir Putin.

America’s billionaires should take note. When extreme wealth combines forces with extreme power, the former can profit enormously for a time. As in Russia, the benefits of the executive’s policies are likely to flow upward: Super-wealthy Americans will enjoy tax breaks and deregulation for their businesses, while the poor will face rising prices, shrinking services, and reduced opportunity. But America’s tech oligarchs may discover sooner rather than later that, by undermining democratic governance, they are empowering an authoritarian president who can pick them off one by one—just as Putin did with the oligarchs who helped cement his rule.  

[Anne Applebaum: America’s future is Hungary ]

When Communism collapsed in 1991 and Russia pivoted to capitalism, the country’s wealth quickly ended up in the hands of a few newly minted businessmen. A mix of small-time entrepreneurs, opportunistic academics, mid-level functionaries, and shady characters with ties to organized crime, these men affiliated themselves with Boris Yeltsin’s post-Soviet government. By arranging loans for Yeltsin’s floundering administration in return for stakes in privatized industries, they profited directly from the fire sale of state assets.

Among the most prominent of these oligarchs, as they became known, were Boris Berezovsky, a mathematician turned media mogul; Mikhail Khodorkovsky, a former Komsomol activist who became the owner of the oil-and-gas giant Yukos; and Vladimir Gusinsky, a theater-academy graduate who leveraged his ties to Moscow’s elite to build a banking, real-estate, and media empire. While these businessmen rode around in bulletproof limousines and dropped $10,000 a bottle on champagne at ritzy new nightclubs, the rest of the country—already reeling from the Washington Consensus–inspired shock therapy that dismantled price controls, triggering hyperinflation—watched their savings vanish and sank deeper into poverty.

By the 1996 election, resentment of the Yeltsin circle’s insider deals was so great that the Communist Party, in disgrace five years earlier, staged a comeback that saw its candidate compete in a runoff with Yeltsin. Into this chaotic scene came Putin, a former KGB officer who joined the Yeltsin administration that year and became its security chief in 1998. In 1999, Putin was appointed prime minister; in 2000, after Yeltsin’s resignation, he was elected president.

The oligarchs had sponsored his rise as a dependable apparatchik who would instill order and protect their state-asset acquisitions. They misjudged him: Barely a month after his inauguration, Putin reversed the master-servant hierarchy. In June, Gusinsky was arrested on corruption charges and pressured into relinquishing control of his media holdings to the state-owned Gazprom in exchange for his release. Soon after, Berezovsky fled the country when confronted with similar tactics. Both men were accused of fraud and embezzlement. Russia’s top law-enforcement officer, the prosecutor general, is—like the attorney general in the United States—a presidential nominee. These prosecutions were widely seen as politically motivated.

Putin had sent a message: The oligarchs could keep their wealth as long as they obeyed his dictates and stayed out of politics. These moves met no resistance in the courts or from the Duma, Russia’s parliament. Instead, lawmakers immediately granted the president additional powers that enabled him to weaken Russian federalism—dismantling the autonomy that local elites had enjoyed under Yeltsin—and to centralize power in the Kremlin.

Superficially, Putin’s action looked like a renationalization of state assets. In practice, it was a wealth transfer to loyalists and security-service allies. This process culminated in the 2003 takeover of Yukos. Khodorkovsky, then the richest man in Russia and a notable backer of Western-style liberal democracy, was jailed. Yukos’s assets were first frozen and then sold off at auction. The main chunk went to the state-controlled Rosneft corporation, which was led by another former KGB officer, the Putin confidant Igor Sechin. Khodorkovsky’s lawyers faced retaliation for representing their client against the government prosecution.

With that, Putin had ended Russia’s brief experiment in liberalization. Now he set about reshaping the political architecture of post-Soviet Russia.

The horrific 2004 Beslan hostage crisis, when a school siege by Chechen separatists ended in a botched rescue by Russian forces and hundreds of civilian deaths, gave him his opportunity. Under the pretext of fighting terrorism, Putin abolished direct elections for provincial governors and installed Kremlin appointees. He used administrative means to suppress political opponents: Candidates seeking office faced burdensome signature requirements, registration denials, or disqualification on technicalities. Serious challengers such as Alexei Navalny faced trumped-up charges of embezzlement and fraud.

