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Good Deals and Bad Practices

Matthew Van Meter is on the English faculty at the Slavic-Anglo-American School "Marina," where he teaches middle-and upper-school ESL and literature.

One of the most memorable moments in Russia for a citizen of a country less steeped in corruption and nepotism (or at least in which such things are furtive and hidden) is the first time that bald-faced corruption stares them right in the face. Such moments sometimes arise from encounters with the police or other authorities, sometimes in business negotiations, and sometimes in academic settings. Mine came relatively late in my time in Russia, but the air of corruption and "blat" ­ a handy, and untranslatable, Russian word for all sorts of shady business and ability to influence people ­ was pervasive enough to be obvious. Clearly, enough has already been written about Russian corruption from economic, cultural, legal, political, and almost any other point of view one can imagine, and its inescapability is both notable and legendary. On the other hand, the consistent inability ­ or unwillingness ­ to address Russia's problem head-on with anything more than rhetoric shows the Kremlin to be at best complicit in the eventual demise of the stable Russian state.

James Surowiecki, economics writer for the New Yorker magazine, wrote last week about the impact of the "shadow economy" on Greece's debt. It hardly takes an economist to make the link between Greece and Russia on this count. When I was an undergraduate at Middlebury College, I went to the town of Nezhin, Ukraine, to do research for my thesis, which involved a factory in the town that had effectively ceased to function except as a vehicle for under-the-table barter transactions. So, to me, the assertion that 27.5 percent of Greece's GDP is tangled up in untaxed under-the-table economics is hardly surprising ­ and that figure only includes the "legal but off the books" part of the economy, discounting entirely that which is illegal: surely a greater black hole still. Indeed, to anyone who has lived for any time in Russia, Surowiecki's entire article seems self-evident, along with the tales of tax officials bribed with envelopes of cash and a diagnosis of nation-wide low so-called "tax morale." Indeed, Greece's situation would hardly be remarkable within its central and eastern European neighborhood were it not for its long-running membership in the European Union and its Western pretensions ­ no one is particularly surprised by the corruption of Greece's ne'er-do-well companions in arms: Bulgaria and Romania. If, as Surowiecki says, the EU's future may depend upon Greece's dedication to changing its tax-evading ways, how much more important might a similar dedication be from Russia? Surely, the EU and the rest of the word are more enmeshed with Russia's economy than Greece's, at least in the current oil-based economy.

Yet, Russian corruption goes beyond what is usually called "korruptsia" in Russian, which generally refers to official, read governmental, corruption. The sad truth is that, for an upstanding person, the former Soviet Union is a toxic place to do business. On "The World," a daily news program from Public Radio International and the BBC, a story last October described an American trying to start a small business in Kiev without paying any bribes. He discovered, as anyone there could have told him, that bribes to officials were only the beginning; contractors would not work without near-constant bribes of one sort or another. Indeed, the most telling part of the story is the narrative of another foreigner doing business in Ukraine, who has bought into the system in a way that strikes me as somewhere between affirming -- using the system to get by -- and depressing. Russians and those in the other post-Soviet world have already made their decision about that.

One day, in the office of the school in Moscow where I worked, I saw a constant stream of people coming into the Head of School's office to try to cheat or cajole her. She dealt with each firmly and in turn, but the true extent of the uphill battle inherent to doing business in Eurasia became clear to me in that moment. Instead of running her small, unobtrusive business, the head was simply trying to deflect needless loss inflicted by those who would cheat her either for their own gain or their children's. At some point, without exceptional dedication and strength of personality, the battle is always a total loss. If one must spend 40 minutes contesting a few hundred rubles, how easy it must be simply to give in.

An acquaintance, speaking about her son's graduate school program, told me that none of the students actually complete their physical education requirement. "We pay two thousand rubles, and he gives everyone a pass," she said. "It's a good deal, I think. The teacher gets extra money and doesn't need to go to work, and everyone gets a pass and doesn't have to go to class." In fact, as I thought about it, it actually is a good deal. But searching for good deals does not an academy, or an economy, make.


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