Dark Side
The Demand for Political Will
By Mikhail Delyagin, Russia Profile 30/4/08
May 1, 2008 - 1:45:46 PM

Over the last few years, the feeling has grown stronger that it is corruption, and not some unintelligible “sovereign democracy,” that has become the true foundation of Russia’s political system. The first assistant of Russia’s Prosecutor General, Alexander Buksman, claims that “the total revenue of the corruption market is comparable with the federal budget,” exceeding $240 billion.

During a staff meeting at the Prosecutor General’s office in February, Prime Minister Viktor Zubkov said: “At the same checkpoints at our western borders, it takes our colleagues 6 minutes to let a car through, while it takes us 6 hours. The situation with processing cargos in our ports is similar. Officers there can hold containers for days at a time, refusing to release them until offered bribes. If this is the way things are, how can we talk about any kind of growth and development of our businesses?”

At the same time, the growing level of corruption has nearly paralyzed the state: more and more often, officials simply refuse to do their jobs even after they are bribed because if, instead, multiple bribes follow one other quickly enough, the corrupt officials’ financial prosperity is guaranteed. As a result, instead of working 8 hour shifts, they would need to work for only an hour, which also, consequently, decreases the amount of work they actually get done.

Quality versus quantity

The main problem, however, is the quality of corruption: the majority of state decisions, even strategic ones, are made for reasons of corruption, not for substantial ones. The creation of non-transparent state corporations creates the impression that it is corruption, not modernization, which is being deliberately stimulated.

Russian society is extremely upset by the state’s venality. The Corruption Perceptions Index calculated by Transparency International in 2007 places Russia in 143rd place out of 180, next to Gambia, Indonesia and Togo. The Levada Center estimates that 55 percent of Russians are convinced that the activity of the country’s political leaders is mainly aimed at securing the politicians’ personal interests. Venality is one of the main complaints aimed at the government (the fourth most often mentioned, after the government’s inability to stop the growth of prices, to provide social protection, and to provide employment opportunities).

Corruption stimulates theft

One of the qualitatively new factors of social and economic development over the last several years is the moral degradation of Russia’s management and work force. A deficit of professionals appeared in the fall of 1998, and, since then, it has only become more poignant. In many professions, the last skilled experts die without leaving behind any successors to pick up their work.

The education system, affected by corruption and degraded to a state of a simple extortion mechanism for parents of high school graduates, mass produces not specialists, but unemployed people convinced of their own singularity, whose capability to learn has been completely destroyed. In these circumstances, people who have preserved their motivation and professional skills realize their uniqueness, and, in the best case, dictate their own “game rules” to potential employers, and in some cases are outright negligent toward their work.

On the other hand, the general belief that every businessman is a thief, cultivated by liberal reforms (incited by official propaganda connected with the “YUKOS case”), has been strengthened by open and obvious corruption on the part of the bureaucracy. And it has grown into a general tolerance for theft.

It is very typical that the so-called “Kuchins Report,” which became a sensation because of its scenario for the consequences of Putin’s murder, did not spur any emotion in Russia by mentioning the “multi-billion embezzlements” by mayors Yuri Luzhkov of Moscow and Valentina Matvienko of St. Petersburg. Russian society has practically stopped condemning thieves according to the classic formula: “a bureaucrat’s work is such that he is forced to steal.”

At the same time, there is no doubt that it is not shameful to steal from a thief. Indeed, labor motivation has depreciated—to work honestly in an era of universal mass theft and corruption is not only ridiculous, but also simply shameful. Managers of large corporations instinctively imitate the state, and do not treat the owners of their companies any better than do the representatives of the reigning bureaucracy. As a result, over the last few years, the total amount of intra-corporate theft increased two to threefold.

Experts estimate that for some companies in the field of transportation, for example, on account of a priori unpunished theft, financial losses (especially near export ports) amount to three percent of the turnover. As a rule, it is useless to count on the help of the law enforcement authorities. Making a manager who has embezzled less than $20,000 legally liable will often cost more to the plaintiff due to the decay and venality of the court system.

Blunt impunity creates an additional stimulating effect. Russia has never seen such mass and omnipresent theft as it has in the last three to four years, and it keeps increasing, becoming a real threat to production and often to the lives of businessmen. A “kickback” has become the norm—no deal is imagined possible without it; the situation has reached a point where the “kickback habit” is the main obstacle for the development of an economic relationship between Russia and Belarus, where rather strict mechanisms of financial control exist. Corruption has become a way of life, a mass culture, and the state makes no systemic attempts to fight it.

Necessary measures

Judging by more successful countries, corruption is held in check by a free economy, a developed civil society and a transparent state. This problem is not unique to Russia. A systemic fight against corruption and organized crime in the United States started only in the late 1960s, when the American political elite recognized the mafia as its true rival for political power in the country. The response was the passing of the RICO Act, which regulated the rights of law enforcement representatives, including when they infiltrate a criminal society. These laws introduced the practice of confiscating all assets of organized crime members refusing to cooperate with the investigators.

