Corruption in Russia

One of the defining features of Russian life since the fall of the Soviet Union has been the rise in corruption. Everything and everybody had their price. This included the police officers who would ignore a traffic violation for the right price or government officials who would use their offices as a means of accumulating wealth for themselves and their family. The Russian state has now launched a program to fight corruption. I have my doubts. Corruption is changing in Russia, but it is not disappearing. In the same way that power is becoming increasingly centralized, corruption too is becoming monopolized. Simply put, rather than paying many people small bribes, it is now necessary to pay one individual one large bribe to achieve the same goal. Below is an excerpt from the online journal Gazeta.ru followed by my translation.

Прежде всего, речь идет о смене модели коррупции в России в последние два-три года – от массовой и преимущественно «низовой» коррупции страна стремительно переходит к коррупции преимущественно «верховой». По всем оценкам, обороты на коррупционных рынках растут не так уж и стремительно: например, Всемирный банк в своем отчете за 2006 год вообще утверждал, что объемы «коррупционного налога», процента ВВП, приходящегося на коррупционные сделки, несколько сократился.

Одновременно наблюдается существенный рост объема средней взятки –тенденция подтверждается и региональными опросами, и косвенными данными. Говоря грубо, размер взятки вырос, число взяток уменьшилось – вполне очевидно, что речь идет о консолидации процесса мздоимства в более высоких эшелонах власти.

First of all, the discussion centers on the changing model of corruption in Russia in the last two or three years where corruption went from a pervasive and largely "grassroots" corruption to a corruption of the upper echelons. By all estimates, sales in the corruption market is not growing exceedingly fast: for example, the World Bank in its 2006 report claimed that the the "corruption tax" collected as a percentage of [Russia's] GDP declined slightly.

There is a significant increase in the average bribe, a trend confirmed by the regional polls, and circumstantial evidence. Simply put, the size of bribes has increased, while the number of bribes declined, and it is clear that there is a consolidation process whereby bribes paid stay within the higher echelons of power.

This, of course, only applies to government officials. Businesses in Russia do not only have to deal with the official state structure and the corruption that is inherent, they must also pay the unofficial and illegal structures (the "mafia") if they are to remain in business.

The overall tendency therefore is a centralization of corruption that parallels a growing centralization of power. It is also a matches the growing power of monopolies in the Russian economy both at the national and regional level and the increasing disparity of wealth in Russia. It is much easier and efficient to siphon bribes and wealth from a small number of companies than it is to collect a "corruption tax" from thousands or millions of small businesses and individuals. Given that much of Russia's growing wealth is based on the oil and gas industry, the existence of a few monopolies (GAZPROM being a prime example) simply facilitates the centralization of the economy and the potential for corruption.

However, all corruption, big or small, weakens a country's economy. The centralization of corruption will not make the Russian economy stronger, it simply makes the general population that much poorer in the long run.