Putin also moved to crush Russia’s free press by revoking licenses for independent media, forcing ownership changes, and installing editorial teams that would stick to Kremlin-approved narratives. With a series of laws, Putin escalated measures against foreign NGOs, criminalizing their activity and cutting funding for human-rights work in Russia.

In a charade of compliance with presidential term limits, Putin stood down in 2008, serving as prime minister under his protégé, President Dmitry Medvedev. Exploiting a constitutional loophole that barred only consecutive terms, Putin returned to the presidency in 2012—and then secured an amendment in 2020 that reset his term count and will allow him to remain in office until 2036. After public demonstrations against election fraud in 2011 and 2012, his government imposed harsh penalties for “unauthorized protests”; today, even a single person with a placard violates the law.

The Russian Orthodox Church has been a major sponsor of Putin’s regime. The Church’s head since 2009 has been Patriarch Kirill, an ultra-wealthy oligarch in his own right, with a fortune estimated at $4 billion. Declaring Putin’s leadership “a miracle of God” in 2012, the patriarch has provided important ideological buttressing for Putin, reframing his neo-imperialist project as a metaphysical struggle against forces opposing the “Russian world” (a Völkisch concept encompassing any territory with a Russian-speaking population). Under Putin, Orthodox priests have become regular fixtures in schools, at official ceremonies such as rocket launches, and at the front in Ukraine.

Wrapped in the Russian flag and carrying an Orthodox cross, Putin has gone about making Russia great again—with the help of his obedient oligarchs. When Russia seized Crimea, in 2014, his closest allies took a cut of Ukrainian assets: Arkady Rotenberg, the president’s former judo partner, acquired confiscated land and was awarded a $3.6 billion contract to build the Crimea Bridge. By Putin’s fifth-term reelection last year, the business elite had little choice but to back his “special military operation” in Ukraine: The oligarchs’ collaboration successfully shielded them from U.S. and European sanctions, and the combined wealth of Russia’s 10 richest billionaires has grown since 2023. But there’s a catch: Even the oligarchs live in terror. Among the numerous Russian businessmen to have suffered a fatal fall from a window in recent years was Ravil Maganov , the chairman of Lukoil, after his company called for an end to the war in Ukraine.

[Read: Trump gets a taste of Putin’s tactics ]

Putin’s regime offers a stark illustration of how democratic institutions can be hollowed out. Some of Trump’s recent moves contain echoes of Kremlin strategy: canceling institutional checks in favor of loyalist appointments, attacking lawyers who work for opponents, demolishing independent agencies, feeding popular delusions of imperial greatness by threatening neighbors. The reforms of Musk’s DOGE outfit are set to shift public goods into private hands.

America is not Russia, and no billionaires are falling from windows here. The U.S. economy remains far more diverse and dynamic, and far larger, than Russia’s, but its competitive edge is already challenged by China, a threat that Trump’s tariff policy is unlikely to offset. America’s competitive advantages may start to erode under the new administration’s war on science and education. That already happened in Russia: Once a scientific and cultural powerhouse, the country is now a rigid petrostate. Over the past two decades, Russia’s scientific community has contracted by about 25 percent, thanks to declining educational standards and a brain drain of self-exiled talent.

An authoritarian oligarchy is not a pleasant place to live in. Ask my 88-year-old aunt, who was hit by a car in a provincial Russian town some years ago and can no longer leave her apartment because of the long-term injuries she sustained. After the case was investigated, she was pressured to withdraw her testimony because the driver was the son of a local official. That is how Putin’s “power vertical,” as Russian political parlance refers to his highly centralized, top-down authority, reaches into the lives of the little people. The oligarchy’s erosion of the rule of law trickles down, corroding public trust and ultimately leaving everyone—elites and ordinary citizens alike—at the mercy of arbitrary absolutism. The billionaire class now rallying behind Trump would do well to consider the implications of such a partnership.

