Bureaucrats in Russia see the opportunities of the market economy: opportunities of regulation, influence and corruption. This corruption involves a very strange phenomenon - it is not a problem of state-capture, but of business-capture, where the state is capturing business.
Many believe corruption saved Russia
Mrs. Elena Panfilova, Director of Transparency International Russia interviewed by Sanita Jemberga, a journalist from the leading Latvian daily Diena
Mrs. Elena Panfilova graduated from Moscow State University’s Department of Political Science and the Diplomatic Academy’s political science department with a specialization in international development. She began her career as a freelance political columnist before taking a position with the OECD. In 2000, Mrs. Panfilova returned to Russia to establish the local branch of Transparency International.
The former communist countries seem to go through a similar pattern of development. The first stage consists of an old-boys network privatizing the most important state enterprises and natural resources. Then they come to power, or at least get some political influence, only to be followed by the next generation of politicians who fight the previous ones and try to privatize what has been left. Hopefully, after that we will live happily till the end of our days with administrative corruption as the main source of our worries. If this is the case for Russia, which stage do you think you are in now?
I think you are absolutely right in this general description of the transitional period. At the same time, I would say that the popular concept of state-capture goes in the way that, first, the old boys capture the state and then the next generation comes and captures the previous capturers, including the state.
Russia is a different case. I would say that, from the very beginning, the older generation and the younger generation created the concept of state-capture in a very sophisticated way. The young minds needed capital and the former communist elite had it, but they had no market strategy on how to develop it into so called “clean wealth” through privatization schemes or the trading of shares.
From the very beginning, our elite formulated quite an interesting combination of state-capture of the already captured state, where no formal guys have really left their offices and privatization was done by the same groups of people who had been working in the Soviet structures, but with the added enthusiasm and thinking of a new elite.
According to Forbes, we have 10 billionaires now and theoretically, as we all started from the same point, we all should be like them. But, only ten out of many millions of Russians are billionaires, even though they were nobody five or ten years ago. So I would say that their strategy was even smart and in no way am I blaming them, I just think it was the wrong thing to do. But, if it was not them, it would have been somebody else.
Unfortunately, in Russia corruption is not simply administrative or non-administrative; it’s very systemic and complex. In other countries, like the Baltics, they have drawn a very fine line: this is political corruption and that is administrative corruption or daily corruption. Here it is a rather complex issue where all the forms of corruption are linked. Now, the system has reached a stage of fine verticalization working upside down where a majority of the decisions have been made through the system and even if the internal integrity of the system is in place they are operating in the system and they have to make a lot of attempts to avoid shadow deals.
Believe it or not, I do think that it was wrong to use the American strategy of “shock therapy” and to do privatization without administrative reform. Now we are facing the consequences of this approach where the administration is weak, but is growing in size. We have three times more bureaucrats in Russia than they had in the whole Soviet Union! Now they are civil servants operating in a market economy and you would imagine that in a country under transformation there would be less and less of them. They are in every level of administration and they do see the opportunities of the market economy: opportunities of regulation, opportunities of influence and opportunities of corruption. Sometimes they don’t just feel those opportunities, but enjoy whole participation in them.
The verticalization of corruption involves a very strange phenomenon, which is perhaps seen only in Russia. It is not a problem of state-capture, but of business-capture, where the state is capturing business. Obviously, you would see groups trying to influence the mayor’s election or the parliamentary elections, but in our case you see more and more that the different bureaucrats are capturing the economy or businesses by the appointment of their people to the boards etc.
But how does society react, because you mentioned a very popular example, like, “ Oh, yes, we know he is a thief, but he has made this town so beautiful!” Is society worried at all or is it reacting in a very pragmatic way?
There is a very popular concept in Russia, supported not only by the people on the street, that corruption saved the state. When the state collapsed in the beginning of the nineties, up to 1993 there was no service delivery in place, literally no heating, healthcare, education, anything. The population reacted in the way that everyone needs them and corruption replaced the system of state service delivery.
You know how people feel towards a savior and we do not blame the bureaucrats. They are not living on an isolated island; they were a part of the same culture, their children needed the same schools and medical treatment. So the people started to pay even if they later started to think that we are living in a democratic country, we should not pay etc. But they saw it work!
At this point we have quite a reasonable level of tolerance towards corruption in the way that you know that in an airplane you have your safety jacket under your chair. It does not mean you will use it, but one should know that the opportunity is there. Almost every driver in Russia keeps a couple of banknotes in his pocket together with his driver’s license, which does not mean that he is going to violate the rules. It is a kind of self-imposed tax, which a citizen is ready to pay if something happens.
The problem is that this tolerance towards daily corruption automatically relates towards state officials. People are not stupid, if they do not riot against it that transforms it into a strange form of culture. Of course, there is a small but strong group in society, which tries to raise the issue. Even among politicians, we have brilliant guys, even in the administration, but all of us know that for a new democracy it will take more than two or five years.
But do you see any chance that those voices could be heard and start to influence politics?
They are already. There is a systemic logic in everything: corrupted societies are not sustainable. Look at the USA. Do you remember what it meant to be an American cop in the 30s of the last century, at least according to the movies? You could buy them in bunches and they delivered, but now? You could even buy a congressman, right, not to talk about the traffic officers. But it is not there anymore, the right instruments are in place and not just the approach of “let’s go and clean the police.” I am not saying that they do not have corruption problems anymore, but the instruments are in place.
