Speaking to a forum of foreign businessmen and Duma leaders in March this year, former First Deputy Prime Minister Boris Nemtsov proposed a novel solution to the vexed question of how President Vladimir Putin should deal with Russia's oligarchs.

"Putin should collect all of the oligarchs in one room," Nemtsov suggested. "Then, he should look at them seriously and tell them in his meaningful low tone: ‘In the next six months, I want each of you to bring $100 million back into Russia and invest it in the country.'"

"That," Nemtsov suggested, "is the only way to deal with these people." But though the foreigners in the room cheered Nemtsov and his proposal as a way of improving Russia's investment climate, few worried of the legality and undertones of such methods. Even fewer expected something like this to happen given the clout of the moneyed elite in the country.

But now, state prosecutors, tax ministry officials and other law enforcement agencies have begun firing salvos at well-known Russian businessmen and raiding their companies.

A majority of the desperate Russian population will no doubt back the president to the hilt – having gained no stake in the new Russia. On the other side, the president will see an increasingly powerful coalition of businesses, journalists and intellectuals – both Russian and foreign – gather against him. The oligarchs will no doubt skillfully cloud the real issue – how they became billionaires overnight without having engaged in constructive enterprise or capital to start with – by first training their guns on the lower functionaries and then on the president himself.

Putin will not get much help from the troops he is using for this anti-oligarch campaign either. Most of the bureaucrats and prosecutors involved in the raids were up to their armpits in the wash of money that was the Russian privatization process. Others are simply incompetent and unable to carry the moral weight of their actions or defend them in a court of law.

There is a long precedent in this country for what is about to take place. Putin is imposing a new order – and who is to suffer will be decided arbitrarily, not by the law. A favored few will doubtless be left untouched, at least for some time. What is ominous about the campaign so far is not the targets, but those excluded from its grasp. Though it would be naive to expect everyone to be treated equally, it might be too early to predict any winners either. When the men in black coats come knocking in the middle of the night, no one can tell whose door might be next.

Unfortunately, Putin has opted not to invest patience and time in strengthening the judicial system. Instead, he is taking the easy and dictatorial option, using the security branches to extort money from big business through intimidation via summary jailing and personal criminal charges.

It is fair to assume that most oligarchs will find their wings clipped by the end of this. Most will have to either cough up hard cash or control of their fraudulently acquired assets. Others will simply get downgraded to the status of ordinary mortals.

However, we are also likely to see thousands of smaller businesses being raided, as bureaucrats – taking their cue from the Kremlin's larger raids – begin local extortion rackets. It will be the smaller people who suffer the long-term consequences of this short-term crackdown as crooked little functionaries run them out of business.

At the same time, it is difficult not to give a small cheer at the current crackdown – the intentions are no doubt reasonably good – and watching crooks like Vladimir Potanin squirming is a true pleasure.

The oligarchs must be hoping the public will buy their scare campaign, which will likely suggest a Chekist dictatorship and a pending return to Russia's dark past – hoping to rally people against the president.

From now on, a jury will have to sit in judgment every day on how far the arm of the state should be allowed to go while the unacceptable status quo is overturned.

But just as Nemtsov's baravado ran out of steam and he ran to the president last week suggesting a roundtable with business, the omens are that the banditry and anarchy of the last few years is about to be replaced by the dictatorship of an apparatchik, a none too pleasant prospect either.

The future of Russian people is now perfectly balanced between a rock and a hard place.