For now, America still has a functioning electoral system, democratic institutions that have endured for centuries rather than decades, and a diverse, vibrant civil society. It also holds a vision of itself, enshrined in the Declaration of Independence, in which everyone has the right to pursue a fulfilling and self-determined life. But as Putin showed, constitutions can be amended or worked around; Trump is already musing about a third term. To follow Russia’s cynical path—whereby an all-powerful ruler feeds the masses false promises of greatness and keeps the oligarchs in line with favors and threats—would be to lose sight of that vision.

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Here Are the Places Where the Recession Has Already Begun

by | Apr 7, 2025 | The Atlantic

Last month, Nicholas Gilbert received a delivery of grain for the 1,400 cows he tends at his dairy farm in Potsdam, New York, 20 miles from the Ontario border. The feed came with a surprise tariff of $2,200 tacked on. “We have small margins,” he told me. “I had a contracted price on that grain delivered to my barn. It was supposed to be so much per ton. And they added that tariff right on top because it comes from a Canadian feed mill.”

Gilbert cannot increase the price of the milk he sells, which is set by the local co-op. He cannot feed his cows less food. He cannot buy feed from another supplier; there aren’t any nearby, and getting it from farther away would be more expensive. When he got the delivery, he stared at the tariff for a while. Shouldn’t his Canadian supplier have been responsible for paying it? “I’m not even sure it’s legal! We contracted for the price on delivery! If your price of fuel goes up or your truck breaks down, that’s not my problem! That’s what the contract’s for.”

But the tariff was legal, and it was Gilbert’s responsibility. The dairy farmer is one of tens of thousands of American business owners caught in a spiraling trade war, and lives in one area of the United States that might already be tipping into a recession because of it. Businesses near the Canadian border are particularly vulnerable to the rising costs and falling revenue caused by tariffs, and are delaying projects, holding off on hiring, raising prices, letting workers go, or wondering how they are going to keep feeding their cows as a result.

President Donald Trump kicked off his long-promised trade war by applying levies to steel, aluminum, and goods from China, Canada, and Mexico soon after he took office—insisting, incorrectly, that foreign companies would pay the tariffs and that American growth would surge. On Wednesday, he unleashed a global shock-and-awe campaign, announcing tariffs on every American trading partner.

[Rogé Karma: Trump’s most inexplicable decision yet ]

The measures are meant to counter foreign countries’ tariffs and trade barriers, Trump said. But the numbers announced have nothing to do with such policies, where they even exist. The White House set a minimum 10 percent levy on imports from around the world, and imposed higher rates on imports from more than 60 countries, territories, and trading blocs. The administration appears to have derived those higher rates by dividing the value of the country’s bilateral trade deficit with the United States by the value of its exports to the United States.

The tariffs are capricious, haphazard, and weird. The Trump administration took into account only trade in goods, not services. It slapped tariffs on countries with long-standing free-trade agreements with Washington, including Australia, South Korea, Israel, Panama, Singapore, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. It put tariffs on countries with a trade surplus with the United States. It implemented tariffs on remote, uninhabited islands . It implemented tariffs on a territory occupied predominantly by American and British soldiers.

The nonsensical policy will nevertheless have real effects. American consumer goods will get more expensive, with the average family paying an estimated $3,800 more a year for groceries, cars, clothing, furniture, and everything else if the tariff rates remain this high. Thousands of American firms, mostly small businesses, will go under. The United States risks collapsing into an astonishing voluntary recession, caused solely by a few powerful ideologues’ erroneous beliefs about trade.

If you want to understand where the American economy is heading, head to the border.

From Bellingham, Washington, to Calais, Maine, the United States has dozens of communities that are not so much linked to Canada’s economy as interwoven with it. Gas stations in these places rely on business from Canadian commuters. Ski resorts and water parks rely on Canadian tourists. Manufacturing firms rely on Canadian industrial inputs. Farms rely on Canadian feed. Hotels rely on Canadian business conferences.

[Annie Lowrey: Don’t invite a recession in ]

Contrary to Trump’s pronouncements, tariffs are paid by domestic importers, not foreign exporters. Most companies pass the cost increase on to consumers. Others, like Adon Farms, cannot. “We’re taking that right on the chin,” Gilbert told me, explaining that he would have to pay tariffs on the fertilizer and farm equipment he buys too. “We’re not like other businesses,” he told me. “We’re very slow moving. I can’t pivot at all.”

