Putin's Corruption Trap
Tatiana Stanovaya
16 April 2013

The fight against corruption is a perpetual topic in Russia: it has been discussed for centuries, but almost no one believes that the situation can ever be improved. For the last five years, however, the Russian government seems to have become more involved in the problem. Since last fall, a number of big corruption scandals have broken. Political analyst Tatiana Stanovaya considers whether the fight against corruption is the government's real objective or just another instrument to solve the Kremlin's political problems.

 

 

The numbers that experts use to describe the extent of corruption in Russia are definitely not for the faint-hearted. National Anti-Corruption Committee Chairman Kirill Kabanov has recently estimated the corruption market in Russia at around $300 billion a year, which is considerably more than the $300 to 500 million that the illicit drug market launders annually. According to Kabanov, "typical bribes—that is, low-level corruption—that we hear about in criminal cases and which amount to 80 percent, I think, in our country, do not form this market." He further explains, "First of all, this market is formed due to the distribution of the budget in terms of corruption, state property, and natural resources management. These are the main sectors of the corruption market." Alexander Savenkov, deputy chairman of the Federation Council's committee on constitutional legislation, said that, according to Interior Ministry statistics, the average level of a bribe in Russia in 2011–2012 amounted to 300,000 rubles ($10,000). The Association of Russian Lawyers for Human Rights estimates that corruption consumes as much as 50 percent of Russia’s GDP. Top areas for corruption are law-enforcement agencies and the judicial system. These data were included in a 2010 report prepared by Clean Hands, a Russian anticorruption center. Transparency International has ranked Russia 133rd (out of 174 countries) in its 2012 Corruption Perception Index. According to the 2011 "Bribers" Index by Transparency International, out of 28 countries included in the study, Russia had the most corrupt companies when dealing with foreign operations.

Corruption is without doubt the most topical question in Russia, which is destructive for state efficiency, the government's reputation, budget stability, rates of economic growth, competition, and so on. A rapid growth in corruption was noted in 2000, when Vladimir Putin became president. Yet he wants to be seen as the main fighter against corruption. What is really going on?

Having become president, Putin got caught in his own political trap. During his first term (until 2004), he meticulously built the "vertical of power" by replacing Yeltsin's people with his own supporters from St. Petersburg, squeezing out oligarchs, and taking control of state decision-making mechanisms. Personal loyalty played a key role in personnel appointments, with corruption considered an insignificant side effect. Putin's logic was simple: he aimed to gain the maximum control possible over the government in order to make a "breakthrough." He thought that mobilization based on corporatism was needed to "raise the country from its knees."

A rapid growth in corruption was noted in 2000, when Vladimir Putin became president.

The president, however, soon began to turn into a hostage of his own elite. It would seem that the bureaucracy's total submission, its control over key positions and distribution of economic resources, and the redistribution of spheres of influence and property in favor of oligarchs close to Putin would guarantee him many years of stable rule. But the price of loyalty keeps increasing, and Putin becomes more and more dependent on the appetites of state oligarchs who made their money as a result of their proximity to budgetary decision-makers.

In practice, this situation is reflected by three key elements of Putin's course with regard to corruption. The first element is a political one. One has to admit that since 2000, the Kremlin has not shown any political will to fight corruption. Corruption is considered inevitable, and a real systemic fight against it is seen as a risk for the regime. The Kremlin’s semi-official position on the subject recognizes only "household" corruption and blames its existence on people, business, "Russian tradition," and immature legal consciousness—that is, anything except itself. One need only recall Putin's reaction to a letter sent to him by legendary Russian rock musician Andrei Makarevich. Last summer, Makarevich wrote an open letter addressed to the president in which he emotionally raised the question of "kickbacks." "Five to six years ago, the average kickback in the country was 30 percent. We wept, but we paid. Today it is 70 percent. I even know a case in which the kickback was 95 percent," Makarevich wrote. "I know what you will say—let them go to court. But they will not go to court, Vladimir Vladimirovich, because our courts today have become machines to punish undesirable elements or devices to get money from plaintiffs. Thus, with the remaining 30 percent of the budget we intend to strengthen the defense, to build roads, to develop industry, healthcare, and education, and to organize the world's best Olympic Games. If the situation does not change drastically in the near future, it will end in a total disaster." In response, the president could not think of anything better to do than to send a similar letter to businessmen blaming them for corruption.

Another example of a characteristic Putin reaction is a statement made during a December 2012 news conference. "I have already cited this dialogue between Peter I and his prosecutor-general,” said Putin. “When the latter gave examples of theft, Peter suggested that corrupt officials be either exiled to Siberia or executed for even small, not very big crimes, to which his prosecutor-general answered: ‘But then who will be left, Your Majesty? We are all thieves.’” Putin concluded the historical anecdote by calling corruption a Russian tradition. Putin's logic is transparent: he is afraid that if he really starts throwing corrupt officials in prison, he will be left alone.

Nevertheless, after 2008, this approach underwent some changes. Dmitri Medvedev tried to show political will by scrupulously developing anticorruption legislation. Under Medvedev the government acknowledged for the first time the existence of "big-time corruption"—kickbacks connected with government contracts and illegal payments linked to the decision-making process in regard to the distribution of benefits (it is funny that, according to the Russian prosecutor’s office, doctors and teachers are the most corrupt professions). It is, however, obvious that Medvedev’s political will was linked with his real political authority, which was very limited. Putin did not object to Medvedev's activity: he realized very well that legislative changes alone would produce no effect in the conditions of “manual management” and a lack of real democracy and political competition. Putin was right, but not entirely. Medvedev made officials publish all government contracts on a special website, and scandals started to emerge one after another in spite of the bureaucracy’s cunning tricks (for example, one could not find a state contract on this website if the text was written in Roman and not Cyrillic letters). Medvedev also forced officials to publicly declare their income, which created many opportunities for civic activists to examine these declarations with a magnifying glass.