A common strategy for the United States and Italy was distributing the responsibility between the bribe-taker and the briber. This decision was based on the fact that it is the official who sets the “playing rules,” and the businessman is often faced with a choice between giving up his business and giving a bribe. This is why a briber who cooperated with the investigation could retain not only his freedom, but also his good name; whereas toward the officials, the law was ruthless. Russians are shocked by the dismissal of high-ranking officials for accepting inexpensive gifts (an official in the United States is allowed to keep a gift that costs no more than $50), for taking private rides in an official car or making private phone calls from an official cell phone.

The impression of extreme cynicism is made by the thesis popularized by the state: Russian citizens are to blame for the corruption because they give bribes. And if they stop bribing, corruption will just disappear on its own. At the same time, representatives of the state principally ignore the systematic extortion on the part of ruling bureaucracy representatives, as well as the presence of extensive scopes of activities that are simply impossible without paying different types of bribes.

Measures that would be able to significantly cut down corruption are simple and widely known. The problem is that the state’s leaders do not really wish to curb it, as opposed to simply making nice speeches.

Change for the better

The situation is not completely hopeless. In 2007, some significant changes took place at the front of the war against corruption. Even if the drastic increase in the number of convicted and arrested corrupt officials (mostly middle-level) is a consequence of the struggle to redistribute the corruption markets, many businessmen note significant systemic changes for the better.

First of all, in 2007 regional law enforcement authorities (the Ministry of Internal Affairs, the Prosecutor’s offices and, in some regions, even the tax revenue bodies) lost their dependence on the governors. Before, the latter used to feel like absolute masters of the regions and did whatever they pleased; now they are starting to be afraid, because each agency can set out to get them and remain unpunished.

Institutional reforms were carried out earlier, but the psychological turning point came in 2007, often tied to the fact that elected governors were replaced with ones appointed by the federal center. Criminal proceedings have been initiated against the governors’ protégés, thus creating additional instruments of influencing the governors. The governors, however, remain untouched.

A system of “checks and balances” has been created in the regions, which allows business to develop, since the elimination of the governors’ monopoly over power has given entrepreneurs the opportunity to complain to one government body about the arbitrariness of another. Fragmentation of regional law enforcement bodies creates an objective need for a court that would be independent from all of them (although it can still be dependent on the President’s Administration) as an organ of balancing different corporate and administrative interests.

Another change in the practice of fighting corruption is connected with the functions of the Courts of Appeal. Now, cases of “disputes of economic operators” are not handled in the same region where they were heard by a court of first instance—they are transferred to a different region, and sometimes even to a different federal district. As a result, the existing link between the courts of the first and second instances is getting destroyed.

Finally, for the first time since the beginning of Putin’s reign, law enforcement authorities in a number of regions lost the opportunity to help their friends and colleagues who are caught in some improper action to avoid criminal prosecution. This is not a turning point yet, but a timid manifestation of a qualitatively new tendency.

A smokescreen for a clan war

Lately, Russia has ratified a number of serious international documents aimed at fighting corruption. These documents presuppose that formalized anti-corruption procedures will be carried out and that the country agrees to international control and monitoring, guaranteeing grand scandals in the absence of a real war against corruption. These documents taking effect now objectively puts the new President Dmitry Medvedev at a crossroads.

On the one hand, if Russia simply and honestly meets its international obligations, it might not extirpate, but will definitely undermine corruption, and thus will not only improve the condition of the state, but also increase the competitive capacity of Russia’s economy. This complies with the public statements of the president-elect, with his references to the necessity of developing a national plan of standing up to corruption and of developing anti-corruption laws that are absent in Russia today.

However, it is obvious that from the political point of view, the start of a real war against corruption will be extremely dangerous for Medvedev. In case the new president will not have enough courage to wage an annihilating war against the powerful bureaucratic clans that form the very tissue of the modern Russian state and provide the necessary support for it, there is a second path–comfortable for him and mortally dangerous for the country.

In the circumstances of a conflict between two hostile clans (the so-called “liberals” and “law enforcement bosses”), it will be very easy for the new president to use Russia’s anti-corruption obligations as a weapon against the “law enforcement” clan, building upon the existing notion that they are the ones predominantly associated with corruption.

The inevitable crude and clumsy resistance of the “law enforcement bosses” to the process of “anti-corruption dispossession” will only make the “war against corruption” more lively and credible, while the West’s sympathies, clearly on the side of the allied “liberal fundamentalists” and aimed against its rival “power oligarchs,” will guarantee a victory for the “liberals.”

However, corruption will remain a systemic phenomenon, as it has been throughout the 1990s, because today it is attributable to both clans. The strategic objective of Russia’s development in the next year is not to replace the war against corruption with a war against corrupt officials