Corruption in Russia, Research Paper Example

Introduction

The late 1980s were a period of changing and creating the reforms in the Soviet Union. The fact that it corresponds to reality is beyond any possible doubts. It was the time of rather serious and unexpected changes within its policy.

The thing is that many people could not even predict such alterations to happen to the state possessing well-known reputation of extremely stable principles. It was the time when the necessity of different new approaches to governing was in need. The problem was that the late 1980s proved to be mainly referred to such issue as stagnation of the Soviet economy (Brown). Consequently, the new standards of leading the country were of great importance, and possible problems that might emerge while implementing certain political ideas seemed to be not complicated.

These political and economic reforms were created by Mikhail Gorbachev, who became General Secretary in 1985 and whose aim was to improve the communist system. This paper analyses the role of Gorbachev for the communist party in his reformed Russia.

In accordance with Breslauer, Russian Federation has to be regarded as the modern empire, whose people emerged to have inherited much of the old Orthodox, communitarian principles with the elements of absolutely Byzantine nature.

Newly Born Russia  

Russia that re-emerged on the political map of Eurasia as an independent state in 1991 is considered to be very interesting for the world community due to its dramatic way to the formation of the democratic and civic society. The country belongs to the post-Soviet states and this circumstance plays one of the significant roles in the development of Russian Federation. Generally, the last twenty years were especially hard and challenging for the societies that missed their revolutions of 1989. The experts explain the situation by the growth of the oligarchy’s power including the former communist leaders that was not challenged by the opposition and managed to destroy the communist regime and take advantage of this event, thus preserving their interests. Naturally, these politicians were acting at the expense of the citizenry and that resulted in the grievance in the society, the increase of tension in the country and the protests against the government.

The analysis of the situation in Russian Federation suggests that the state was transformed into the competitive authoritarian regime in which limited political freedoms and formal democratic institutions were involved into the political system that was created for enriching the governors at the expense of the local people. The events during Yeltsin’s regime demonstrated that Russian opposition was strong enough to resist the highhandedness of the President and his corrupted team with the use of civic mass protests.

The experience of the European revolutions in 1848 showed that it is impossible to form a new state when the sources and structures of power peculiar for the old regime were still functioning. The same situation happened to post-Soviet. It is very cynic, but the politicians (oligarchs) had never ceased to provide their self-serving, parasitical and rent-seeking existence. Therefore, they changed the policies and the political directions but remained in the same institutions without any intentions to change them. Despite the fact that Soviet Union crushed and new approaches to managerial policy were adopted, it did not help eradicate the signs of corruption that appeared to be deeply-rooted since the very emergence of USSR even though not in such a large scale.

The Phenomenon of Corruption and its Peculiarities in Russian Federation

Indisputably, there are some differences in the economies of West countries and those located in Asia due to a number of reasons. In this case, great interest of the scientists is concentrated on the developing Russian economy, its main fundamentals, strategies and other related issues. Basically, drastic changes and development of the entrepreneurship in Russia began in the late 1990s and many scholars argue that eliding of strong social networks and their growth influenced the further development of the entire Russian economics and industry. However, one of the biggest problems of Russian arrangement is corruption; the thing is that its exceptionally negative role for the development was already proven by theoretical and practical investigations. Obviously, the problem of corruption in Russia is much more serious that it might seem (Gradirovski & Esipova). However, although the phenomenon of corruption was included into the studies as a commonplace by many scientists, there are some controversial questions which require further research. Moreover, despite the fact that there are different kinds of corruption and its harmful consequences cannot be denied, the link between corrupt schemes and business success still remains to be a hypothesis. This theory is very important for the foreign investors who would like to start their business in Russia but are not aware of the social, cultural and other peculiarities of this country. However, the majority of studies are concentrated on the issue of corruption as a structural but not a dynamic value.

The most simple and precise definition of the corruption defines it as a universal phenomenon of public institutions. It is clear that corruption negatively influences both social and economical development (Mauro). There are many research papers which emphasize on the growth of corruption as one of the necessary products of doing business in Russian Federation. Basically, it is characteristic for the developing and transitional societies, such as Russian Federation, which faced rapid economic growth during the last decades and is deeply involved into the problem of official corruption on all the levels in the public sector. Therefore, it is necessary to examine the phenomenon of corruption and its peculiarities in Russia in order to understand whether it is integral part of the modern Russian business and what to expect for the foreign multinational corporations searching for the collaboration with this extremely perspective country.

