Corruption in Russia: Editor’s Introduction

Although Vladimir Putin began his first presidential term with reforms that were geared in part toward reducing illegal activity on the part of both state officials and average citizens, the hopes that tax and judicial reform and higher salaries for government employees would quickly reduce the extent of corruption in Russia proved unfounded. Corruption remains one of the most critical problems facing the Russian state and society.

This issue of Russian Politics and Law returns to the theme of corruption that we first addressed in 2009. The authors of the articles found in this issue describe the extent to which bribery and other forms of corruption occur in Russia as a whole and in specific sectors. They also address potential solutions to the problem and even discuss the extent to which corruption is necessary for the continued functioning of the Russian state.

Vladimir Rimskii’s “Bribery as a Norm for Citizens Settling Problems in Government and Budget-Funded Organizations” describes the results of a study that shows that bribery in Russia draws support from a system of norms and values that is deeply rooted in Russian society. The hypothesis driving the study is that bribery in Russia has become a social norm by which citizens solve their problems with government representatives. Rimskii tests this hypothesis by examining the results of three surveys conducted over a ten-year period. The results show that behavior in corruption-prone situations depends on the nature of the problem, with bribery being most common in relations with medical assistance or during motor vehicle inspections, while it was less common in situations where the respondent was applying for a job or government benefits, dealing with housing issues, or even going to court or the police. The frequency of bribery in Russian society is high, but stable.

One interesting finding that comes out of the surveys is that corruption has become such an entrenched part of the system that most people offering bribes do so without being asked and a sizable plurality know in advance the appropriate amount to give in particular situations. The surveys show that almost 40 percent of the population believes that giving bribes is essentially a necessary part of life in Russia. Most people blame the system or corrupt officials for the endemic nature of Russian bribery, rather than implicating their own behavior. They also see various state-sponsored anticorruption measures as ineffective, registering a high level of hopelessness about the possibility of systemic change.

Additional data about the demographic and geographic characteristics of corrupt behavior is found in “The Geography of Bribery” data put together by the Public Opinion Foundation, based on a survey it conducted in 2011. The data in this short article shows that corrupt behavior by government officials is most common in the southern parts of the country and in the twin capitals of Moscow and St. Petersburg. Corruption is least common in the middle regions of Russia, including Siberia, the Urals, and the Volga region. In terms of demographic characteristics, the groups most prone to find themselves in corruption-prone situations are “those with greater social and material resources: men, middle-aged people, people with a higher education, and people with relatively high incomes.”

Large-scale corruption at the regional level is explored in detail by Leonid Bliakher in “The Regional Barons.” He finds that the post-Soviet Russian state has gone through three phases. In the first phase, extreme state weakness resulted in the state’s enforcement functions being performed by organized criminal gangs. As local state structures began to strengthen while the central state remained weak during the second phase, regional barons came to preside over regional administrative markets. The establishment of a strong central state in the most recent phase has led to the creation of a unified national administrative market.

The next several articles examine specific aspects of corruption. In “Bribery and the Judiciary,” Vladimir Rimskii shows that the judicial reform carried out during Vladimir Putin’s first term as president has made bribery more widespread in the Russian courts, with business people the main target of extortion. The frequency with which bribery is used in the court system to assure favorable rulings has undermined Russians’ trust in the court system and has prevented the courts from becoming a way for citizens to protect their rights. In fact, most Russians see no distinction between the judiciary and the executive branch and do not believe in judicial independence.

Anastasia Dubova and Leonid Kosal_’s examine “Russian Police Involvement in the Shadow Economy.” They find that Russians do not trust the police to be impartial in carrying out their duties. The authors find that “police involvement in the shadow economy has reached the point where it poses a threat to the Russian economic and political system.” The main causes of extensive corruption among the police stem from their de facto privatization and use by governing elites in the division of assets left over from the Soviet system. At the same time, the collapse of the communist system undermined the police professional code, while low salaries encouraged police to use their powers to make money on the side.

