The Merchants of War: Russia’s Oligarchs and the Economics of Conflict

By Matthew Parish, Associate Editor

Friday 12 June 2026

One of the more striking features of modern Russia is the extent to which war has become not merely a geopolitical instrument but also an economic system. Throughout history wars have created winners as well as losers. While soldiers die, civilians suffer and states exhaust themselves in military campaigns, there are often individuals who accumulate extraordinary fortunes from the machinery of conflict. Contemporary Russia is no exception.

The Russian invasion of Ukraine has devastated entire regions, displaced millions of people and consumed an immense quantity of military hardware. Yet amidst the destruction, a number of Russia’s wealthiest businessmen have found new opportunities for profit. This is not because they are necessarily directing military strategy or shaping Kremlin policy. Instead it is because the modern Russian economy has become increasingly organised around the requirements of war.

The phenomenon is not unique to Russia. The United States witnessed the rise of powerful industrial fortunes during the Second World War. Britain’s industrialists profited from wartime production during both world wars. Germany’s largest companies expanded dramatically through military contracts under the Third Reich. Whenever governments spend enormous sums on armaments, logistics and industrial mobilisation, private actors positioned close to the flow of public money tend to prosper.

Russia’s system however has a distinctive character. The country’s oligarchic class emerged from the chaotic privatisations of the 1990s. Vast industrial assets that once belonged to the Soviet state were transferred into private hands, often under circumstances that remain controversial today. Over time, political loyalty became inseparable from economic success. Those who aligned themselves with the Kremlin prospered. Those who challenged it frequently lost their assets, their freedom or both.

The war economy has intensified this relationship. Defence manufacturers have received enormous state orders. Steel producers, chemical companies, electronics suppliers, logistics firms and energy enterprises have all found themselves integrated into the needs of military production. Factories that once struggled with declining demand have received new contracts. Regions dependent upon industrial employment have experienced temporary economic revivals fuelled by government spending.

At first glance this may appear paradoxical. Western sanctions were intended to weaken Russia’s economic capacity and restrict the resources available for war. Yet sanctions also contributed to a process of economic consolidation. Foreign competitors withdrew. Domestic producers received protection from international competition. Government procurement expanded dramatically. Companies able to navigate the sanctioned environment often found themselves enjoying greater market power than before.

Some Russian billionaires have undoubtedly suffered losses. Luxury assets abroad have been seized. International business opportunities have diminished. Access to western financial markets has become restricted. Nevertheless other members of Russia’s economic elite have adapted rapidly. For firms embedded within domestic supply chains serving military requirements, the war has generated substantial revenues.

This creates a troubling political dynamic. When influential economic actors become dependent upon military expenditure, peace can appear economically threatening. Factories producing ammunition, drones, armoured vehicles and military communications equipment naturally prefer continuing orders to declining demand. Workers employed in those industries depend upon their wages. Regional governors welcome the tax revenues and employment statistics that accompany industrial activity.

No serious observer would suggest that Russian oligarchs alone determine Kremlin policy. The Russian state remains highly centralised around presidential authority. Strategic decisions concerning war and peace are ultimately political. Yet economic interests create constituencies that benefit from continuation of the conflict. As wars become prolonged, entire networks of suppliers, contractors and financiers emerge whose prosperity becomes linked to military spending.

There is a broader historical lesson here. War economies frequently create distortions that persist long after hostilities end. The military-industrial structures developed during conflict acquire political influence. They lobby for continued spending. They resist demobilisation. They seek new markets and new justifications for their existence. What begins as an emergency response can become a permanent feature of economic life.

Russia faces precisely this challenge. The longer the war continues, the more resources become committed to military production rather than productive civilian investment. Human capital is consumed on the battlefield rather than employed in innovation. Scientific talent is directed towards weapons systems rather than commercial technologies. Economic growth increasingly depends upon state expenditure rather than entrepreneurial creativity.

For individual oligarchs, war may offer opportunities for enrichment. For Russia as a nation however, the picture is far less encouraging. Wealth generated through military procurement is not the same as wealth generated through productive economic development. A factory producing missiles contributes to national power, but it does not improve living standards in the same way as a factory producing consumer goods, medical equipment or advanced commercial technology.

History suggests that societies built around permanent militarisation ultimately pay a heavy price. The Soviet Union itself devoted enormous resources to defence while neglecting much of its civilian economy. Its military capabilities were formidable, but its economic foundations proved unsustainable. Contemporary Russia risks repeating aspects of that experience.

The tragedy is that while a small number of individuals may become wealthier from war, the broader costs are borne by society as a whole. The dead do not profit. The wounded do not profit. Families separated by mobilisation do not profit. Nor do future generations who inherit the economic consequences of prolonged conflict.

The fortunes accumulated during wartime may appear impressive on balance sheets and in financial reports. Yet history tends to judge societies not by the wealth of those who supplied the weapons, but by whether the war itself ultimately advanced the interests of the nation. On that measure, the profits of Russia’s oligarchs may prove to be among the least important statistics of all.