Center for Defense Information
Research Topics
Television
CDI Library
Press
What's New
Search
CDI Library > Johnson's Russia List
Johnson's Russia List
 

 

September 20, 1998   

This Date's Issues: 238523862387



Johnson's Russia List
#2387
20 September 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Boston Globe Moscow bureau job openings.
2. HELLO RUSSIA. FREE RUSSIAN WEEKLY NEWSLETTER: Alexander Samoiloff
on "what is really happening in Russia, why, and where Russia is going to?"

3. Paul Backer: on the endless theme one incident and one joke.
4. Peter Ekman: Anti-Americanism?
5. PBS Online Newshour: RUSSIA'S CRISIS. Will Russia survive its economic 
and political crisis? Leon Aron and Michael McFaul answer questions.

6. Los Angeles Times: Carol Williams, The Germ of Post-Soviet Russia Is 
Corruption. Bribe-taking and cronyism in government lead to corner-cutting 
and scofflaws in private enterprise. ]


******

#1
Date: Sun, 20 Sep 1998
From: David Filipov <dfilipov@glasnet.ru>
Subject: job openings

The Boston Globe has two non-staff job openings in its Moscow Bureau to be
filled immediately:
* Stringer: We are looking for an experienced, Moscow-based journalist to
cover economic and political news for the paper. Must be able to write
newspaper stories in English and on short notice; fluent Russian a big plus.
Please e-mail a resume and clips, and any questions, to dfilipov@glasnet.ru
* Part-time researcher: This is a 20-hour-per-week job. Fluent Russian a
must. Applicants must be able to manage own time, work independently.
Previous experience in a Moscow news bureau a big plus. English a plus.
Note: This is NOT a translator position. Applicants should be interested in
current events. Please e-mail a resume and, where relevant, references, to
dfilipov@glasnet.ru 
or by fax to 415-2937 AFTER Tuesday Sept 22.