In “The Border Zone,” Sergei Golunov shows how the Russian border zone offers many opportunities for illegal self-enrichment. He identifies six types of commonly occurring corrupt practices carried out by border zone officials: (1) illegally allowing people or goods to cross the border, (2) extorting money or goods from entrepreneurs and other travelers crossing the border, (3) giving vehicles the right to move to the front of the line at border crossings and customs offices, (4) granting privileges to businesses with connections to the officials, (5) using the restricted status of border territories to exploit their resources, and (6) lobbying government officials in support of legal standards that are conducive to border zone corruption. Golunov argues that smuggling and other types of border zone corruption can be reduced through increased public oversight, systematic rotation of personnel, and the formation of informal associations to pressure officials to reduce abuses.

The last two articles address some of the fundamental causes of corruption in Russia and touch on possible solutions to the problem. In “Hostages of Distrust,” Aleksandr Auzan and Tat_’iana Malkina discuss how efforts to eliminate corruption can have unexpected consequences in societies based on personalized ties. Auzan argues that while corruption can have quite pernicious effects in societies that function based on depersonalized norms, in societies that are based on personalized ties efforts to eliminate corruption may lead to societal paralysis as public services cease to function. He places Russia firmly in the latter group and argues that transition to the group of states founded on depersonalized norms is difficult and does not follow any general laws. Auzan believes that for Russia to make this transition, the creative class will have to put pressure on governing elites to create institutions that can help them function without having to leave the country.

In “The Strategy of the New Principal,” Nikolai Rozov provides a potential path toward eliminating the endemic nature of corruption in Russia. He defines corruption in Russia as a social institution that is based on a principal–agent relationship that allows for frequent violation of formal or informal rules. If such violations become constant, they may be considered rents being paid by clients to the agent, with the active or passive agreement of the principal. While in some societies, the collective citizenry may play the role of the principal, in Russia the role of the principal is given to the supreme state authority—the president. The president has the power to allow his agents to engage in corrupt activities or to punish them for such activities. By frequently changing the rules of the game, the president encourages the formation of an “institutional trap.”

Rozov argues that this trap is created by the existence of a system in which the main actors are more interested in “winning more rights to break rules or greater powers to set both the rules themselves and the rules for breaking rules.” Attempts to replace the existing set of rules with rules that might benefit society as a whole are viewed as hopeless and may lead to the elimination of the actor pressing for such changes.

Based on this analysis, Rozov formulates a potential pathway for breaking out of this vicious cycle of corruption. “The first step is to prevent illegal state coercion directed against persons and property.” This can be done only if a sufficiently large segment of society becomes willing to challenge the rulers in what is essentially an attempt to take away their position as principal in favor of giving that role to the people. This has to be done gradually, first through the formation of local initiative groups that are focused on reducing corruption and reforming the citizen–state relationship in particular localities and on specific issues. Gradually, such groups can coalesce into a political movement that seeks to reform the relationship in Russia as a whole.

In the introduction to the July-August 2009 issue of this journal, I wrote that the most likely scenario is “more of the same, with Russian leaders issuing occasional declaratory statements aimed at making people think that the government is concerned about the problem of official corruption and taking a few exemplary steps against some individuals who have in reality fallen out of favor, while few actual measures are undertaken against systemic corruption.” Events in the last year have shown that this prediction remains very much on the mark, with several corruption-related show trials against regime opponents and highly visible firings of top officials such as former Defense Minister Anatoly Serdiukov for corruption-related offenses. At the same time, there is no longer even any pretense of attempts to eliminate systemic corruption. The governing elites are no longer capable of changing the system they have created; this will inevitably lead to pressure to change the system from below.

Russian Politics and Law, July 2013 Table of Contents

Volume 51 Number 4 / July-August 2013 of Russian Politics and Law is now available on the mesharpe.metapress.com web site.

This issue contains:

Corruption in Russia: Editor’s Introduction  p. 3
Dmitry Gorenburg
Bribery as a Norm for Citizens Settling Problems in Government and Budget-Funded Organizations  p. 8
Vladimir Rimskii
The Geography of Bribery  p. 25
Public Opinion Foundation
The Regional Barons  p. 30
Leonid Bliakher
Bribery and the Judiciary  p. 40
Vladimir Rimskii
Russian Police Involvement in the Shadow Economy  p. 48
Anastasia Dubova, Leonid Kosal’s
The Border Zone  p. 59
Sergei Golunov
Hostages of Distrust  p. 71
Aleksandr Auzan, Tat’iana Malkina
The Strategy of the New Principal  p. 85
Nikolai Rozov

The future of Oboronservis

The most recent issue of Moscow Defense Brief has an interesting article (gated) by Vedomosti journalist Aleksey Nikolsky on the future of Oboronservis after Serdyukov’s ouster. Oboronservis was set up in 2008 as an integrated holding  company that would run the Russian military’s non-core operations, including logistics, repairs, and maintenance. It gradually became a major player in the sale of surplus (or ostensibly surplus) military property, and it was allegations of corruption in this area that launched the scandal that was used as a pretext to fire Serdyukov last fall.

