The Cost Of Doing Business In Russia

Click on the title for another IHT article about the societal acceptance of bribery, as a legitimate business practice.

Grigory Satarov, the president of Indem, said in an interview that the new growth of bribery fed off the inefficiencies of Russia's still-sclerotic state structures, inherited from the communist past.

Under communism, there was far more demand for products that would enrich people's lives, than suppliers could provide. Long lines to get basic products that we just go to the supermarket for, were not uncommon. Not everyone was able to get what they needed from authorized government sources, so enter the black marketeers, aka the Russian mafia. They paid their bribe money to all necessary officials and presto, they were in business. They filled the void.

When the Soviet Union broke apart and Russia moved boldly toward a free market economy, the mafia became legitimate commercial entrepeneurs. Unfortunately, with their established market shares, they kept their strong arm tactics.

But he also blamed Putin policies that have weakened the rule of law. Fighting corruption, he argued, required three conditions: free news media, a vibrant political opposition and a truly independent judiciary. Under Putin, he said, the Kremlin has undercut all three.

The main thing," Satarov said, "is that all this time Putin has not done anything to change the situation." For businesses especially, bribery is ballooning, along with the amounts solicited, which Indem estimated to average $135,000 - a 13-fold jump from 2001.

Old practices and habits die hard.

70+ years of socialism engrained into a large population's minds has left them with a sluggish, lazy work force at a critical point in their newly found, free market economy. But, they aren't producing. Therefore the government isn't getting the revenue, it needs.

The bribes of the old Soviet oligarchy were a key source of revenue during that era. And now, we are seeing Putin creating some of the same political conditions conducive to a return of bribery, as viable government revenue producer.

To get the full understanding of what business conditions are like in Russia, I highly recommend reading the whole article.