Thank you,
David Filipov
Moscow Bureau Chief
The Boston Globe

******

#2
Excerpt
From: "Alexander Samoiloff" <tolmach@usa.net>
Subject: Hello Russia #4
Date: Sun, 20 Sep 1998 
HELLO RUSSIA
FREE RUSSIAN WEEKLY NEWSLETTER # 4
Sept. 20 1998
==================================================
Regional political events, business, culture, crime, way of life and
another issues, coming to you from Khabarovsk, Russia's Pacific Rim.
==================================================
HELLO RUSSIA
- To subscribe send mailto: hello_russia@usa.net with Subscribe in
subject line.
- URL: http://www.angelfire.com/biz2/HelloRussia/index.html
- Personal contact e-mail address: Tanya_Samoiloff@usa.net
==================================================
1. ABC - RUSSIAN EVENTS
(Alexander Samoiloff)
I receive letters from people who ask, what is really happening in Russia,
why, and where Russia is going to?
Offering you my own opinion, I remember a song of Johnny Cash: ..play you
banjo well, and if you have political conviction, keep it to yourself". I
hope our readers will not do with me, what a public done to that music
band.
Also I'll try to be as short as possible.
First of all, let's take a look into the history, which created Russian
mentality. Russians had two kinds of Tzars: "People's Tzar" and "Boyar's
Tzar".
The most famous People's Tzars were Ivan the Terrible, Peter The Great,
Stalin. Why? They cut off Boyar's heads (i.e. noblemen, who are close to
Tzar). Russian people have short memories of crimes committed by such Tzars
against their own people. People were happy to see Boyar's heads off and
remember this. It's true, that such Tzars really raised up international
prestige of Russian Empire, and were highly praised for that by Russian
historians.
A vivid example of Boyar's Tzar were Leonid Brezhnev, Gorbachev, and now is
Eltsin. This kind of Tzars where Boyar's puppets. Boyars ruled and robbed
the country without any fear of punishment, and than always followed a
period of depression. Dissolution of the USSR was a result of Gorbachev's
weakness. He believed be able to bring up Western standards of democracy to
greedy Boyars, and they dissolved USSR to throw off an intellectual Tzar.
>From 1996 Russia started reforms by freeing prices and giving free hand to
monopolies.
Reforms went in such a way, that major industries were privatized by Red
Directors and lucrative bureaucrats, i.e. by few people, who are closer to
power. Profits are going to the foreign banks, and state budget is
permanently robbed out by them.
I liked Grygory Yavlinsky's remark: "The USSR with its mighty military
machine and arms race lived on oil and natural gas. Now gas and oil pipes
are working at full speed, country population shrunk twice, but where is the
money?"
For example, being a supporter of Eltsin, I became his opponent in 1996,
when our frustrated President reported to the nation: "800 trillion Rubles was
wired for restoration of Chechnya, and only 200 trillion came into Chechnya.
Where the rest money have gone to? God only knows!".
When I watch hot debates about Clinton's love affair, I figure out, what
American people could do with Clinton, if he'll report to the nation
something like that.
To provide you with examples of high level corruption and crime deserves a
multi-volume book "Crime without Punishment".
I understand Boyars. They robbed the country and moved funds into foreign
banks. All International Monetary Fund loans never reached people. The last
2,6 billion loan provided by IMF on July 26 disappeared from Russia within
couple of weeks. Now Boyars are waiting for more loans, and try to scare the
West with communist threat.
Universal corruption, high crime rate and impoverish among ordinary people
are results of so called "reforms".
We have a joke: American dog asks Russian dogs, what have changed from
Soviet times. "During the Soviets I had a short chain, small bone and was
not allowed to bark. Now we have a democracy. They made my chain longer,
removed the bone, but I can enjoy barking as much as I like".
---------------------------------------------------------
How it happened that Western investors and IMF were hooked up by Russians?
Two years ago, when a majority of Russian assets were robbed out, Russian
Boyars started to build up a huge financial pyramid with a short-term state
bonds (GKO), issued at 240% to 300% monthly interest rate. During that time
IMF issued loans for the "development of reforms."
I hope Western people know well, what is a "free cheese in a mouse trap" of
financial pyramid. So do Russian people and even children know well.
Please now try to convince Russian people, that IMF experts and Western GKO
speculators are innocent like a child, and never suspected a sting.
Right this morning TV reported, that "cheated GKO investors have united, to
submit a claim to International Arbitration Court. Russia must pay debts
with its state property located in foreign countries.
My first qeastion is: What are the plaintiffs?
I will not be much surprised, if a majority of this Western companies are
controlled by Russian Boyar's capital. Why? Because Russian foreign assets
are the only valuable thing, which one may steal today.
Please try to convince me, that this is not another big international sting
to rob Russia.
10 days ago Boyars made a reshuffle by promoting a new Premier - "clean" and
convenient Prymakov. As I understand, they will try to extinguish fire by
printing money to cover state debts and paycheck arrears. This will result
in hyperinflation and will deepen the crisis.
Russians are blamed, that they become a nation, who plays the game "Avoid
the Taxes".
But any Russian may ask the following question: Why should I pay taxes?
- All taxes disappear in a "Black Hole", and teachers, miners, Army and other
people are not paid their paychecks for 5-6 months. And such is a usual
policy of government for the last few years.
- My police doesn't serve and protect me. There are busy earning money by
using a law-enforcement status and often work for Mafia.
- I don't have any social benefits.
To be sincere I don't know any company, who honestly pay taxes. Last year
during TV interview a reporter asked Khabarovsk Tax Office (IRS) Chief to
name an honest tax payer company. The Chief was frustrated, and than named
only one company a "Pioneer Group" (USA Inc.).
During last week I received a call from Municipal Public Transportation
Company to come and receive due money from 2-4 p.m, exactly today. I talked
with bookkeepers, and they explained that Company for a long time doesn't
pay taxes. Bookkeepers could not remember the sum of the debt to the budget,
as penalties increase it every day, and they simply don't go to the bank.
To survive, the Company collects some amount of cash, than one day shows it
in the books and immediately pays salaries and other expenditure. If Tax
Police will raid, the Company will loose working capital, salaries and
Khabarovsk public transportation will be stopped. In Russia public bus is
the main transportation for majority of people.
-------------------------
What is the future of Russia?
In my opinion, if Lebed will not come to power this winter, we may expect a
dissolution of Russia, or revolt.
So, may be some day you'll receive E-Zine "Hello Far Eastern Republic".
We joke, that "Far Eastern Republic must declare war to USA, and than
immediately surrender."

