The Germ of Post-Soviet Russia Is Corruption

Graft, corruption and bribery have been excused throughout this country’s painful post-communist convalescence as unavoidable but short-lived moral compromises on the road to a better Russia.

But a decade into the transformation, it is becoming clearer by the day that epidemic corruption is not a fleeting ailment. More and more, it is looking like an enduring framework for doing business.

Today’s bribe-taking, favor-trading cronyism is not the flawed prototype of an emerging democracy but the bedrock of a criminal society that calls itself the New Russia.

As the economy staggers from crisis to crisis and the Kremlin leadership rotates figureheads like board-game pieces, those Russians who have managed to grab a share of this country’s considerable natural bounty are increasingly concluding that crooked capitalism is here to stay.

Yet while the government agencies that control every license and liberty may seem impervious to reform, the roadblocks they throw in the way of private enterprise are not necessarily insurmountable. Ordinary Russians, long accustomed to cutting corners, now routinely break laws and shirk taxes to help their business endeavors survive.

As a result, the economy and government of the New Russia lack any concept of the common good, an ingredient that the architects of democracy elsewhere would argue is essential for any sound society.

From the booming port of Vladivostok on the Sea of Japan to Kaliningrad on the Baltic coast, nine time zones to the West, Russians busily making new lives for themselves are wasting little time on legal, moral and ethical considerations. And such indifference exacts a toll.

Already, Russians exude a resigned tolerance of widespread thievery, the result of centuries of property deprivation. Even in czarist times, land and resources were in the hands of a greedy aristocracy. In the communist era, everything belonged to no one--and thus everything, then as now, was up for grabs.

Inured to that culture of theft and stripped of any surviving social values by morally broken institutions, young Russians emerging from today’s underfunded schools and the disgruntled army have been seduced into the cynical disrespect for authority displayed by their elders, as convinced as any previous generation that rules are made to be bent, if not broken.

And unlike past domestic versions of corruption, the vibrant new strain here is going global. The hydra of the Russian mafia rears its heads in centers of trade and commerce around the world, threatening other economies and societies.

Cruelly, Russia may have put the tainted czarist and communist eras behind it only to usher in a new age of moral indifference and corrosive ethics.

“Corruption is now the lubricant of the economy,” says Daniil B. Tsygankov, a sociology professor at St. Petersburg State University and an expert on black markets and organized crime. “It’s the substance needed from the government to allow all other parts of the economic machinery to work together.”

Enough of the iron grip on resources and property forged by the state during the communist era survives for the government to retain the power to make or break any business deal. That has allowed the self-interested bureaucracy of the old system to stay in place and smother competition as effectively as a layer of concrete.

For some time now, a growing segment of society has dodged the crushing weight of corruption. Rather than wishfully thinking that the blighted hierarchy will somehow be legislated out of existence, those building the New Russia are finding their own twisted paths around the roadblocks.

If the means are not a concern, the ends are very much in evidence. A look at any major city in Russia makes clear that the wheels of commerce are turning despite the brakes being applied from above.

In Vladivostok, a former military enclave closed even to most Russians until 1991, revival is obvious to all but the statisticians. Battered kiosks selling Communist Party propaganda and dirty glassfuls of mineral water have been replaced by umbrella-shaded sidewalk cafes and flanks of quick-stop shops dispensing hot dogs, hair coloring and the latest rock music. There are more cars per capita in the port than even in affluent Moscow.

However, as in the capital and wherever else business is incongruously booming, entrepreneurs prevail by circumventing the immovable bureaucracy and ignoring legal niceties such as licensing and taxation.

Chic young entrepreneurs and ex-Communist robber barons alike exude confidence about getting rid of the official rot at some point in the future. But for now, there is only mild irritation and disregard for the obstacles in their way.

Unofficial Economic Measures Are Best

The means of measuring economic recovery, however, appear to be as unreliable as the leadership. The distortions worked on economic figures were exposed in June when the head of the State Statistics Committee, Yuri Yurkov, was arrested and charged with taking bribes to deliberately underreport industries’ output so the businesses would be assessed lower taxes.

Better measures are the success of consumer services like Pavel Metsger’s bustling travel agency in the Siberian city of Irkutsk. Metsger’s small company sells thousands of vacation packages to Thailand and the Mediterranean at an average cost of $1,100--quite a feat in a city where the average income is reported to be $150 a month.

Metsger shrugs off the labyrinthine bureaucracy and interference inflicted on small businesses by the government, both local and federal, as irritants more than serious obstacles to prosperity.

