"At least for Alfa, we don't feel ourselves as powerful, as influential and as strongly in the center of events as Mr. Berezovsky was trying to show," said Aven, who served as foreign trade minister in the early 1990s under acting Prime Minister Yegor T. Gaidar.
Nevertheless, the appellation oligarch stuck and redefined the public understanding of the relationship between the government and Russia's new tycoons.
Often likened to the U.S. robber barons of a century ago, the group of seven were survivors of the Soviet system. Some, such as Potanin and Khodorkovsky, were Young Communist leaders who were able to capitalize on connections when the Soviet Union collapsed. At the other extreme was Smolensky, a typesetter who rebelled against restrictions on earning money and was arrested by the KGB for helping print Bibles on the side.
Berezovsky, a math professor who made his fortune by taking over the sale of Russian-made Lada cars, later acquired holdings in oil, banking, television and Aeroflot airlines. At one point, he was worth an estimated $3 billion.
After losing his Security Council post a year ago, Berezovsky was appointed executive secretary of the Commonwealth of Independent States, the loose association of 12 nations that were once part of the Soviet Union.
Berezovsky has developed such close ties with Yeltsin's family that he has been called "a modern Rasputin" after the mystical monk whose hold on the family of Czar Nicholas II helped bring down the Romanov dynasty.
"Of the old oligarchs, only Berezovsky is influential now," said Vyacheslav Nikonov, president of the Politika Fund think tank. "Not because he's a financial tycoon, but because he's a perfect political manipulator close to the family of the president."
Various analysts say government officials also belong to the elite group, including two who helped create the system of oligarchy: former Prime Minister Viktor S. Chernomyrdin, reputedly worth billions as a former manager of energy giant Gazprom; and Anatoly B. Chubais, who headed the privatization program, managed Yeltsin's 1996 campaign and is now chief executive of Unified Energy Systems, an electricity monopoly.
In fact, some say it was government officials, including Chernomyrdin and Chubais, who anointed each of the oligarchs and helped them rise to power as Russia distributed the spoils of the Communist system.
The first stage in the oligarchs' rapid accumulation of wealth wasthe acquisition of money through currency trading. Entrepreneurs bought rubles at cheap rates and sold them in other regions of Russia where they were valued higher.
This helped them prepare for the first round of privatization in the early 1990s. Under this program, every citizen received a voucher for a share of government property. While the plan had an egalitarian appearance, most people had little idea what to do with the vouchers. Enterprising companies sprang up to buy the seemingly worthless pieces of paper, sometimes for as little as a bottle of vodka. Later, businesspeople showed up at government auctions with suitcases full of vouchers and bought property and enterprises at low prices.
Banks Established to Finance Empires
The more successful businesspeople set up banks to handle transfers of money to finance their growing empires. The best-connected banks won the exclusive right to handle the accounts of certain government agencies. Departments such as the State Tax Service or the State Customs Committee would deposit billions of rubles in their accounts, which the lucky banks could use for months at a time as interest-free loans to acquire more government assets.
"By holding budget money for some time, you can become quite rich," Nikonov said.
By 1995, the banks were well-established and the government was short of cash. Potanin, whose Uneximbank had the lucrative customs agency account, proposed to the Cabinet that Russian banks lend the government money in exchange for shares in government enterprises not yet privatized. Under the plan, the government would later have the option of recovering the shares by paying back the loans.
Chernomyrdin's government agreed. Through government auctions widely regarded as rigged, Potanin won controlling shares in two of Russia's biggest companies, Norilsk Nickel, a metal producer, and Sidanko, the country's fifth-largest oil company, at greatly discounted prices. Others in the group of seven also acquired shares in major companies for a song.
By September 1996, the Cabinet was due to decide whether to pay the loans back and reclaim control of the companies. Two months earlier, Yeltsin had won reelection with the tycoons' help. One of their rewards was the appointment of Potanin as first deputy prime minister in charge of finances, economics and state property.
Days after Potanin took office, the government decided to forgo repayment of the loans and let the banks keep the company shares. Six months later, Potanin left the Cabinet.