******

#3
Date: Sat, 19 Sep 1998
From: "Paul Backer, Esq." <pbacker@glasnet.ru>
Subject: on the endless theme one incident and one joke

on the endless theme one incident and one joke.
incident, yesterday flight from Nizhnii to Moscow.
Several expats including me talking (never met before), asked me what I do.
I said that I am a securities reg./corporate finance attorney. People
(including me) started laughing ... laughing, it has become funny to be a
securities/finance expert in Russia.

joke,
man goes to a bank in Russia to open an account, asks the teller who he
should talk to. She says, "a pyschiatrist".

*******

#4
From: "Peter D. Ekman" <pdek@co.ru>
Subject: Anti-Americanism?
Date: Sun, 20 Sep 1998 

I keep reading about a "rising tide of anti-Americanism in Russia." As
an American living in Moscow, I haven't seen any sign of any such thing.
Perhaps it is because the students I work with are biased toward Americans,
or because Moscow is different from the rest of Russia, but in the last
month I haven't noticed any difference in the way Russians treat me - which
is usually much more respectfully than they treat fellow Russians. Of
course I have noticed journalists and politicians complaining about the IMF
and western oriented policies - but this is quite different from
anti-Americanism.
Actually, I think this "rising tide" is just journalistic laziness, like
most other "rising tides" you read about in the papers. The journalists are
trying to say something about a growing distance between the Russian and
American governments. Perhaps some of your Russian readers would like to
comment on whether they've seen any anti-Americanism here.

*******

#5
PBS Online Newshour
Questions and Answers
http://www.pbs.org
RUSSIA'S CRISIS 
Will Russia survive its economic and political crisis? 
September 17, 1998 

Here to answer your questions on the crisis in Russia are Leon Aron and
Professor Michael McFaul. Mr. Aron, a resident scholar at the American
Enterprise Institute, is also the author of an upcoming biography of Boris
Yeltsin. Dr. McFaul, an assistant professor of political science at Stanford
University, is also the author of an upcoming book on Russian democracy.
Please send in your questions and comments. 

Questions asked in this forum:
Is Primakov the right man for the job? 
What does the appointment of Primakov mean for Russia's relations with the
West ? 
What should the United States and the West do to help Russia get through this
crisis? 
What does the average Russian think about the current crisis? 
Can the appointment of Primakov be interpreted as a defeat for the reformist
policies of Yeltsin? 
Is there any possibility that Yeltsin will dismantle the monopolies? 

Richard Williams of Madison, WI, asks: 
Is Primakov the right man for the job? Can he lead Russia out of its current
malaise? 

Leon Aron, resident scholar at the American Enterprise Institute, responds:
Under the very tough political constraints within which Yeltsin was operating,
Primakov was the best choice. In appointing him, Yeltsin avoided the two
extreme scenarios: a) a (quote possibly) violent confrontation with the Duma a
la 1993, if he had submitted the Chernomyrdin candidacy for the third time and
then attempted to dissolve the Duma and schedule a legislative election; b) a
total surrender, if he had asked a Communist leader (Yuri Maslyukov, Gennady
Zyuganov, or Yegor Stroyev) to form a government. 
While Primakov faces enormous challenges in terms of economic rescue, at the
very least he stopped (or interrupted) Russia's slide toward chaos and
disintegration of the entire constitutional edifice erected in 1993. 

