Monday, July 25, 2005 at 10:58 AM

Westerners are Shocked, Shocked to Find There’s Corruption Going on in Russia!

Posted by Anthony L. Hall

The Putinization of Russia (return to Stalinism) holds nostalgic appeal for poor Russians – many of whom feel betrayed by the unfulfilled promises of democratic reforms and capitalism. But for the oligarchs, burgeoning middle-class and Westerners with vested capital and political interest in Russia, it portends recriminations (such as confiscation of property without just compensation) and the rebirth of costly and dangerous cold war tensions.

It is not surprising, therefore, that many opposition forces in and outside Russia would be motivated to undermine domestic and international confidence in the leadership of President Vladimir Putin. But it is unacceptable – even for unabashedly partisan journalists in the UK – for Western newspapers to become propaganda sheets for those forces, no matter how much they espouse democratic values. Unfortunately, this is precisely what some of the most respected newspapers in Britain have become.

It defies logic to think that as Putin deploys his increasingly dictatorial powers to purge oligarchs (like Mikhail Khodorkovsky who was recently sent to the gulag for 9 years) for raking in tens of billions from “the piratization of Russia” during the roaring 1990s, that Russian bureaucrats would be daring and clever enough to embezzle or extort hundreds of billions from Russian enterprises.

Yet anyone reading the British papers last week (without a healthy dose of skepticism) would’ve believed that this is indeed the current state of affairs in Russia today. In fact, the headlines were impossible to ignore: The Guardian: “Cost of bribes soars as Russia’s millionaire bureaucrats rake in profits”; The Independent: “Massive scale of corruption in Russia revealed”; and The Financial Times: “Bribery in Russia up tenfold to $316bn in four years”.

Coincidentally, each of these reputable papers cited research by the Indem Foundation, a Russian think-tank and business consulting firm, which concluded that “the Russian state itself is the country’s biggest racketeer [and, by inference, Putin more a mafia godfather than president]”. But any amateur political economist would’ve been drawn to their headlines more by the troubling suspicion that the level cited was fiscally infeasible than by the report of alleged widespread corruption in Russia. After all, $316 billion was more than twice the annual budget (of $93 billion) and almost one third the GDP (of $1.4 trillion) of the Russian Federation in 2004. And, bribery on this level would make even the dark kleptocracies of Nigeria and Kenya seem positively transparent.

Is it credible that corrupt Russian civil servants collected more than twice as much in bribes than its Treasury collected in revenues last year?

One can only speculate about the reasons why a watchdog foundation would publish such blatantly spurious (and entirely unverifiable) statistics about the Russian economy. Perhaps it is part of a Machiavellian strategy by reformers (and Khordokovsky sympathizers) to discourage legitimate investments in Russian and, thereby, undermine Putin’s authoritarian rule. But whatever Indem’s political motivations (because its research has no economical merit), it is utterly inexcusable and unethical for respected British papers to abuse the trust of their readers in this fashion.

Putin has done a great deal to disillusion anyone interested in seeing democratic reforms implemented in Russia. But the evidence suggests that there was far greater corruption going on in Russia during the “democratic” revolution lead by former President Boris Yelstin. Therefore, specious alarms about corruption in Russia today only discredit objective criticisms about Putin’s dictatorial leadership and regressive economic policies.

Note: Anyone familiar with the level of racketeering in the U.S. government (especially at the Pentagon as evidenced by its dubious relationship with Halliburton) and in the UK government (as evidence by the “secret commissions” British Ministry of Defense contractors routinely receive on weapons sales – especially to rich developing countries like Saudi Arabia) will find these self-righteous and indignant reports about the Russian government more than a little hypocritical. (Nevermind that corruption at Enron, WorldCom, Adelphia, Tyco even caused many poor Americans to feel betrayed by their faith in capitalism….)


  1. Anonymous July 25, 2005 at 3:43 pm

    Like everything esle about western values, there is a double standard when it comes to corruption too. Thanks for challenging the sanctimonious blather of the British press.

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