Bureaucrats Stamping <i> Nyet</i> on Russia Reforms

By CAREY GOLDBERG

Aug. 22, 1994 12 AM PT

TIMES STAFF WRITER

ULYANOVSK, Russia —

“What beasts our civil servants are!”

--Nikolai Gogol, “Diary of a Madman”

In this birthplace of V. I. Lenin, the most noxious reminder of the Communist past is not the giant bald statue still towering above the Volga River, or the ration coupons still doled out for meat and butter. It is the fact that many people still live in fear.

They don’t fear the KGB, they don’t fear the Communist Party; those days are truly gone. They fear their own local leaders, the men who hold livelihoods in their hands, and the petty officials with rubber stamps and metal seals who do their bidding.

“In essence, we live under an overblown form of bureaucracy,” an Ulyanovsk businessman said. “This power is still extremely strong; it still has the ability to repress and control.”

Then he asked that his name not be used, for fear his business would suffer.

As if the entire country didn’t recognize the phenomenon he was describing at its most extreme. As if the president himself had not recently growled publicly about “nasty little officials.” In the old Soviet Union, the Communist Party controlled nearly everything, and “the apparatus” carried out its orders. In the new Russia, the ideological component is gone, but the overweening power of officialdom remains, embodied in the bureaucratic obstacle course that even the simplest of transactions can often still entail, and in the nearly unchecked power of local bosses.

Where else does a woman need a note from a gynecologist confirming her feminine health to get a driver’s license? Where else does the recipient of an overseas parcel end up standing in 16 different lines at the airport customs office to pick it up?

It is a more subtle affliction, this bureaucratic yoke, than the old monolithic Communist tyranny, but it is one of the main reasons--in addition to the generalized lawlessness and old habits of thought--why it will take Russia so very long to make its new society run Western-style. If it ever does.

“We have a very strong bureaucracy and a weak state,” author Alexander I. Solzhenitsyn concluded recently after a two-month odyssey across Russia.

Solzhenitsyn would have particularly noticed officialdom’s might in the backwaters he passed through. The Kremlin may proclaim privatization and free trade and land reform, but if it then takes years to implement those decrees, it is because greater power than ever lies in the hands of officials “in the places,” as Russians refer to their far-flung provinces.

“On the local level, there is dictatorship,” said Nikolai Povtarev, former head of the regional council in Ulyanovsk. “If a person suddenly takes a different position, and, say, he’s the director of an enterprise, suddenly he’s being checked by the fire inspectors, by the tax inspectors, construction is frozen and so on.”

If, during the perestroika era, the bureaucracy was blamed for “braking” Mikhail S. Gorbachev’s reforms, now it is reviled for pursuing its own venal interests rather than advancing Russia’s transition to a civilized free-market system. In the popular perception, it is slowly giving up its death grip on state property only in exchange for a river of bribes.

The main difference between the old bureaucracy and the new, said Alexei Golovkov, former chief of the Russian government apparatus, is that now, along with the simple pleasure of power, bureaucrats have a tremendous new incentive to keep procedures tangled and difficult: money.

“A class of people have appeared who are ready to pay for everything,” Golovkov said, “and if, before, a bureaucrat had a few little privileges, now a normal bureaucrat can afford 10 times more than he did 10 years ago.”

The great challenge of painstakingly building a normal civil society, one in which people know and defend their rights, hinges in part on whether Russian democracy can stamp out the trait known as proizvol --arbitrariness, rogue power, clout wielded irresponsibly.

Rooted deep in Russian life, official proizvol is perhaps best depicted in literature by the 19th-Century tragicomic genius Nikolai Gogol. In his classic story “The Overcoat,” a timid clerk named Akaky Akakievich is given such a merciless dressing-down by an “Important Person” that the trauma, coupled with the loss of his overcoat, kills him.

“Where do you think you are?” the Important Person demands of Akakievich. “Don’t you know how things are conducted here? It’s high time you knew that first of all your application must be handed in at the main office, then taken to the chief clerk, then to the departmental director, then to my secretary, who then submits it to me for consideration. . . .”

Soviet founder Lenin ran into what is ironically referred to here as “the deathless bureaucracy” when he returned to work after a four-month illness and found that his 16 government committees had metamorphosed into 120.

And President Boris N. Yeltsin has run up against a similar phenomenon. He has repeatedly demanded cuts in the government staff and publicly berated his administration chief, Vladimir Kvasov, but to little avail. The newspaper Kuranty disclosed this month that the Russian government is actually supporting an administrative machine that costs proportionately half again as much as its Soviet counterpart.

No one gives up power voluntarily, Ernst Cherny notes in the Kuranty article, which carries the headline, “The Official Can Devour Russia.”

In Ulyanovsk, an aviation and agricultural region renowned as possibly the most Old Guard bastion in Russia, no one seems to give up power at all.

Local journalists and officials cite a game of political musical chairs that results in a permanent stasis: The former head of the regional Communist Party is now the regional governor; the city Communist Party head is now a deputy governor; a former second secretary of the city party now heads Ulyanovsk’s biggest commercial bank; former ideology chieftains now handle the region’s foreign economic ties (what few there are) and its pension fund.