Of course, but it is quite a popular belief in the West that Russia will never be a truly democratic state free of corruption because it’s simply impossible. The past, its mentality, natural resources…
Here I have a real question: do they not believe or do they not want Russia to be a real democracy? It’s interesting what the West might say if they saw a democratic Russia with a true market economy and no corruption? What would it mean for Western thinkers? I guess it’s not a very pleasant idea to have too strong an economy with wonderful resources. It is quite a difficult question for a brief interview.
Everything is possible and corruption is not a cultural phenomena. That does not mean that if Russia is corrupt now it will stay like that forever. There is always the possibility of cleaning up at least some sectors.
Ask any Swede how he enjoys their Access of Information Law, which has existed since 1763? They have been living for three centuries, enjoying stable conditions, but how long have we had democracy? 10 years? It is too early to judge.
Of course, Russia is a special case, different from the Baltic countries. You cannot do everything at once, but one should go step by step: administrative reform; public, civic and legal education of the society because you cannot expect an intolerant attitude towards corruption in a society where the level of the legal education of the population in general is low.
But you have undergone one very visible change since the former KGB man, Vladimir Putin, took the President’s office. People seem to like his strong handed approach that he will get rid of all the corrupted men. Has there been a real change of attitude towards the fight against corruption since he replaced Boris Yeltsin?
In general, yes. At least the position of Russia on the corruption perception index has gone up more than 10 positions.
Perception is one thing, reality is something else.
The reality is that slowly, for me too slowly, he is going in the right direction. He has approached administrative reform, I guess because he stands a real chance of re-election and it could become an important question on his agenda. He has created an image that he understands what corruption is and that is really a big change if you compare it with the previous administration. I am not talking about Yeltsin, I am talking about the administration in general.
The Freedom of Information Act has been adopted, of course, more for citizens than for the media. But the changes are more like a prevention measure, which has nothing to do with the expectations of society regarding its real enforcement. No big cases regarding corruption have happened. Some offices are trying to conduct investigations, a General Prosecutor’s office for example, at least there are articles regarding corruption in the new Criminal Code of the Administrative Code. Institutional changes are going on painfully slowly.
Does Russia have any corruption prevention strategy at all?
I truly believe that there are two ways to approach corruption in transitional economies. One is the very special way of writing strategies, creating bureaus, commissions or laws and all the “blah-blah-blah”. The other is to approach the system in a normal way: good public procurement laws, a normal code of conduct for civil servants, a normal law regarding conflict of interests, normal police and normal prosecution, normal everything, one by one, all together or however you like it. It is not that you approach only corruption, but the whole government, in a very normal way. If the normal democratic instruments are working there is no corruption, at least in theory.
It’s quite a phenomenon for transitional countries to establish special bureaus. Of course, a transitional period is ridden by corruption problems, some from Soviet times, some from the period of market change. The big reason for change is that foreign investment always comes with conditions attached and then, to ensure that the state fights corruption, you get all the accessories like bureaus, strategies or whatever. But take Italy, a purely Western country and the member of every organization you can imagine; the premier tries to get immunity from the court – and no anti-corruption strategies are requested!
Are you saying that when a country becomes a member of the so-called Western club, the rules change?
Yes, in a way. What I want to say is that I do not care too much about Italy; they have their problems, we have ours. What I am saying is that the standards should be the same. No national, international or multinational organization should have a direct influence on the subject. Like saying, “We have a Hong Kong model and let’s implement it everywhere, and by the way this is the condition for you to join whatever.”
I would like to see strict and equal conditions for everybody; France and Slovenia, Great Britain and Latvia. It should not be like, “This is for you, this is for us; we are going to monitor you, but nobody is going to monitor us.” It is not a strategy that leads to a united Europe or to respect for each other.
When we look at the future, it is quite clear that the next big thing in Latvia and Estonia is going to be the parties’ finances and their control, i.e., political corruption. What is the next big thing for Russia?
It is the same topic, it has always been a big problem, but we have had a lot of different problems on our agenda, like the conflict of interests or the law on information. But unlike Latvia, which concentrates on party expenditures and income and controllable things like advertising in a newspaper, we have concentrated on administrative resources, which is a very complicated issue. It is much more important than the financing of the parties, which is visible; declarations are there, advertisements are there, but what is underneath is invisible. It is a danger of administrative resources: how do you know that someone has taken money for a deal that is not visible to the average citizens. These are invisible deals that are sometimes impossible to detect or to label. There is absolutely no way to track the gray deals and to label them.
You have headed IT Russia for three years. Have you ever faced a situation where someone has asked for bribes?
No, in my private life I do not do that, but I know that if you want to do things quickly then time is money. When I was guiding my younger son to school, there were some indications that if I … But I said firmly that I am not paying for state services and in no way are you going to change that. Actually, people accepted it quite normally.
Institutionally, we almost got into a difficult situation when we tried to register TI Russia. Then the Ministry of Justice was in charge and we faced a sort of difficult situation when there were signs that they did not like our papers or they were expecting something. There was a suggestion that it could be easier if we would go through some company, but again, we said we are an NGO and you cannot force us to go through a private company because, while it may even be legal, it is not the transparent and legal way.
How does the state look at you, do they listen?
When they need it, then yes, when they don’t, they don’t. It happens when our agendas are similar. We have contacts in parliament, at some point the president’s administration was interested in what we’re doing with the Freedom of Information Act. They see us, but we are not as influential as the Latvian branch. But good guys are everywhere.