2005 July 22 Friday
Russia Experiences 10 Fold Increase In Bribery

Are the government officials demanding more for the same services or do they have more assets and powers to sell for cash?

INDEM, the independent and highly respected think-tank, released its annual report on corruption in Russia this week.

Its findings are hardly encouraging, but not unexpected either. Corruption in Russia has grown ten-fold over the last 4 years. Instead of making a commitment to deal with this grave social malady, the authorities have accepted the institutionalization of corruption as part of Russian economic expansion.

INDEM's "Corruption in Russia: Dynamics and Perspectives" report claims the average bribe in 2001 was $10,200 and has increased to $135,000 in 2005. The report claims bribes increased 10-fold since 2001 and equal to two and a half times the current federal budget.

The authorities have recognized the damage corruption inflicts upon the economy. To counter the temptation to accept bribes for political favors, 35,000 state officials in the federal bureaucracy, representing 10% of all state employees, were given a five-fold pay increase roughly a year ago. These employees are now paid $500 a month, instead of $100. Most observers applauded the government's move as a good first step to fight corruption, but paying some state employees more has not stemmed Russia's oldest social malady called "rent-seeking."

Some Western observers hailed Putin's coming to power. They figured even if he decreased democracy he'd at least cut back on corruption so that the Russian economy would grow faster. Well, Putin has been a total failure by that measure. The biggest economic plus for Russia in recent years has been the rise in oil prices.

Not only are prices up but quality is down too.

However, as the INDEM report points out, the "corruption equilibrium" may now no longer serve its purpose. In the past, the effectiveness of a bribe was a near certainty; today paying a bribe does not assure the "service" will be provided.

What is causing the rise in corruption? Did Putin renationalize assets and thereby cause access to those access to become sellable by government officials? Or has an increase in oil revenue brought in more money with which to pay bribes?

The increase in bribery is the result of growing predatory behavior by bureaucrats.

“The general tendency of growing corruption is not new, but the Yukos affair has completely untied the hand of bureaucracy in their pursuit of bribes,” Mr Satarov said.

But he said the underlying reason for the rise in corruption was the lack of political or civil society control over bureaucrats, who had become the dominant force under Mr Putin.

“Putin is the hostage of the system because he depends on political support from the bureaucrats,” Mr Satarov said.

Putin is portrayed as a strong man. But if he can't control the bribery then he's even even weaker than Yeltsin. Yeltsin's government was better than Putin's.

Share |      By Randall Parker at 2005 July 22 12:09 AM  Civilizations Decay

Invisible Scientist said at July 22, 2005 3:21 AM:

Elementary, Parker...

Since the annual trade deficit of the United States is over $500 billion, and since the United States is the only major counry running a significant trade deficit, it must be that our annual loss equals the annual gain of those countries that are net exporters. Japan and China do export more than they import, but they still have to pay for the raw materials they are importing, and the Japanese profit margins are not all that high. Thus the raw materials exporting countries are the final destination for the annual US trade deficit. And Russia is not just exporting oil, and natural gas, but also many useful minerals. Thus, for example, it was published that for 2004 in Russia, the trade surplus of USD88.4bn is reported, compared with USD59.9bn in 2003 (The link to this article is http://www.russiajournal.com/news/cnews-article.shtml?nd=47457 ).
Wherefore it follows that all these dollars must have been accumulating somewhere. And the dollars always accumulate in the pockets of the smarter people in any country. But we must also observe that the smart people who are accumulating these dollars in Russia, are also spending a lot of this money locally, so that the average Russian is also benefiting considerably. However, in the event that the United States stops the trade deficit, or even if the US trade deficit is reduced just a little bit, I am absolutely sure that a terrible depression will follow in Russia.

RL said at July 22, 2005 4:17 AM:

The people will vote for him anyway.
Because at least now they are being dominated and swindled by corrupt Russian government officials, and not by you-know-who.

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