In particular, the issue of corruption became pervasive approximately 20 years ago. In accordance with the survey of Elena Panfilova, the chair of the Center for Anti-corruption Research and Initiative Transparency International, 54 % of respondents are aware that corruption impacts life in Russian Federation “very strongly.”  Despite the fact that government is attempting to take the situation under control, it remains to be the same, as many observers comment. Although the prevailing definition of the corruption in Russian Federation is associated with the pursuit of the private interest by public power at the expense of public interest, the other explanations are required. First of all, in Russia private interest is traditionally classified into two groups: individual interest and the interest of groups, institutions and localities. Thus, the means of pursuing the private interests may be also legal and illegal, such as overspending of the public funds, using public resources for private reasons and lobby the interests of the other groups and individuals due to financial or some other kind of reward. Obviously, it is possible to distinguish four kinds of corruption in Russian Federation. They are as follows:

• Crimes (especially economic crimes) committed by government officials while on duty;
• A variety of malpractices in government agencies where officials use public power for private gains;
• Extravagant use of public funds;
• Immoral conduct by Party and government officials such as gambling and extramarital affairs.

The majority of Western investors argue that Russian companies act according to their own rules and the issue of corruption is not a taboo for them. Moreover, “the Russia’s complex tax and customs systems” are not likely to eradicate the signs of corruption (Roaf 2).

Privatization as the Stimulus of Corruption in Russia

Basically, the main concern about this discussion is related to the hypothesis that privatization is a form of corruption in Russian economics. Evidently, Russian economics changed greatly in the last few decades in a result of privatization, penetration of foreign firms in national markets and increasing participation of the nation’s largest companies in the world market. Such archipelago economy and globalization, basically caused by a series of reforms aimed to launch a large-scale privatization, in the whole tend to weaken the national territorial units and make the other spatial unites of organisation more popular. Among such units are the sub-units (mainly cities and regions) and border areas, which include two or more sub-units and supranational units (global markets and free trade zones). In addition, it should be mentioned that the possibility of global operations, coordination and control are also available in the new information technologies. They make it possible for the large corporations not to be dependent on the location and distance.

Moreover, all the big cities that are involved in archipelago economy became technologically- and economically-integrated cities; that is why they became quite favoured among the investors. As the result, smaller cities are left without any investments. The fact that the state does not want to regulate economy by itself causes such economic situation. Furthermore, urban development, which includes building big business centres and other facilities, makes one areas in the same city more competitive than the others. What is more, multinational companies and corporations have a great influence on the development of such areas by controlling infrastructure price, quality, and reliability and investments

All in all, despite the fact that privatization may be characterized as an integral part of Russian culture, there are many cases and scandalous situations in the international relations proving the idea of Russian privatization to traditionally result in corruption. After the examination of the existing literature, it was concluded that the role and benefits of privatization have been exaggerated by the authors and cannot be substantiated by the statements with proper arguments.

Russia’s principle of privatization is mainly based on personal benefit, and definitely not the state enrichment. The government’s intentions to sell in state controlled companies, including Rosneft, VTB and Sberbank, SovComflot, TransNeft and RusHydro, were accompanied with the accumulation of big sums of money in the officials’ pockets. Despite the initial willingness of Gorbachev to build up state capital via the process of privatization, Putin’s campaign has changed this course dramatically. There were few waves of privatization; the first one occurred from 1992-1994. The second one occurred from 1994-1997. However, it is necessary to draw special attention to the third phase of privatization that occurred from 1998 and had to be absolutely different from the previous ones in terms of its transparency. All in all, Putin and Medvedev did not succeed in positive shifts from corrupt schemes to transparent mechanisms of privatization; the only thing they improved is the mechanism of personal enrichment. Mr. Putin is also “…is responsible for the expanding bureaucracy.” (Orttung 2) Despite some efforts, incorporating the creation of new Silicon Valley (Skokovo), in order to stimulate the process of privatization, Russian annual losses of revenues due to corruption are still enormous.

Predominance of Tsarist Regime as the Hindrance to Economic Growth

Since the times of Yeltsin’s resignation, The Russian presidential campaign became one of the most controversial issues in the world politics. Many European and American newspapers covered the process of voting in different ways, but all of them agreed that it was one of the toughest and predictable campaigns in Russian history. This paper is going to analyze how two media outline the same information from different perspectives.

Nevertheless, if to compare two different articles that cover the same event – Vladimir Putin’s public address in the day of his victory, we will see that different newspapers outline it from the different angles. For example, The Telegraphpublished the article under the title Vladimir Putin wins in Russia: the politics of fear. This article gives the valuation of Putin’s style of government together with the expectation from it. That is, the author expects that the Putin’s presidency will become very cruel and unjust. On the other hand, Reuters published the article under the title Tearful Putin wins back Russian presidency that exposes Putin in a little bit ridiculous way. From the beginning of the article, the readers will be looking more for the information about the tears of Russian president and about his weakness than about his domestic and foreign policy. Bernard Cohen states: “The press may not be successful much of the time in telling people what to think, but it is stunningly successful in telling its readers what to think about. The world will look different to different people, depending on the map that is drawn for them by writers, editors, and publishers of the paper they read.” Therefore, Putin is presented like a heavy-handed politician; whose tears and other expression of emotions look false and feigned.