Manufacturing firms and construction companies near the border face the same quandaries as the costs of steel, aluminum, lumber, and machine parts rise. These firms can’t quickly relocate their operations or find new suppliers either. “We surveyed 40 of our manufacturing companies in the region,” Garry Douglas, of New York’s North Country Chamber of Commerce, told me. “One sources raw materials from Canada and is looking at a $16 million cost increase to their U.S. operation. Another company is a paper mill that sources wood pulp from Canada. It’s the one source of the type of wood they need.”

At the same time as it is raising costs for border businesses, Trump’s quixotic trade war with Canada is depressing revenue for these businesses too. Dan Kelleher runs a tourism-promotion agency in the Adirondacks. “We had a terrific January in terms of overall visitation,” he told me. “Our numbers were up 24 percent over the five-year average. And then February came.” The president kept referring to Canada as the “51st state,” and hit the United States’ closest ally with a 25 percent tariff. Spending on lodging dropped 4 percent in February, Kelleher told me, with retailers reporting a 20 percent decline in sales.

“We have a lot of cross-border events, particularly hockey tournaments,” Kelleher said. “The teams are locked in to come play, but when they come, they’re not spending any money here.” He worried about the summer tourist season, and more so about the relationship between residents of the Adirondacks and their neighbors across the border. “Our Canadian friends—they’re upset, they’re hurt, they’re betrayed.”

Ron Kurnik is a dual citizen who lives in Canada and commutes across the border to run Superior Coffee Roasting, a café and coffee distributor in Sault Ste. Marie, Michigan. “One of our premier labels is an espresso blend, which I aptly termed the friendly neighbors,” he told me. “We spell it both ways on the label, neighbors and neighbours. It’s been the centerpiece of our business, and our relationship with the residents of this area.”

[Rogé Karma: Trump’s tariffs are designed to backfire ]

Kurnik imports his coffee beans from Mexico and his coffee bags from China; both are more expensive, thanks to Trump’s levies. “With the added tax, we’re currently underwater on distribution,” he told me. With fewer Canadians crossing the Saint Marys River, sales at his café have dropped too. Superior Coffee Roasting has a “bit of a war chest,” in the form of profits from last year, Kurnik said. “That will probably, probably, get us through this year.” But he’s cut back on employee hours and laid one person off. “I’m trying to hold the line and not make too many big, consequential decisions,” he said. “If these things continue for six, eight months or beyond, it’s going to get bad.”

Residents of border towns see their shopping malls and greasy spoons half empty. They read stories in the local paper about rising construction costs and Candians detained at border crossings. They notice the lack of hiring signs. They hear about the trade war on the evening news. As a result, many are reducing their own spending in expectation of a downturn: putting off home repairs, delaying the purchase of a new car, canceling vacations, eating in instead of ordering out.

“It is definitely having a rippling effect, and it’s been immediate,” says Michael Cashman, the supervisor of the town of Plattsburgh, New York, 20 minutes south of the border. “These may seem like small trade restrictions in Washington. But they’re devastating for our region.” He told me he was “deeply concerned” about sales-tax revenue dropping. Plattsburgh is preparing to pull back on public spending “until there is more clarity in the forecast.” Of course, the town cutting its budget would worsen the downturn.

What is happening in Plattsburgh and Sault Ste. Marie is happening in rural Nebraska, Kentucky’s bourbon country, and Las Vegas too—in every community that relies on foreign tourists, foreign imports, foreign exports, and cross-border traffic. Now, Trump’s new policies have put the whole country at risk. I surveyed my inbox the morning after the president’s Liberation Day announcement, reading market analysts’ notes: a “self-inflicted economic catastrophe,” a “large headwind,” a “transformed outlook,” “unconditionally bad,” an “extended period of volatility,” a “historic shift,” “madness.”

In Michigan’s Upper Peninsula, Kurnik was penciling out numbers on Wednesday—when retailers might raise prices for a bag of beans, how much to slow down production—while Trump was preparing for his speech in the Rose Garden. “We can’t operate a business flying by the seat of our pants,” he told me. “The administration can organize itself in that fashion. But how do you realistically expect me to follow suit?”

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