The American Spectator

At Large

The West in general and the United States in particular has been shocked at the recent spate of reports of corruption and assassination involving Russia. How could this happen under the sophisticated modern leadership of Vladimir V. Putin? The explanation lies in the past.

In 1997 a World Bank study authored by Dr. Louise Shelley of American University attested, "In Russia organized crime groups are dominating both legitimate and illegitimate economic sectors simultaneously." She further stated that $50 billion of Russian capital left the country between 1991-96. Other estimates put the figure closer to $150 billion.

These figures mean little by themselves other than to suggest the vast scope and history of corruption in contemporary Russia. Sadly, corruption was then and is now a way of life in that country. Bribery for everything from governmental contracts to getting a child into a preferred public school is the fabric of both official administrative and private existence. And it has been that way for decades.

Hidden under the totalitarian mantle of Soviet communism was a nation whose economic inadequacy and political favoritism was as pervasive as its repressive security structure. The Brezhnev years of the 1970s introduced a form of nepotism that was closely akin to pre-revolutionary Czarist days.

This pattern was established by what came to be known as the "Dnieper Mafia," a nation-wide connected clique of friends and acquaintances of Leonid Brezhnev from his earlier days in Dneprodzerzhinsk and Dnepropetrovsk. This was administrative corruption at its most sophisticated and suffocating.

Mikhail Gorbachev's perestroika days of the eighties raised the intellectual and cultural level of Soviet leadership, but at the same time introduced a major discontinuity into the long established system of Soviet corruption. Gorbachev, with a reformer's zeal, initiated a program of reintroduction of private ownership of business. He also set in motion stringent controls on Russian alcohol production. These two unrelated actions collided.

An immense black market grew throughout the Soviet Union in all types of liquor as the authorities looked the other way. The vast illegal profits of the criminal gangs were laundered and turned into investment in now legitimate private ventures. Al Capone must have twisted in his grave with envy.

WHILE TOO MUCH CAN BE attributed to this multimillion ruble illicit booze operation, it is clear that it encouraged the entire world of criminality. Rubles were used to purchase drugs, guns and other illicit items that in turn were sold for hard currencies. That money rolled into foreign bank accounts and soon the Russian mafia became international bankers of risky enterprises. Russia's new privileged and politically influential class was reborn as venture capitalists.

With the demise of the USSR, and the arrival of democracy and the sometimes sober Boris Yeltsin, came the sale of Russia's national assets. Deals were made at bargain prices and the new rich became the new oligarchs of Russian capitalism. They were even aided by the cleansing flow of Western investment.

Enter Vladimir Vladimirovich Putin. With the aid of his old friends in the KGB (now FSB and SVR) the smart, youthful Putin led the Russian government in a program to reclaim from the oligarchs the former Soviet national industrial and trade assets. It was a popular action that also played on the instincts of the West to support reform in any manner.

Soon smaller private enterprises were under attack by Putin's secret service and military colleagues, the siloviki, who had become the praetorian guard of his presidency. It did not take long for Russian business to learn that a "partnership" with newly created government instruments or selected "investors" insured the continuance of their commercial operations.

World oil and gas prices skyrocketed and Russia's economy soared with them. At the same time, however, dissent about the return of the power of the state security agencies, as well as the ongoing war in Chechnya, brought swift reprisal. The Russian moneymen of the previous administration were arrested or fled abroad. From this presumed safe haven the latter sponsored vigorous political attacks on their tormentor, Putin.

The President of Russia, a long time martial arts devotee, had never been one to react gently to criticism and soon let it be known to his under-bosses that these criminal expatriates and their supporters still remaining in Russia sought to destroy the legitimate government of the new Russia. Soon official retribution began to be carried out on all levels of Russia's economic and political life. The good old bad old days were back, and so were scores of former civilian and military security personnel.

Vladimir Putin succeeded in escaping any direct connection to the harassment and sometimes assassination of often high profile anti-government individuals. These actions, in spite of the worldwide attention drawn to them, seemed far too bizarre to involve the cool-headed and urbane President of Russia.

THE PROBLEM WITH THAT THEORY is supposedly Putin is an exceptionally hard-working and intelligent man who pays great attention to detail. To believe "executive actions" of so many types taken at home and abroad without this boss' knowledge requires an extraordinary leap of faith. Certainly the simple illogicality of Putin's involvement supports the plausibility of denial, and it is on that Western democratic rulers are hanging their collective hat.

But it doesn't really matter to what degree, if at all, Putin had forehand knowledge of these punitive actions. He has constructed a regime that exerts a full range of secret police powers. The old criminal organizations may have curtailed effectiveness, but their replacement by government-related elements exercising the same tactics may be even more dangerous. The potential for official commercial extortion exists at every turn. Political disagreement has strict limitations and often dire consequences.

Unfortunately, the fact is Russians have come not only to expect corruption and criminality in their own government, but to perceive the rest of the world as the same -- or worse. V.V. Putin thinks as his countrymen do and adjusts his policies accordingly. The tragic Litvinenko affair has finally pushed London and Washington rather belatedly to begin to realize this. They, too, will be adjusting their policies.

Happy New Year, Vladimir Vladimirovich!

topics:
Trade, Vladimir Putin, Business, Military, Russia, Communism, Oil