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RUSSIA: Corruption Admitted, Not Ended
By Kester Kenn Klomegah
MOSCOW, May 31, 2006 (IPS) - Corruption is not new, but President Vladimir Putin admitting it is. Eradication, however, is still some way off.
"I note what has become a characteristic feature of our country's political life - low levels of public trust in some of the institutions of power and in business," Putin said in his state-of-the-nation address earlier this month.
"We will continue, of course, to work on raising the prestige of the civil service and to support business, but be it a businessman with a billion dollar fortune or a civil servant of any rank, they all must know that the state will not turn a blind eye to their dealings if they attempt to gain illegal profit out of creating special relations with each other."
And then Putin spelt it out. "I make this point now because, despite all the efforts we have made, we have still not managed to remove one of the greatest obstacles facing our development, that of corruption."
Putin's rhetoric has not convinced many that corruption will now be tackled effectively.
"Unfortunately, Russia has a government based on state control rather than checks and balances," Maria Lippman from the Carnegie Moscow Centre told IPS. "This makes way for rising bureaucracy. Oil money flowing in has only increased corruptible attitudes."
Lippman said the President's annual address had reminded bureaucrats and businessmen of their social responsibility but "extremely tough measures are needed" if Putin wants to produce more than mere political rhetoric.
Many see corruption growing with Putin's coming to power Dec. 31, 1999.
"The elite group that rose to ascendancy together with Putin in 2000 is largely made up of the people who back in the 1990s filled insignificant positions in secret services, and had no access to massive privatisation of government property," Yevgeny Volk, head of the representative office of The Heritage Foundation, an independent watchdog, told IPS. "On rising to power they hastened to make up for what they had missed."
Many officials with high posts in the Putin administration are also chairmen of boards of giant energy, transport and arms trade monopolies.
"Excessive government regulation is a nutrient that feeds widespread corruption," Volk said. "Under Putin this system has significantly solidified and hence corruption has grown even further."
Some instances of action against corruption have not been convincing. Recent uncovering of wrongdoing in the customs service led to re-organisation and resignations, but at a junior level.
"All such measures are doomed to failure," Volk said. "One can as well admit that the country lacks a real political force interested in uprooting corruption, and with a capacity to do so."
Prosecutor-General Vladimir Ustinov has said that law enforcement agencies and government corruption are themselves the biggest problem, and are hindering the fight against terrorism and organised crime. Business development efforts are also being frustrated due to rampant corruption and rising demands for bribes by officials.
"I think it is only now that the Putin administration has begun to recognise this as a serious inhibitor to economic growth and efficiency," Michael Redman, director of Diligence, a group that focuses on corporate investigations, compliance, transparency and support for western businesses in Russia told IPS. "At the most basic level corruption deprives the state of revenue, and the issue is likely to feature prominently in any post-Putin government."
Companies face a serious challenge of remaining competitive in a corrupt environment, Redman said. Rival firms might be willing to pay bribes in order to smoothen things over and secure contracts.
"This is a serious issue, particularly when you consider the regulation at home that many companies face. For example, the Foreign Corrupt Practices Act creates a raft of compliance needs for U.S. firms that can slow and complicate business in Russia."
On the other hand the environment in Russia, he said, presents a challenge for Russian companies seeking to operate in far more regulated economies in the European Union and the United States.
Meanwhile the independent Indem foundation has said in a study that corruption has grown tenfold during Putin's term.
"Administrative reform is dragging along and it's difficult to say when it will produce desired results," Indem president Georgy Saratov was quoted as saying in the Moskovski Novosti newspaper.
In 2001, Saratov said, the bribes paid to corrupt officials amounted to less than the federal budget, but now they are an estimated 2.7 times the annual budget, with no reason to believe that there will be a decline in this growth. (END)
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