“Eighty percent of a person’s success depends on personal initiative and outlook,” says Metsger, an upbeat manager in his 30s who left a career in physics to open his agency five years ago, just as Russians were getting international passports and the right, if not always the means, to travel.

As millions of Russians travel abroad each year for relaxation, their exposure to foreign cultures and the outside world’s greater familiarity with the concept of service may be one of the most influential forces helping Russians find ways out of their own ruins.

The ability to salvage what works of the old system and bend it to facilitate the needs of the new state is raising Russians’ traditional knack for improvisation to an art form and even encouraging emulation in unexpected corners.

The U.S. government, for example, has launched a pilot project in the Far East that is an unapologetic effort to help Russian and U.S. traders get around the customs service, arguably the most corrupt and commerce-stifling agency in a generally obstructive federal government.

“Many customs officers in Russia learned their jobs under the Soviet system, when customs was a restrictive organization,” says Jane Miller Floyd, the U.S. consul general in Vladivostok and a career Russia hand. “The objective wasn’t to protect domestic industry or facilitate trade, it was to stop it.”

A byzantine network of inspections and assessments is complicated by a federal law that allows each regional customs post to set some of its own regulations and tariffs, resulting in an incomprehensible and often contradictory muddle.

Clear-Pak, the U.S. Commerce Department project, finances a liaison office with Vladivostok customs to get authorization for shipments from Seattle-area suppliers ahead of the cargo’s arrival so it can be cleared in two days.

“We’ve seen $10 million in sales of U.S. goods to the Russian Far East since the first of the year, largely due to this project,” Floyd says. “It’s a minimal part of Washington state’s economy, but it’s a start.”

Whether such circumventions of official corruption can be replicated on a wider scale is uncertain, but some of the country’s most influential businesspeople have the government obstructionists in their sights.

Vladimir I. Shcherbakov, one of the leaders of the Business Round Table that unites Russia’s “financial oligarchy,” blames a resilient Soviet-era mentality for the tenacity of corruption and the public’s perplexing indifference to it.

“There has long been this attitude that all businessmen cheat people out of their money. All of us are believed to be crooks who would be behind bars except that no one has bothered with our case yet,” says Shcherbakov, whose holdings include a Kaliningrad automotive works. “So the customs service treats every single businessman trying to import or export something as a smuggler and a criminal. . . . If they don’t find a violation, they hold up your shipment until they can invent one.”

The Kremlin has gone through periodic displays of getting tough with those who create economic bottlenecks in order to earn bribes to clear them. It has fired the most blatant offenders when the public spotlight of a relatively free press turns on the heat.

But as with the March firing of Prime Minister Viktor S. Chernomyrdin and his entire Cabinet, many of the ostensible crackdowns are little more than smoke to shield the ousted officials from responsibility for greater troubles. Chernomyrdin was recalled to the prime minister’s office in late August--after the expendable interim government chief, Sergei V. Kiriyenko, took the fall for a ruble devaluation and financial crisis brought on by the excessive borrowing during the five-year Chernomyrdin premiership.

Although Chernomyrdin was rejected by the Communist-dominated parliament for the permanent post, his replacement, former Soviet spymaster Yevgeny M. Primakov, carries much baggage from the communist era and has little experience in economic affairs.

The choice of an intelligence operative to head the government and of Cabinet officials schooled in the edicts of a command economy promise only to institutionalize the old Soviet ways of doing business--empowering the regional bosses who control Russia’s vital industries and natural resources.

The only difference between the former regional party leaders and the omnipotent rulers of Russia’s 89 republics and regions is that the modern-day bigwigs must get themselves elected.

Being Elected to Office Licenses Greed

The blanket immunity from prosecution granted elected officials in Russia is one of the most destructive influences on the quality of those in public office, says Svetlana Glinkina, a political science professor and head of the Center for East European Studies in Moscow.

Pyramid-scheme swindlers, coup plotters and Kremlin security goons suspected of complicity with arms smugglers and hit squads have all escaped punishment by running in remote constituencies and winning on the strength of their association with those still in power.

“It’s going to take generations to cleanse the ranks of authority,” says Glinkina, who says she doubts that officialdom will be much more responsive to the needs of the people by the time her 16-year-old son is a grandfather.

While this bleak outlook is predominant, voices can be heard arguing that things won’t always be this way.

