Corruption and Informal Practices in Russia

2014

This article examines Russia’s political economy through the prism of mega-projects, using the 2014 Sochi Winter Olympics as a case study. Such projects help Russia’s leaders promote the country’s image abroad, define development priorities for Russia’s urban landscape, and gain support for the incumbent regime. Events like the Olympics help to justify Russia’s overall political and economic systems and to funnel state resources to specific regions. By setting investment goals and implementing projects through a closed system that allows for little public input and accountability, mega-projects create numerous corruption opportunities. Ultimately, this system works to benefit a small group of elites, with uncertain contributions to the larger population.

Georgetown Journal of International Affairs, 2017

This article examines three questions. First, what is the nature of Russia’s oligarchic corruption? Second, what do the Russian oligarchs want? Third, what policy challenges does Russia’s corruption present for the West?

European Journal of Political Economy, 2000

This paper describes the institutions and social norms that have accommodated corruption in the Russian Federation in the post-transition years. We show how corruption is sustained by ill-defined boundaries between political and private business activity, and how the role of the state facilitates rather than hinders corruption. The paper draws upon a longer w document prepared by the authors, the IDEM Report on Corruption on Russia IDEM Foundation, 1998. Russia versus Corruption: Who Will Win?, Council of Foreign and Ž. x Defense Policy, Moscow. in Russian .

Lund University, Sweden, 2013

CONFERENCE: Beyond Transition? New Directions in Eastern and Central European Studies. VENUE: 2-4 October 2013, Lund University, Sweden Economic Corruption and Nepotism in Russia Chair: Mi Lennhag * Yuly Nisnevich (Higher School of Economics, Moscow) / Peter Rožič (Santa Clara U): Why Lustration Works: A Radical Approach to the Problem of Corruption * Mi Lennhag (Lund U): Blaming the State. Citizens and post-Soviet Informal Economy * Steven Sampson (Lund U): From Botswana to Ukraine: fighting corruption in the developing and postsocialist countries

State Capture, Political Risks and International Business Cases from Black Sea Region Countries Edited by Johannes Leitner, Hannes Meissner, 2017

Over the last few decades, Russia has been attracting foreign companies from all over the world and it has become the third most attractive country for foreign direct investment (FDI) worldwide after the US and China. Moreover, Russia is currently the second-largest emerging economy after China. However, at the same time it is one of the most corrupt countries in the world. Political corruption remains one of the main problems for Russian political and economic development and the primary challenge to business activities there. In addition, unstable property rights and the Russian state's growing control over business activities and the business community has harmed Russia's business environment. Taking this as its starting point, this article examines the informal rules and practices that have developed since Vladimir Putin began his first presidential term in 2000. First, the paper investigates the specific characteristics of these rules and practices at the federal and regional level in Russia. It focuses on systematic corruption and favoritism as the main political risks. Next, the article assesses their impact on the domestic business environment. Then, it looks at the methods used by state officials to mitigate or minimize the negative consequences of corruption and favoritism. The article concludes with an evaluation of the political risks for the activity of international companies in Russia.

2020

Putin has now been under Russian leadership for longer than the former leader of the USSR Brezhnev, associated by many with a prolonged period of stagnation. How will Putin 4.0 differ from all previous ones? Is Russia capable of a rapid economic breakthrough in order to increase its global role and improve the quality of life of its people? Are the national development goals set by President Putin realistic or is it just an illusion? What are the major obstacles and challenges that need to be overcome in order to deliver quality change and achieve the goals set? the answers to these questions will be explained further in this book. Jānis Hermanis The Russian Economy: Prospects for Putin 4.0 the Skolkovo Innovation Center is not enough, even if it works well; the peculiarities of the development of Russia's regions do not allow introduction of new practices. If the current situation is quite acceptable for Putin's elite as providing for them not only power but also wealth, the real victims are the Russian people, whose social benefits and prosperity are like a distant mirage. In a number of life quality indicators Russia, a country rich in energy, metals and minerals, lags far behind Western Europe and the United States -countries that Kremlin's propagandists are relentlessly disparaging and mocking. Medvedev's updated economic modernization was, in part, a facade name of Russia's attempt to plug holes in the state budget with a framework of "cooperation with the EU to modernize Russia". A real economic transformation would require political changes to ensure the independence of the judiciary and the liberalization of the internal energy sector, which would increase competition and foster the development of an entrepreneurial culture. The Kremlin was afraid that Mikhail Khodorkovsky and similar businessmen would compete with the center for power in the process of liberalization, so no regional activity on their own was allowed. Labor productivity is boosted by internal competition in capitalism, but it has been in part replaced by efforts of businessmen to find favor with the president, governors and other local authorities of modern Russia. The system in which Putin's friends receive special favors, such as the diversion of taxpayers' money to counter the effects of Western sanctions, is not conducive to the functioning of the free market. Russia could attract more investment (including innovative projects) if foreign investors were not afraid of raiderism (deprivation of business through legal, semi-legal and illegal methods) and 'telephone laws' (influencing court decisions by telephone calls from high-level government officials). Without fundamental political reforms, such an objective cannot be achieved. The history of Russia shows the campaigns of modernization and industrialization that have been carried out from the top down, as is already accepted in totalitarianism and authoritarianism. Peter the First made a rapid change, with men having to shave their beards and start following European fashion in clothing. Innovations were introduced through ruling with an iron rod -it was dangerous to say 'no' to the emperor. Neither Stalin's industrialization took into account anything, including human lives. Will Putin implement such modernization? Even if he wanted to, he could not do it, because much of today's Russia's population is not like under Peter the First, and therefore they would not submit. Will the 21st century Russia's leader follow Western modernization scenario? Rather not, as political change would make him and his circle of confidence lose power. So, the forecast is simple -there will be no real political and economic modernization of Russia while the Putin system persists. The Russian Economy: Prospects for Putin 4.0 in Russia -either big, medium or small -is much more vulnerable. Learning the lessons from two Ukrainian 'colour revolutions' , where some businessmen directly supported anti-governmental protests, Russian authorities are determined not to allow free business to emerge. Despite the rhetoric of high-ranking officials, suggesting that the state is taking care of businesspeople's interests, there is no will to devise a systemic solution to their most urgent problems. They include systemic violations of the property rights, abuse of criminal law provisions in investigations into economic crimes, arbitrary actions by control and prosecution bodies, as well as the partiality of courts which frequently manipulate the course of the proceedings, as a consequence of which businesspeople increasingly often lose cases brought against them by the authorities. The proportion of acquittals in cases involving economic crimes remains below 1%. According to government estimates, the operation of the supervision system leads to business losses that reach 5% of GDP annually. Over 70% of entrepreneurs claimed in 2016 that the level of risk associated with doing business had risen since President Vladimir Putin started his third term in office in 2012 7 . Under such conditions Russia stands virtually no chance of succeeding in the global technological competition: bottom-up development of advanced technologies that could contribute to economic growth is often suppressed by politically-motivated repressions aiming to take control over every single sphere of social-business activity. 1 For a more thorough analysis of Russian political-economic system see: M. Domańska, Putinism after Putin. 'The deep structures' of Russian authoritarianism, OSW Studies 78, October 2019, www.osw.waw.pl 2 The estimated losses to the state budget and business circles inflicted by corruption reach hundreds of billions of dollars annually (estimates have been made by Transparency International). 3 Bloomberg ocenil ottok kapitala iz Rossii v US$750 mlrd za 25 let, March 12, 2019,

Eurasian Geography and Economics , 2021

Social Research: An International Quarterly