The official purpose of Oboronservis was to allow the MOD to outsource non-critical functions. Nikolsky notes that while many thought that these functions would be contracted out to civilian contractors in a manner similar to models used in Western militaries, the Russian MOD chose instead to transfer its non-critical operations to Oboronservis subsidiaries. These subsidiaries then in turn were authorized to use private contractors for their operations, though the only areas where outsourcing was fully implemented were catering and cleaning. However, even in these areas, the subsidiaries have run up large debts to the contractors, at least in part as a result of the embezzlement of allocated funds by employees of Oboronservis or its subsidiaries. Nikolsky believes that the major subsidiaries will most likely be split off from the company or else the MOD will take over their assets and return to the old system. Opponents of outsourcing have claimed that living conditions in compounds run by the subsidiaries have deteriorated, even as spending on outsourced functions such as catering has increased substantially. Other critics note that outsourcing is problematic because it cannot be relied upon in times of war. Since the military would have to rely on its own mobile support units when troops are in the field, it is difficult to generate efficiencies that could be available if such units could be eliminated. The Oboronservis proposal to solve this problem by making commercial contractors part of the Russian military reserve and mobilizing them in the event of military action does not (to me) seem very realistic, given that most of the cooks and servers that provide the catering are middle-aged women and would not have a particularly easy time fitting into the Russian military structure.

The second (and much less publicized) goal of Oboronservis was to provide the MOD with a channel for importing modern Western weaponry independent from Rosoboronexport and Rostekhnologii. According to Nikolsky, this function was to become gradually more prominent. There are two arms import programs currently being run by Oboronservis. The first is the licensed assembly of 3,000 Iveco LMV M65 armored vehicles in Voronezh at a cost of $1.5 billion. The second program is for Rheinmetall to build an army training center in Mulino, Nizhny Novgorod oblast at a cost of $100 million. Nikolsky believes that while the second program is unlikely to be modified by the new regime, the Iveco contract may be reduced. Two other potential deals — for Israeli UAVs and for helicopters from Eurocopter have not gone forward, in part because of lobbying by opponents in the domestic arms industry. Nikolsky believes that Sergei Shoigu, the new defense minister, is largely supportive of the idea of importing military equipment from abroad. The Emergencies Ministry, which Shoigu headed until last spring, was the first Russian government agency to buy foreign helicopters. Shoigu has repeatedly complained about excessively high prices charged by Russian aircraft manufacturers and has suggested that foreign competition may be a way to force them to lower their prices.

Finally, Nikolsky argues that Oboronservis is likely to keep the former MOD repair plants, which have been consolidated under the Aviaremont and Remvooruzheniye subsidiaries. Just the aircraft repair component provided one quarter of the company’s total revenues in 2011. Shoigu has already indicated that outsourcing of repairs and maintenance is likely to continue, with an emphasis on awarding contracts to the original manufacturers whenever possible.

It seems to me that this article implies that the new regime will make only limited changes to the outsourcing model. While changes in logistics services, and especially catering, may be contemplated, I don’t think the military is particularly eager to bring back conscript cooks and the low quality food they used to produce. Most likely, there will be an effort to limit the company’s ability to sell property, as part of an effort to reduce corruption. As usual, this will  result  in a shift in illicit financial flows, rather than their elimination.

 

The Russian military’s manpower problem

The greatest failures of Russian military reform over the last two years have been in the realm of manpower and staffing. Policy in this area has been wildly inconsistent and has shown no sign of either prior planning or strategic thinking during the reform process. I’ll focus here on just one aspect — the continuing debate over whether the Russian military should be staffed primarily through conscription or by recruiting professional soldiers to serve under contract. I’ll leave aside (at least for now) the equally problematic questions of reductions in the number of officers, education and training, and housing allocation.