Michael McFaul, assistant professor of political science at Stanford
University, responds:
Given the other options available at the time of his appointment, Primakov may
have best choice. Yurii Luzhkov, the mayor of Moscow, was a stronger candidate
who would have formed a stronger government (for better or worse), but the
rumor in Moscow was that Yeltsin's family disapproved of Luzhkov as they
feared for their long-term security should Luzhkov have become prime minister
and then president. (Allegedly, one of Luzhkov's conditions for taking power
was that Yeltsin would resgin sooner rather than later, and then new
presidential elections would be held.) 
I do not believe that Primakov will be able to pull Russia out of its current
economic crisis. Prime minister Primakov and his new team of Gorbachev-era
ministers plan to assign a greater role for the state in managing the economy.
Strapped for cash after defaulting on its debt, the government will print
money and thereby fuel inflation. To control inflation, the new Russian
government will introduce wage and price controls; some governors already have
done so. Eventually, this set of policies will produce shortages, rationing
coupons, and a black market. The question then will be what comes next-- a
genuine attempt to address Russia's economic problems or an even more anti-
market regime? 

David Miller of Chicago, IL, asks: 
What does the appointment of Primakov mean for Russia's relations with the
West? 

Michael McFaul, assistant professor of political science at Stanford
University, responds:
Primakov has been a difficult person for the West to deal with over the last
several years. He has promoted the idea of trying to balance the United States
by allying Russia with China. He also has talked about renewing Russia's role
as a major player in the Middle East. In an earlier period, the United States
coulds always check Primakov's influence on foreign policy by getting on the
phone with Yeltsin. This will no longer be the case as Yeltsin will be too
weak to play this role. 
However, remember that Primakov's plate is very full dealing with domestic
problems. Russia cannot afford to devote attention to international issues
now, but must focus on averting anarchy at home. 

Leon Aron, resident scholar at the American Enterprise Institute, responds:
Russian foreign policy will remain the same as it was under Primakov: tough on
rhetoric critical of the U.S., attempting to re-create (at least symbolically)
Russia's status as a superpower (as France has done since the 1950's),
challenging the U.S. (e.g., in the Middle East, or arms trade), but, at the
same time, accepting the status quo and avoiding direct confrontation with the
West and cooperating with the West (and the U.S.) in many vital areas. 
This is what is known as a "non-revisionist" foreign policy -- which is quite
different from the policy of the Soviet Union, which was engaged in a zero-
sum, global and ideologically-motivated competition with the United States in
an effort radically to alter "the correlation of forced". You may read more
about the Primakov foreign policy in Chapter One ("The Foreign Policy Doctrine
of Russia and Its Domestic context"), which I contributed to Michael
Mandelbaum, ed., The New Russian Foreign Policy (New York, Council of Foreign
Relations, 1998) 

A. Dillman of Denver, CO, asks: 
What should the United States and the West do to help Russia get through this
crisis? 

Leon Aron, resident scholar at the American Enterprise Institute, responds:
Unfortunately there is very little we can do at the moment except to be
attentive, sympathetic and standing by to help if and when Russia is back on
the path of reforms. We are currently witnessing a Left backlash, which is
quite common in post-communist societies: Poland, Hungary, and Lithuania
brought the Left-of-Center governments (or parliaments) back to power several
years ago. 
As always, the Russian case is worse and more complicated. Its communist
legacy is much heavier because of immense militarization of the economy and
decimation of agriculture. And, second, Russia simply does not have moderate,
reformed, post-communist Socialists. 

