The corrupt advantage in Russia
By Kathy Lally,
The first private businesses were already operating and making a lucky few wealthy as the Soviet Union staggered toward its last autumn. Laws were not changing fast enough to keep up with the new economy — many officials still viewed profits as exploitation — making even the most well-intentioned businessmen guilty of some violation or other. The corrupt took full advantage.
Protection rackets flourished — a businessman approached by the rapidly growing criminal groups known as the mafia often felt he was not in a position to call the police. A three-part Washington Post series earlier that summer titled “Soviet Capitalism: The Wild East” had documented the way a new criminal enterprise seemed to spring up next to every legitimate one as the communist system attempted to develop into a free market.
Those crooked roots held fast over the years, providing a rich harvest today and hobbling the nation’s growth. A report published Sept. 7 by the World Economic Forum, the organization that sponsors the annual economic summit in Davos, Switzerland, found that Russia had dropped three places, to 66, on its global competitiveness index.
The report blamed corruption, inefficient government bureaucracy and crime for making Russia less competitive globally, saying it needed to strengthen the rule of law, protection of property rights and the judicial system. Russia came in just behind Vietnam and just ahead of Peru.
The country has also been given a negative ranking on Transparency International’s corruption perception report, which put Russia in 154th place, tied with Kenya, on a list that goes from least to most corrupt.
At an international forum in the city of Yaroslavl on Sept. 8, President Dmitry Medvedev acknowledged that Russia remained haunted by its Soviet past.
“We tried to create a society without the rich in the past,” he said. “That experiment led to stagnation, poverty and disintegration of the country.”
His conclusion? “Inviolability of private property must be guaranteed.”