(All of these related questions, and many others, are addressed in an excellent pamphlet by Rod Thornton, recently published by the U.S. Army’s Strategic Studies Institute and entitled “Military Modernization and the Russian Ground Forces.” I urge everyone interested in Russian military reform to read this piece — it’s one of the most balanced and informative English-language reviews of the reform I’ve read.)

While the military leadership continues to go back and forth on the question of conscription versus professionalization, it has been largely ignoring the simple fact that there simply aren’t enough 18 year olds in Russia to staff the military at current levels given the current one year term for conscription. The math is quite straightforward. The military wants to have 1 million men in uniform, of whom 150,000 were to be officers and another 150-170 thousand contract soldiers. The number of officers was recently raised to 220,000. This left a need for somewhere between 610 and 700 thousand conscripts per year. Presently, there are 700,000 men reaching the age of 18, of whom only about 400,000 are currently considered draft eligible because of various deferments and health exemptions. Furthermore, the severe drop in the birth rate in the 1990s means that within the next two years, the number of 18 year olds will decline by a further 40%, leaving less than 300,000 draft eligible 18-year olds. So the military will be facing a gap of at least 300,000 (and more likely closer to 400,000) soldiers every year for the foreseeable future unless something is changed.

The military has tried to address this problem by reducing deferments. This has not proved very effective, with only 20 percent of university graduates entering the military. At the same time, more and more young people are leaving the country for education and work, in part in order to avoid having to serve in the military. Another option that has been discussed is to increase the length of conscript service to either 18 months or two years. This is a politically unpopular measure that cannot be undertaken before the 2012 elections and may prove to be difficult to enact even then. It will most likely lead to at least some level of popular protest. My guess is that while there’s certainly some chance that the length of conscription could be increased one or two years from now, it’s fairly unlikely. Furthermore, if it happens, it will signal the rollback of military reform and the victory of the old guard over the reformers.

So that leaves two possible options for dealing with the manpower crisis within the reform paradigm. The first is to greatly increase the number of contract soldiers serving in the military. This has been the stated goal of the reformers over the last two years. But so far they have little to show for their efforts. In their recent Carnegie Moscow Center working paper on the military reform, Aleksei Arbatov and Vladimir Dvorkin point out that over the last 15 years, Russia has actually regressed in its ability to attract professional soldiers. In 1995, the Russian military had 380,000 contract soldiers and NCOs in service. Because of a combination of financial problems and resistance by senior generals, by 2003 this figure had shrunk to 135,000. Subsequent programs to increase the number of contract soldiers to 400,000 failed due to a combination of sabotage by the military bureaucracy, mistakes in implementation, and continuing problems with low pay and lack of prestige for serving in the military. Arbatov and Dvorkin note that only 107,000 contract soldiers are left at this point. This has not prevented the military from promoting new plans to increase the number of contract soldiers to 425,000 in the next few years.

The second option is to reduce the size of the military to a more manageable number. None of the arguments made in favor of maintaining an army of 1 million soldiers make sense. They are usually based on factors such as the country’s size or the length of its borders, rather than on an analysis of the realistic military threats that Russia might face in the foreseeable future. Arbatov and Dvorkin argue that the actual reasons for maintaining the size have to do with efforts by senior generals to preserve the current conscription system. I would add the factor of prestige — the generals want to be seen as leading a powerful military and in the old school world that many of them inhabit, a powerful military is a numerically large military.

Arbatov and Dvorkin propose reducing the size of the military to 800,000. They show that such a size would be sufficient to deal with potential military threats.  They believe that Russia could then have a fully professional military comprised of 220,000 officers and 680,000 580,000 professional soldiers. While this may be a laudable goal down the road, I just can’t imagine how the Russian government could succeed in recruiting such a large number of contract soldiers. A more likely scenario is to continue to combine professional and conscript soldiers, at least for the short term. If we assume that the military can continue to draft around 300,000 conscripts a year for one year of service, the required number of professional soldiers would drop to 380,000 280,000. This is still a reach, but at least somewhat more manageable as long as the government follows through on its promises to increase salaries and improve working conditions in the military.