“After the 1991 coup there was such euphoria that now there would be a new life,” said Alexander Kuznetsov, editor of Skify, or Scythians, a business newspaper. “Nothing of the kind. The bureaucrats all act as they did. Only the ideological character is different; what was under an ideological cover before--Lenin, the party--is now revealed as pure power, pure officialdom.

“In the last 10 years, the country has changed phenomenally,” he added. “But as for bureaucratic principles and orders, they don’t change as fast as many would like.”

Especially in Ulyanovsk.

Like the old Soviet Union, Ulyanovsk, home to 1.5 million people, is still a place where you feel as if just about anything can happen to you.

Entrepreneur Oleg Berlent got the best restaurant in town up and running, doing all the renovation and investment to make the Registan a luxurious watering hole the likes of which Ulyanovsk had never seen.

And may never see again. As local journalists and politicians tell it, Berlent somehow got on the wrong side of the Ulyanovsk administration and was informed that his restaurant would have to be turned over to the local police station to be used in an expansion of its detention cells.

A similar fate befell many of the city’s kiosk owners, who were suddenly informed last spring that they would have to relinquish their licensed spots at the center of town or close down. And vendors at Ulyanovsk’s main “Thing Market”--a flea-market-like institution common to most Russian cities--were abruptly moved to a remote spot near the airport.

Then there were the entrepreneurs who shipped 8 million rubles--about $4,000--worth of candy and cookies from a neighboring region, only to be told they would have to pay 2 million rubles for an Ulyanovsk “certificate of quality.” They ultimately avoided the certificate, but it required a month of running from official to official.

The examples go on and on. The victims of proizvol are not totally without recourse. They can appeal to a new system of arbitration courts; they can sue; they can bribe. In the extreme, they can try to get help from Moscow reform chiefs, and sometimes the Kremlin will intervene, as it did when it leaned on recalcitrant Ulyanovsk leaders to privatize more shops and enterprises.

But Moscow is far away, and the real power in Ulyanovsk is Yuri Goryachev, the backward-looking governor who still believes universal ration coupons are the best defense for the poor and still makes whistle-stop tours of farm towns like the Communist chiefs of old.

When Georgy Stupnikov, Yeltsin’s official representative in Ulyanovsk, calls Goryachev on their special government line, Goryachev often just hangs up when he hears Stupnikov’s voice, Stupnikov said. So much for Moscow.

Despite repeated requests, neither Goryachev nor several top Ulyanovsk officials would agree to even a brief interview with The Times. So much for America.

Still, it would be unfair to say Goryachev and the Ulyanovsk apparatus resist reform full force.

Their attitude, said Kuznetsov of Skify, is: “Go ahead, own something, but you should know that if I decide I don’t like it, I’ll close you down with a decree or a resolution or taxes or some other way.”

Sitting in his modest office, Kuznetsov, a sizable, mop-headed man with a friendly, bespectacled look, mused aloud: “If they shut us down tomorrow . . . “

“We’d be sad, but we wouldn’t make a fuss,” finished his general director, Nikolai Frolov.

“We’d look for something else to open. . . ,” Kuznetsov said. Like the kiosk owners, they would not go to court because local officials could always find some violation of tax laws or the building code or some other excuse to justify the closing.

Kuznetsov and Frolov, though they are natural entrepreneurs, have a long way to go before they can fit Yeltsin’s vision of a Russia composed of “a million owners, instead of a few millionaires.”

An even more disturbing product of Ulyanovsk bureaucracy is Sergei Kruglov, who runs a small commercial store in the center of town. The store is a hole-in-the-wall, with the usual shoddy mix of shoes and radios and doodads, and Kruglov does not plan to fix it up or expand it because he cannot own the space it occupies. He can only lease it.

“I invest money, and tomorrow they say, ‘It’s not yours,’ ” he said as a saleswoman looked on disapprovingly and hinted at the trouble he could get into for speaking out. “Why should I invest? Even if they give you something for 20 years, they can take it away.”

A year ago, Kruglov had started up a similar small store in a medical clinic, stocking it and investing about $300--then the equivalent of six months’ salary. After two months, a decree came out prohibiting shops in “social and cultural buildings” such as clinics, and he was kicked out with no compensation.

He could have fought the officials who did it, he said, “but that means you go here, you go there, you may find the truth, but you’ll lose your health.”

Without basic security regarding what they own, it is hard to expect Russians to invest the work and money needed to make things better. And investment is what economists say Russia now needs most.

The solution, Russian politicians hope, is a new civil code that will finally regulate most commercial transactions and contracts, giving citizens a better idea of what rights they can brandish when they face overbearing bureaucrats.

“The main principles of the sacrosanct nature of private property are reinforced in the civil code,” said Sergei Alexeyev, one of its authors and main advocates.

Of course, there are plenty of pretty rights codified in Russia’s new constitution, passed last December, but that charter has proved of little help in Ulyanovsk.

Ultimately, believes former Russian government administration chief Golovkov, what will change the bureaucrats of Ulyanovsk--and their counterparts around the country--is the dawning realization that by maintaining too tight a grip, they are only hurting themselves.