Michael McFaul, assistant professor of political science at Stanford
University, responds:
Until the new Russian government has a credible anti-crisis program, Western
assistance programs for macroeconomic stabilization such as I.M.F. loans must
be suspended. At the same time, other kinds of assistance programs aimed at
fostering microeconomic reforms should be expanded. For instance, programs
which provide small business loans, projects which furnish information about
Western markets, and business training and exchange initiatives should all be
expanded. Similarly, technical assistance projects which facilitate the
development of important market institutions such as laws governing property
rights, disclosure, bankruptcy, pension funds, taxes, and the securities
markets also need to increase. 
Since independence in 1991, Russia has yet to attempt genuine market reforms.
If the opportunity arises in the future for a renewed attempt, the people and
knowledge must be in place to make reform work. 
On the democratic front, the U.S. also need not stand by idly. At the highest
levels, U.S. officials must send clear signals to Russian elites about the
negative consequences of circumventing the democratic process. In particular,
the rules for the next presidential election must be followed. As such a
transfer would be a first in Russian history, no single event is more
important for the consolidation of democracy than Russia's upcoming
presidential election. 
At the non-governmental, grassroots level, programs that promote democracy and
democrats in Russia also must be enlarged. For instance, projects that provide
expertise regarding the development of parties, trade unions, federalism, the
rule of law, an independent media, and civil society more generally should be
expanded, not curtailed as is presently planned. Fascism in Russia can only
grow through the grassroots; trade unions, youth groups, parties, and women
organization's are their current targets. Russian democrats who are battling
for the heart and souls of these organizations right now must be supported,
not abandoned. 
Obviously, the kinds of assistance programs outlined here will not "solve"
Russia's current economic crisis. But they may be the long-term investments
that will save Russia from crises in the future. 
More immediately, these kinds of programs also offer Americans a way to remain
involved with Russia during this difficult period. These programs can be
administered without transferring a dime to the Russian state. They also can
be pursued without presidential leadership in either the United States or
Russia which cannot be counted on in the near future. 
Many Americans have grown weary of Russia as achievements have been few and
headaches many. However, now is not the time to give up on Russia. Only seven
years since the Soviet collapse, Russia's revolution has by no means ended.
While Russia's current leaders are still committed to developing a market
economy and a democratic polity, it is in the vital national interests of the
United States to insure that this trajectory continues. The days of
presidential summits may be over, but the work in the trenches has just begun.

Siva Natarajan of San Jose, CA, asks: 
What does the average Russian think about the current crisis? 

Michael McFaul, assistant professor of political science at Stanford
University, responds:
So far, we have little evidence on this question as few polls have been taken.
(I personally would never try to speak on behalf of the average Russian). In
polls released this week, people fear inflation most. Starvation -- a refrain
heard often in the West -- is a lesser concern. Remember, Russians have
learned to survive with economic hardship well before this latest crisis. In a
survey conducted earlier this year, 71% of respondents reported that their
household has a plot of land where they grow food ! 
On a more anectdotal level, I can tell you that my friends in Russia are
disugusted and disheartened by this latest crisis as it means that all of the
gains of the previous fivie years have been wiped out. These friends of mine
are middle-class people in Moscow and St. Petersburg, who in many ways will be
the people hit hardest by this crisis as it is the middle class who had money
in banks, who bought imported goods (in Moscow 60% of all food purchased is
imported), and who worked in new private firms that are now closing. And the
biggest tregedy of all is that it did not have to occur. This crisis could
have been avoided. 
A final lingering legacy of this crisis will be the defamation of the word
"market reform." Little that has happened in Russia in the last several years
should have been called "reform" or "capitalism", yet it was labeled so. Now,
people argue that reform has failed. In reality, reform was never attempted,
but it will be hard to convince people in Russia of this fact after this
latest and ongoing tragedy. 

Leon Aron, resident scholar at the American Enterprise Institute, responds:
Like the "average American", the "average Russian" does not exist. Apart from
the general revulsion and the sense of being betrayed yet again by the
political class, the attitudes toward the crisis likely differ sharply among
the socio-economic and demographic groups. 
The younger, better educated and urban Russians, who have profited very
significantly from the reform and who have been Yeltsin's core constituency
and delivered his victory in the 1996 Presidential election, feel disappointed
and angry at the President but not ready to abandon capitalism and reform. The
communist constituency (rural, elderly and poor) feel vindicated and want a
significant rollback to the Soviet past. What happens next will be determined,
in the end, by how the political forces representing both groups read their
messages and respond to them. 

Matt Roberts of Vienna, VA, asks: 
Can the appointment of Primakov be interpreted as a defeat for the reformist
policies of Yeltsin? 

