#14 - JRL 7059
OPINION: The new and improved corruption equilibrium
Contributed by Peter Lavelle, Moscow-based analyst and columnist for The Russia Journal

MOSCOW, Feb 11 /Prime-TASS/ -- Russia’s so-called "middle class" is an interesting beast. For some, it is not much different than its Western peers. For others it is a group of consumers who merely imitate a certain lifestyle found in the media without the commonly accepted social and moral values implied when using the term “middle class.”

Last week, Interior Minister Boris Gryzlov stated at a meeting of the ministry's board that the state had lost something approaching $1.57 billion due to economic crimes last year, a third more than in 2001. The same news report claims that “Two-thirds of bribe-takers were criminally prosecuted.” According to Gryzlov, “at the same time, some divisions only pretend to fight corruption. Active corruption-fighting must be executed at all levels of government.” Two-thirds of what number was not mentioned in the newswire report this writer read. My suspicion is that the number is rather small. Obviously, the number of bribe-takers was not highlighted in the same wire report.

One does not have to be an economist or bean-counter to apply some elementary logic when it comes to trying to identify who the culprits are in the Ministry’s corruption estimates. The very rich remain above the law, and the poor (by definition) certainly can’t afford to pay a bribe. There is only one social group that remains able to transact a bribe. The group is the “middle class” and/or mid-sized businesses.

What President Vladimir Putin thinks of corruption is one of those black boxes that surround him. The most we can discern from his public pronouncements is that he does not like it, while his actions inform us that he is ambivalent. Perhaps this ambivalence comes from complacency, due to the country's current relative economic and social stability.

The Yeltsin years are indistinguishable from the concept of corruption gone berserk. Apologists for this phenomenon remain notorious to this day. Anatoly Chubais and Boris Nemtsov would still have us believe that corruption is an unfortunate part of Russia's transformation to a market economy. This kind of reasoning might have resonated with the chaotic reality of the times, but today it is a barrier to Russia attaining the "normality" so many in this country — including the president himself — claim to desire.

Corruption is a very powerful disease, able to adapt to various conditions and environments, and the Russian strain is particularly virulent. During the first decade of Russia's exit from communism, the terms "banditry" and "gangsterism" were very appropriate. Society was weak, and the state was collapsing. The situation looks different today: The state is strengthening, business empires are consolidating and a fledgling “middle class” that works for them is coming into being. All seem to have come to a comfortable understanding concerning how the system should be greased in Putin's Russia.

Under Putin, corruption is being normalized in an entirely new and dangerous way. In reality, the level of corruption today is not much different from in Yeltsin's time. How many major figures — known to anyone who watches television or reads newspapers — from the state bureaucracy or the business world have been prosecuted for gross embezzlement and misappropriation of funds during the Putin presidency? The answer is obvious. The difference between the two presidencies is that, under Putin, the state and society have found a new corruption equilibrium.

This equilibrium can be explained as follows: As long as there is a modicum of economic stability, most Russians — the fledgling “middle class” — are not too interested in tinkering with the status quo. Bribery is acceptable as long as the sums are not exorbitant and the desired goal of the bribe is achieved. Bribery is predictable and often the first form of action that is considered to resolve a problem. Being able to bribe officials and "arrange things" is almost chic. In juxtaposition, the written law remains unpredictable and tedious.

For the state, the stakes are simple. A bureaucrat in Russia is a rent seeker by definition, and one must admit they are curious creatures. On the one hand, they are modern because they understand the value and power of money, but, on the other, they are very traditional because they use their positions to interpret the law whichever way it suits them. Most are also very rational: Knowing what to extort is a very important skill.

Recovering from near-anarchy in the early 1990s, the rules of corruption among bureaucrats, businesspeople and ordinary Russians have become more explicit and better-organized. An example of this is that the so-called "roof" is now provided by corrupt police agencies rather than by criminal structures. And, unlike a decade ago, it is estimated that 20 percent of companies have their own security services. Sudden attacks still happen, but apprehension about them has diminished. Is this an example of rational and efficient corruption? Indeed, it is. Corruption is now well-managed.

As demonstrated by Russia's case, pervasive corruption has engendered a parallel, semi-feudal chain of command that competes with the official hierarchy. The real motivation of corrupt officials and business leaders — who are supposedly pursuing national goals — is at odds with the Kremlin's official commands. Most would agree that Russia has gone from worse to bad under Putin. But just because the economy appears healthy does not mean the cancer of corruption is in retreat.

The task of looking for Russia’s middle class in all this is not as clear-cut as some would have us believe. The term “middle class” is not only an economic term; it is a term that almost always is the benchmark to define, if only as a contrast, all other groups in a society. Being able to pay off the police and bureaucrats is an impoverished criterion for defining any respectable middle class, which should represent the average or most identifiable elements of what each modern society is all about.