“There are no simple solutions to problems of the magnitude corruption has reached in Russia, but there needs to be at least an attempt to clean up the system from inside,” says Sergei D. Zamoshkin, head of the Moscow Center for the Fight Against Crime and Corruption in Law Enforcement, a grass-roots union of lawyers and prosecutors committed to rooting out the rot. “We haven’t seen much movement yet in this direction, but it has to happen at some point, or total lawlessness will prevail.”

Marina A. Alexeyeva, a 20-year veteran of the Moscow police force who quit in April to concentrate on her stunningly successful series of detective novels, exudes a mixture of hope and despondency that is typical of the disillusioned patriots of Russia.

“There are many honest cops, but people don’t see this. They see the bribe-takers and bullies and form their opinions about the whole force from this,” says Alexeyeva, who writes under the pen name Alexandra Marinina. However, she estimates that no more than 20% of the police force could be called honest.

That said, she argues that many of her fellow Russians are sickened by the erosion of values that allows one person to steal from another without remorse and lowers the standards of professional behavior to the level of the underworld.

“It’s not a question of getting through the transition. All that is changing is the name and political bent of the persons selling out our diamonds and gold and oil for their own profit,” says the former colonel, whose husband remains in the police force. “It’s going to take many, many years before we have a leadership that operates honestly and to the benefit of society.”

Her reference to hijacked public assets echoes a common lament of the Russian public.

“Red directors,” the Communist Party honchos who parlayed their power over Soviet industrial facilities into ownership of the now-privatized assets, are the most visible benefactors of the property redistribution that has enriched the few and angered the many.

Particularly glaring examples of public robbery do draw Kremlin attention now and then. When $170 million in diamonds disappeared from the Russian Committee for Precious Metals and Gems--the government agency entrusted to market those resources--its globe-trotting, Rolex-wearing chairman, Yevgeny M. Bychkov, was fired in a cosmetic crackdown.

But accusations of corruption and misuse of office were never elevated into formal charges, and Bychkov, who maintains he had nothing to do with the misplaced riches, is now part of the government again as one of a team of investment prospectors for the gold- and gem-mining monopolies.

Unapologetic about the ravaging of public wealth under his administration, he dismisses the misdeeds with the unspoken rationale that everyone does it.

“Germany paid Russia to build 500,000 apartments for troops withdrawn from East Germany, and no more than 3,000 were actually built with the money,” Bychkov says. “No one is screaming about this misuse of public money. But a few grams of gold goes missing and it’s a huge scandal.”

Scapegoats Offer an Illusion of Policing

While Bychkov is no longer the subject of active prosecution, he is typical of the fleeting scapegoats offered up by the government to create an illusion that it is getting tough on crooked officials.

Many of the former Communists who have positioned themselves well in the new economic order go unchecked and unpunished in their efforts to bilk their ill-gotten industries for all they are worth.

“Red directors still control thousands of companies that see the path to wealth not by maximizing asset value but by directing wealth to their own pockets,” says Edwin Dolan, president of the American Institute of Business and Economics, a private MBA program that he opened in Moscow five years ago.

Dolan says he believes that the only way to rid Russia of its strangling network of corrupt officials is to buy out those who are ostensibly running private operations and to wait for the old guard still controlling commerce to weaken or die.

“To the extent that anything is going to pull these industries into the world economy, the people controlling these companies will have to get richer selling out to someone who truly wants to make the company grow,” says Dolan, a career scholar of the Soviet and Russian economies. “But it’s going to be a fairly slow process. I don’t see the prospects of a big industrial boom or prosperity in Russia in this lifetime.”

Dolan laments the West’s naivete in believing that communism was all that was wrong with Russia, when the country has a millennium-long history of misrule and mistreatment.

“The single biggest miscalculation Western economists made about the Soviet Union was the expectation, implicit or explicit, that once assets were out of state hands, private owners would immediately respond to market forces,” he says. “That just hasn’t happened. We were wrong in believing that Russia would become a normal country if it could just get rid of communism.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

About This Series

In this four-part series, The Times examines Russia’s post-Soviet convalescence.

* Today: It is becoming clearer by the day that epidemic corruption is not a fleeting ailment. More and more, it is looking like an enduring framework for doing business.

* Monday: Theft has emerged as an integral part of Russia’s “privatization” of property once owned by the state. For millions of Russians, stealing is a normal part of life.

* Tuesday: Meet Volodya. He killed a man when he was 10. He belongs to Russia’s young and angry underclass, with no way of surviving except through crime and violence.

* Wednesday: Western countries that once worried about the Soviets’ military might are now trying to combat the invasion of the brutal and disciplined Russian mafia.