Leon Aron, resident scholar at the American Enterprise Institute, responds:
To add to my response to Question 1 above: the appointment of Primakov
signifies a major weakening not only of the reform policies of 1992-1998 but,
perhaps even more alarmingly, a de facto constitutional coup d'etat: the
installation of a government responsible to the parliament, rather than the
President. Given very deep ideological divisions in the Duma and its inability
to form a working majority on anything except opposition to the President, a
government controlled by the Duma could lead to a paralysis of power. I
honestly wish this prediction be wrong but the Duma's record until now gives
little ground for optimism. 

Michael McFaul, assistant professor of political science at Stanford
University, responds:
I do not understand why everyone casts the latest government as a "return to
the Communists." Almost every major figure named so far has served previously
in a Yeltsin government, including the prime minister and the two top deputy
prime ministers. Only one of the new deputy prime ministers -- Vladimir
Ryshkov -- is serving for the first time under Yeltsin and he is from
Chernomyrdin's party, Our Home Is Russia. 
There is a very different way of understanding the present government, i.e.
that it represents continuity with the same old strategy of muddling through
without pursuing any policy reform. This reminds me very much of the stagnant
years of the Chernomyrdin years, not the stagnant years of the Brezhnev years.
Why those who have been so critical of the last several years should now be
upbeat at this "change in course" is a bit baffling to me. 
To me, it looks like the same old crowd that began asserting their influence
over economic policy in Russia circa Apri1 1992 and have been in the driver's
seat ever since. The short-lived Gaidar months in power (January 1992-April
1992) and the short-lived Kiryenko government (April 1998-August 1998)
represent the aberrations -- the attempts at changing course. This new
government represents continuity, dating really as far back as 1989-90 through
to the present. After all, didnt Chernomyrdin come to power in December 1992
under very similar political circumstances? The same people in Russia and the
West who hoped for a a centrist alternative in December 1992 celebrated
Chernomyrdin's initial rise to power when he was backed by Civic Union and
other "centrists" of the day. What's the big difference politically this time
around? (The differences in economic terms are much more stark in that
Primakov inherits a situation much worse than Chernomyrdin did in 1992). 
Do not misunderstand me. I see no alternative to this kind of government under
the current conditions and I wish them well. But I personally do not see this
new government as a break with "Yeltsinism." It's the same, a fact that will
disappoint both critics of Yeltsin on both the left and the right. 

Bill Murphy of Harrisburg, PA, asks: 
Is there any possibility that Yeltsin or a designated prime minister would
dismantle the monopolies which are considered to be primarily responsible for
the crisis? 

Michael McFaul, assistant professor of political science at Stanford
University, responds:
The so-called financial oligarchs already have collapsed, or become severely
weakened, as a result of this laest financial crisis. They will be weak for
some time. In fact, they will have to fight very hard simply to hold the
assets that they seized during the "loans-for-shares" program of 1994-1995.
For instance, the financial-industrial group, Menatep, put up shares in its
oil company, Yukos, to borrow dollars from Western banks. As Menatep has
defaulted on these loans, these Western banks -- at least on paper -- have
control of this oil company, the secodn largest in Russia. 
As this drama plays out, my guess is that there will be a push to
renationalize some of these assets. The present Duma and government are not
about to hand over control of Russia's oil fields to Western banks. 
As for other monopolies, this government will do little to break them up. On
the contrary, I believe that Russian monopolies will be strengthened by the
latest change in government. 

Leon Aron, resident scholar at the American Enterprise Institute, responds:
In the past, the so-called "natural monopolies" (gas, transportation, energy)
have been vigorously defended by the Duma against the attempt by the President
and the government to dismantle them. In so far as this government is the
Duma's government, I think they are likely to let the monopolies be. Unless,
of course, the "new industrial policy" will become more radical than has been
announced so far and the monopolies (along with banks) are nationalized. 

*******

#6
Los Angeles Times
September 20, 1998
[for personal use only] 
SUNDAY REPORT 
The Germ of Post-Soviet Russia Is Corruption 
Bribe-taking and cronyism in government lead to corner-cutting and scofflaws
in private enterprise. 
By CAROL J. WILLIAMS, Times Staff Writer

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. 

MOSCOW--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." 

*******



Return to CDI's Home Page  I  Return to CDI's Library