Wednesday, June 09, 2004

Strong Government Does NOT Always Mean Clean Government

One argument often put forward for the generally favorable Russian attitude towards Vladimir Putin's strongman rule is that he's helped to crack down on the corruption that once ran unchecked under the neglectful gaze of Boris Yeltsin. As I've argued before, "strong leadership" is no guarantee of clean government, as any number of Third World examples can attest: for every Lee Kuan Yew who's used his wide-ranging powers to clean up corruption, there've been score upon score of crooks who've simply cracked down so hard on free speech that the appearance of "cleaner" government prevailed (at least in the authorized public media), even as corruption reached new heights hitherto unimaginable.

As luck would have it, this Spiegel article being carried in translation on the New York Times website shows that precisely what I suggested seems to be happening in Russia. Far from "stamping" out corruption, all Putin seems to be doing is replacing Yeltin's thieves with his own partners in crime. If the Russians have been willing to give up their right to hold their government accountable in exchange for more honest government, they'll find that they've given up accountability and gained nothing in return; the big difference is that now they won't even have the freedom to complain.

President Putin likes to be viewed as a crusader against corruption. However, the acceptance of perks and nepotism remain widespread in both the administration and government bureaucracy.

Vladimir Putin's face becomes animated whenever he starts to talk about his favorite issue, fighting corruption. The President wrinkles his brow, makes a fist, and curses – in front of district attorneys, government officials and former comrades at the Lubyanka KGB office.

In 2000, Putin promised voters a campaign against bribery, nepotism and abuse of power. These excesses "demoralize the society and undermine the executive branch and the apparatus of state," he said. This was more than four years ago. The "loud declarations and grand programs," the President said recently at the Kremlin, had "unfortunately had virtually no impact." By the time of his annual address on the state of the nation on May 26, the lofty issue had disappeared entirely.

This is probably an admission of failure. On the list of countries burdened with corruption compiled by Transparency International, in which the lowest ranks correspond to those countries where corruption is most rampant, the Russian Federation ranks 86th out of 133 countries, placing it below India, Malawi and Romania. And the examples of how the Russian president is pursuing a perfidious double-edged strategy against corruption have been multiplying recently.

Although the chief public prosecutor's office and audit office investigate the abuse of government positions and public funds in several regions, key elements of the government and the state-run economy remain in the hands of criminal clans.

During a cabinet meeting in mid-May, Putin stunned the members of his administration by asking "When will we finally see new roads that are up to international standards?" Road construction, traditionally fertile ground for shady deals between government officials and dubious "bisnesmeni," has been under the supervision of Anatoly Nasonov, the new Director of the Federal Road Agency, since March 16.

Nasonov belongs to that special breed of Russian officials locally referred to – with a mixture of respect and revulsion – as "unsinkable." No one knows this better than Putin. As early as 1997, when he was head of the Main Control Administration at the Kremlin, Putin issued a "strong reprimand" of Nasonov, then First Vice Minister for Transportation. Putin, a former KGB colonel, had been able to furnish detailed evidence linking Nasonov to irregularities in the use of funds earmarked for road construction.

In late March 2004, only 13 days after being made the country's chief road builder, Nasonov ordered the suspension of all pending calls for bids. Government officials interpreted this violation of the law as an attempt on the part of Nasonov to drum up business for two trucking companies, Rata-Express and Master-Truck. Both companies are owned by Nasonov's son, Pavel, and are said to have received favorable treatment in the past.

The Nasonov case is not an isolated incident. Shortly after coming into office, Putin handed over control of the state-run beverage industry to a man whose identity alone could turn any talk of fighting corruption into a bad joke. Sergey Sivenko was 32 when Putin placed him in charge of the state alcohol board, Rosspirtprom. He was appointed to the position primarily because of his acquaintance with a man from St. Petersburg who was Putin's self-defense trainer and chief bodyguard.

Rosspirtprom, a state-run agency, controls about a hundred distilleries and 40 percent of national vodka production. When Putin's man was fired in July 2002, because, according to the public prosecutor's office and the audit office, he had allegedly embezzled about six million Euros in government funds "through a series of irregularities," the young man, who had already privatized a number of profitable vodka distilleries, was already financially secure. Sivenko, with an estimated fortune of 220 million dollars, is currently at the top of the latest Forbes ranking of the wealthiest Russians.


Alexander Nazarov, former governor of the northeast Siberian province of Chukotka, was asked to explain his official conduct to the tax authorities in October 2000. Investigators accused him of having defrauded the state of customs revenues, of having given preference to a fish exporter with ties to the Russian Mafia, and of having built villas near Moscow for himself and his associates.

And what happened to Nazarov in Putin's supposed anti-corruption state?

He became a new man. In his new position as a government minister, the former suspect is now responsible for investigating the transgressions of others and appointing a chief auditor to the audit office.
Nazarov's successor as governor of Chukotka, multi-billionaire and FC Chelsea owner Roman Abramovich, is now faced with accusations of his having led the frigid crisis region on the Bering Strait into bankruptcy.


... Vladimir Yakovlev, who was governor of Putin's home town of St. Petersburg until last summer, was not demoted, in spite of all speculations to the contrary. The city's glamorous festivities commemorating its 300-year anniversary, which proved to be of little benefit to the crumbling old buildings of this "capital of the North," had barely ended when Yakovlev, who was under investigation by government auditors, was promoted to the position of Russian vice-premier and, in March, was even made general governor of the northern Caucasus region, which includes Putin's problem child, Chechnya.


According to Satarov, the destructive force of corruption in Russia has grown by "avalanche-like" proportions during the past year and a half. Satarov believes that the arrest of oil billionaire Mikhail Khodorkovsky, who tried to make a name for himself as a crusader for transparency and whose trial began in late May, was the equivalent of a final, devastating signal to government officials, and that bribery statistics have "doubled and tripled." (emphases added)
Many were rejoicing when Khodorkovsky's arrest was announced late last year, taking it at face value as an attempt by Putin to rein in corrupt oligarchs; I was never one to buy into such reasoning. Putin's Russia looks increasingly to be a place where neither private property nor freedom of opinion will be guaranteed by anything more than the President's whim, and there won't even be Singapore-style long-term growth to show for the autocratic rule - oil prices will not stay at $40/barrel forever.