In a year or two, he said, Ulyanovsk bureaucrats will look at the prosperity of their progressive counterparts in Nizhny Novgorod or Chuvashia and understand that when business is allowed to flourish, the entire region can prosper with it. “And then they’ll face a choice,” Golovkov said: “to live as they are or to live like their neighbors.”

That may be questionable, however; former council chairman Povtarev said that many Ulyanovsk officials are creating “state commercial structures” that let them use the local government’s virtual monopoly on trade, commerce and property to turn healthy profits for themselves. Many bureaucrats also openly charge exorbitant rates to give permits or licenses in a reasonable amount of time.

“I ask them, ‘Tell me one thing: What jurisdiction are you, state or private?’ ” Povtarev said. “ ‘If you’re commercial, why do you have governmental functions?’

“The apparatus is becoming an owner,” he said.

Golovkov noted that Parliament is also beginning to pass laws that take effect rather than act as declarations that need follow-up rulings by ministries and local administrations--the spaces between the lines that allow for proizvol --to come into force.

But chipping away at the bureaucratic empire takes time--months, even years. Povtarev compared officialdom to a hydra; others call it a swamp or a virus.

The activists of Ulyanovsk’s Anti-Bureaucratic Center, a small group of former anti-Communists who remain a focus of the weak anti-Goryachev opposition, rejoice that the Communist Party is more or less dead but see officialdom as the great remaining block to freedom.

“Especially in Ulyanovsk, with our mentality, officials will be ruling for a long, long time,” history professor Vladimir Zerkalov said. “That it’s accomplished its first task is a start, but I won’t live to see the day that the Anti-Bureaucratic Center can be dissolved.”

NEXT: How Russians are slowly mustering the independence of mind that is the key to real self-rule.

Opening a Company, Russian-Style

Opening a bicycles business in Russia can mean going through a bureaucratic maze than can take entrepreneurs a month to five months to complete. Here are the steps involved in starting a business:

1) GATHER NECESSARY DOCUMENTS

Protocol Sobraniya (meeting protocol): The document confirming intention to start a company. It includes a list, complete with addresses, of directors and general director of the company.

Ustav (charter): The document specifying what your firm will do. It’s very lax: A limited liability company can sell bananas or build missiles.

Financial Statement: A letter stating, among other things, that the firm has raised at least half of its founding capital. Separate documents are needed to certify that all applicable dues and charges have been paid.

Landlord guaranty letters: Three original letters from the landlord where the company will maintain its legal address. Also, the landlord must provide written proof of the right to lease the premises. Landlords often charge substantial fees for providing these documents, and there is sometimes more than one person claiming the right to lease premises.

2) GET TEMPORARY REGISTRATION

An application for must be filled out at the Registration Chamber of the administrative region.

An official will give the application and other required documents to a lawyer who works at the Registration Chamber. The lawyer informs the applicant what mistakes have been made in the documents.

If an error is found, a new set of documents must be made.

The documents are brought back to the chamber and a small fee is paid for a temporary registration.

About a week later, the Registration Chamber issues a card officially proclaiming the temporary registration. The applicant now has 30 days to complete the registration process.

3) GO TO POLICE

Permission from the local police is needed to obtain an official stamp. No document in Russia is considered legitimate without a stamp.

4) GET REGISTRATION NUMBER

The State Statistics Committee will issue a “code,” which is like an official registration number of your company. They put your code in a computer containing the numbers of all firms.

5) GET STAMP

With permission papers from the police, a printing company will agree to make the company’s stamp. It will take about a week to make the stamp.

6) NOTARIZE SIGNATURE CARD

To open a bank account, a signature card is needed with the signatures of all co-founders attested to by a notary public.

7) OPEN BANK ACCOUNT

Choose a bank and open an account.Some banks will not open an account without proof of a tax registration (see step 9).

8) REGISTER WITH PENSION FUND

The company must be registered with a pension fund and be given a document attesting to the fact that you registered.

9) REGISTER WITH TAX AUTHORITIES

To avoid tax evasion, Russia requires that all businesses register with the Tax Inspectorate. Also, some banks will not let you open an account without proof of tax registration.

If steps 3-9 are not completed in 30 days, the temporary registration expires and the company will have to go through the process again.

10) GET PERMANENT REGISTRATION

All accumulated stamps and documents must be taken back to the local Registration Chamber, where they are examined. If everything is in order, the company is issued a permanent registration certificate.

Congratulations. You can now sell bicycles.

Researched by STEVEN GUTTERMAN and BETH KNOBEL / Times Moscow Bureau

A Driver’s Ultimate Tuneup

Russian drivers ought to be the world’s healthiest. Before taking a driver’s license exam, they must get approval from several doctors.

Psychologist must assert that applicant is in good mental health.

Gynecologist test women for sexually transmitted diseases (no tests for men).

Physical therapist checks the applicant’s reflexes.

Eye doctor checks applicant’s vision.

Other doctors must:

Testify that applicant is not a drug addict

Give a diphtheria vaccination

Give a chest X-ray