In the longer term, Arbatov and  Dvorkin make a convincing case for the value of a transition to a fully professional military. The expectation that the future Russian military will be equipped with more technologically advanced weapons means that there will not be enough time to train conscripts serving for one year to use this technology. Furthermore, hazing (dedovshchina) will continue to be a problem as long as young men continue to be inducted into the military against their will. Professionalization is the best way to solve this problem. Finally, professionalization will eliminate the corruption associated with the conscription system, including both systemic bribery used in avoiding the draft and the use of “free” conscript labor for private ends by senior officers. One article in NVO calculated the total value of bribes received during the annual call-up at 138 billion rubles.  Arbatov and Dvorkin point out that the only fully professional unit in the Russian military — the 201st motorized rifle division based in Tajikistan — has long shown itself to have a high level of readiness and no hazing and can serve as a model for every unit in the ground forces.

I agree that full professionalization is necessary. However, it seems to me that it will take at least 5 years (and perhaps 10) to get to the point where the Russian military can recruit enough contract soldiers to make such a transition feasible, and a stopgap solution is needed in the meantime. By improving pay and conditions in the military, the government can show that it is serious about its goal of recruiting and retaining professional soldiers. If contract soldiers are paid and treated well, a sizeable number will stay beyond their initial three year term. This will start to change the military’s image, making further recruitment of professional soldiers easier and allowing the government to eliminate conscription.

Update: Apparently, I can’t subtract very well. Thanks to a reader for pointing out the arithmetic problem above, now fixed.

The Hunt for General Shamanov

The Russian press was consumed last week with the case of General Vladimir Shamanov, the commander of Russia’s airborne troops. According to reports first published in Novaia Gazeta, Shamanov ordered special forces based near Moscow to stop a prosecutor from carrying out a search of a factory owned by his son-in-law, who is wanted for attempted murder and is currently in hiding abroad.

The story was based on wiretaps of cell phone conversations between Shamanov and one of his subordinates. (Shamanov, naturally, claims that the recordings were edited to create a false impression of what actually took place. He notes that the special forces never actually arrived at the factory and the search was carried out without incident.) These recordings were leaked to Novaia Gazeta, which published an expose on September 21. The next day, the Ministry of Defense launched an internal investigation of the incident. As several Russian commentators have pointed out, this is very unusual — such incidents are almost always swept under the rug.

Writing for RFE/RL, Mark Galeotti argues that the investigation, and the concurrent distancing of top brass from Shamanov, is the result of poor timing on his part. In Galeotti’s words, “He drew attention to the misdeeds of the officer corps at the very time that they are looking forward to a boom time for corruption.” Furthermore, this occurred at a time when the military is trying to shed its image (if not the reality) of being a highly corrupt organization.

I would argue that while this is certainly a part of the story, there is more to it than that. As Russian media sources have pointed out, the order for a wiretap on top airborne troops officers had to have come someone highly placed in government. Furthermore, both the leak and the rapidity with which the decision to launch an investigation were taken point to a desire to remove Shamanov by someone highly placed either in the government or in the Defense Ministry.

As is so often the case in Russian politics, the key question is who would benefit from Shamanov’s disgrace. Writing in the weekly newsmagazine Profil, Elena Mel’nichuk argues that the most likely cause of the scandal is an effort to discredit defense minister Anatoly Serdiukov by forcing him either to defend a subordinate publicly exposed as corrupt or to remove him, thus costing him a valued ally in his efforts to reform the military.

I think the likeliest source is actually the opposite. I would not consider Shamanov a Serdiukov ally. He certainly was politically savvy enough not to oppose military reform outright. For this reason, he kept his position and was not forcibly retired like so many other top generals. At the same time, he used his direct connections with Prime Minister Putin and other top government officials to prevent Serdiukov from applying the restructuring measures to the airborne troops. This supposition fits with the speed with which the military high command agreed to investigate Shamanov after the initial publication of the story.

It may be that this whole scandal is an effort to destroy a general who, despite his outward show of loyalty to Serdiukov and the Chief of the General Staff Nikolai Makarov, is seen as too independent to be controlled. If in coming weeks Shamanov is removed and the airborne troops then subjected to the same restructuring as the rest of the armed forces, this  may prove to be the reason behind the whole story.