 

The RosPil project, initiated in 2010 by lawyer Alexei Navalny (pictured), is directed against corruption in government contracts.

 

In 2011, when Putin began preparing for his return to the Kremlin, Medvedev’s “law professor” approach vanished into thin air. A new approach emerged, dictated by a fear of the West and of political destabilization in Russia. There suddenly rose a wave of corruption scandals, and, in the eyes of the elite, Putin began to “betray his own.” However, there is still reason to say that Putin has no real political will to fight corruption. All recent corruption scandals (such as those connected with Rostelekom, Skolkovo, and former Defense Minister Anatoly Serdyukov) had political motives and were provoked by the transfer of power and resources from Medvedev’s people to Putin’s people. Besides, the growing activity of bloggers, who have been successfully exposing corrupt officials, has played an important role in these scandals. However, if, on the whole, it looks like the government has finally begun to show some political will in fighting corruption, the second key element of the Kremlin's policy makes it evident that this is not true.

This element is a legal one, and it affects the entire system of legislative activity in Russia. It is important to emphasize that the fundamental problem of Russia's legal system consists in the selective character of law enforcement, while the laws themselves remain rather rudimentary. Vladimir Putin is not interested in the creation and implementation of effective anticorruption legislative mechanisms. Such common but necessary aims as increasing the transparency of state officials; developing institutions of civil, parliamentary, and media control; improving the accountability of state officials and the openness of the decision-making process; and increasing publication of these decisions are not on the Russian government’s agenda.

Besides, having adopted deficient and shoddy legislation on income declarations, the Kremlin decided not to follow the example of civilized countries but chose instead to stick to its “own path.” In early April, Vladimir Putin signed two decrees: “On measures to implement provisions of the Federal Law ‘On counteracting corruption’” and “On measures to implement provisions of the Federal Law ‘On control over consistency of state officials’ income with their expenditures’.” These decrees broaden the circle of people whose incomes are subject to declaration (including top managers of the Bank of Russia, social foundations, and state-controlled corporations and companies) and put officials' expenditures under government control. The law on spending provides for the declaration of only those purchases that exceed the official's three-year income. In this case, the official has to report the financial sources used to make those purchases. It is, however, unclear what will happen if the official simply writes in the questionnaire that the money was “saved up."

In practice, the path chosen by the Russian government is considered inadequate. In Western countries, which have developed anticorruption legislation, officials’ expenditures are not declared separately (this practice is very rare). It is much more effective to institute a system of income declaration, in which one has to include his or her property and assets, allowing their value to be verified against the individual’s income. Russia's refusal to ratify Article 20 of the UN Convention against Corruption further aggravates the ineffectiveness of the country’s anticorruption legislation. Russia ratified the Convention itself in 2006, but Article 20, which introduces the notion of "illicit acquisition of personal wealth," has still not been approved.

If anyone is thrown in prison, it will not be because they violated the law, but because they disobeyed Putin.

But even these two decrees create a legal situation in which the fight against corruption becomes an instrument for solving the Kremlin’s political problems. The Kremlin and not the courts will shape the future. The decrees were made public by Kremlin Chief-of-Staff Sergei Ivanov and Yevgeny Shkolov, curator of the department of public office and personnel in the presidential administration (whom Medvedev, incidentally, had fired from the Interior Ministry). Shkolov, who will become the main “executioner” of corrupt officials, will have enormous political authority and possibly a blank check from Putin. Decisions will be made in Putin’s office and formalized during the meetings of the Presidential Anti-Corruption Council. A clear signal has thus been sent to the elite to stand still and worry. If anyone is thrown in prison, it will not be because they violated the law, but because they disobeyed Putin.

In conclusion, one should mention the third (and the most important) element of the Kremlin’s policy with regard to corruption—the public relations element. Anticorruption policy has always been and will continue to be one of the key components of Putin’s public rhetoric; he has to take society’s demands into consideration. The Kremlin cannot afford to ignore the population’s growing discontent with the government’s paralysis regarding corruption. According to a December poll conducted by the Levada Center, 42 percent of respondents agree that in trying to retain power, the current Russian government relies on loyal supporters while turning a blind eye to their crimes. Only 19 percent of respondents did not agree with this statement. Leontiy Byzov, a senior research fellow at the Sociology Institute of the Russian Academy of Sciences, commented on the results of this study as follows: “Corruption is actually a form of management of the country. Corruption is caused mainly by the fact that other institutions specified in the legislation do not work, and repressive measures can only help to mow the lawn to some extent and to prevent the bigger weeds from growing. But, life being as it is, the lawn will keep growing no matter what.”

The same study by the Levada Center shows that the population believes less and less in Putin’s capability to fight corruption. The effectiveness of his campaign is rapidly decreasing along with the public’s trust in the “national leader.” Putin is now trying to solve two problems simultaneously: to strengthen control over the elite without recurring to drastic measures such as imprisonment, and to please his electorate. But, as they say, between two stools you fall to the ground. In the end, the elite will start dispersing and the people will get increasingly disappointed while corruption keeps on growing. Putin has only one way out of this political trap: a radical change of the regime. But that would signify his political death.

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# Alina 2013-07-16 16:04
Put in, put in, put in...Big Bang!
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