Apart from Putin’s expressiveness that many consider as the key to his success, one should not forget about absolutely corrupt schemes that Mr. Putin efficiently adopts. The thing is that Vladimir’s Putin policy, in view of many experts, can be characterized by two distinct phenomena – increased abuse of authorities and, surely, corruption. The 2014 corruption rankings proved Russian Federation to show an African level of corruption. However, this information emerged to be dated, since Russia indisputably demonstrates much more persuasive signs of corruption in comparison with African countries. Obviously, the myth that Putin managed to eliminate the corrupt schemes does correspond to reality. Table 1 bellow clearly shows the corruption of Russia during Putin’s cadences.

All in all, Putin’s second term proved the situation to get even worse. It is important to make mention that fraud as well as bribery has inevitably overwhelmed Russian Federation. One should become aware that corruption occurred as a serious problem in Russia, since it is a system. The point is that the metastases of corruption have resulted in the paralysation of the country’s economic development. According to some analysts, the annual turnover of bribery is approximately $300 billion. Putin’s approaches are characterized by covering up “…corruption among public servants.” (Orttung 3); the corruption has completely paralyzed the law-enforcement institutions. As a result, the issue of personal enrichment emerged as the priority for many police chiefs. One more priority that Putin has successfully implemented is that his friends are endowed with unlimited opportunities, when the rest will definitely be deprived of everything.

Russian Way of Dishonest Dealing

The importance and relevance of corruption for doing business in Russian Federation cannot be underestimated; yet, it is essential to analyze the notion in a deep way in order to understand the reasons of its appearance, its peculiarities and its role in business management. According to some experts within the area of business modelling, the emergence of corruption is a peculiar feature of post-Soviet countries, which start to reconstruct their economies and require some institutional transitions. However, this phenomenon is obviously “… detrimental to growth and development.” (Roaf 3) Since the institutions are traditionally referred to “the rules of the game in the society”, the institutional transitions are characterized as fundamental and comprehensive changes of the formal and informal rules of business management that influence all the organizations as players. In such a case, those economies, which move from the central planning (for instance, Russia, China, Poland, etc) are associated with the transition economies known for their problems and challenges. These systems are recognised for the lack of organization, transparency and other important components of the democratic societies.

General Overview of Russian Mentality

There are some authors, who argue that achieving business success in Russia requires active social approach to network building. Basically, social skills are considered to be necessary because Russian people perceive the others as strangers and are closely tied to their family not only in private relationships but also in business. Thus, it is very important for the European or American multinational corporations which intend to invest in Russian economy or outsource their plants and factories to the Asian area to take the social peculiarities of Russians into consideration. It is believed that social skills can help to leave a good impression on the other people and broaden the size of the social network. Russians perceive business partners as a part of their extended family, and it is very difficult to deserve their trust. In particular, the Figure 1 demonstrates the structure of social structure within the Chinese society.

Thus, in this situation social skills are necessary because owners need to be proficient in developing social networks and overcoming different barriers. They use proactive and elaborative social strategies, work on their social skills and attempt to manipulate the relationship-oriented barriers. The theoretical framework for the strategy is depicted on the Figure 2, which suggests that social skills, proactive and elaborate social strategies and relationship-oriented overcoming barriers influence business success through social networks. Thus, social networks function as mediators between the members of the society.

In this context, many foreign companies argue that operating in Russia is more complicated and time-consuming despite the abundant opportunities. However, apart from the specifics of Russian mentality in terms of cooperation, it is also worth saying that Russian Federation should be characterized as extremely prone to corrupt model of negotiations; moreover, it is about the bureaucracy, which makes Russia buried in downward spiral of economic growth (Orttung 2).

Bureaucracy is known as the organization, which consists of non-elected officials who are in charge of implementing various rules and regulations on the ground of their legal institutions. Nowadays, practically in every country we investigate the manifestations of bureaucracy (mainly in negative ways) that imposes some challenges to the freedom and rights of citizens. The bureaucratization of police and military system has also been widely debated for being dishonest in terms of treating laws and regulations in relation to people, although it had some minor positive effects.

There are numerous reasons for treating the bureaucracy to be negative. First of all, almost every police department has the direct linkage to the political system of the certain country. Respectively, officials pursue commercial goals and treat the police service like a business. The rapid increase in quantity of arrests, sanctioned detections and court cases is the vivid example of police bureaucracy in our times. The next problem is listening to the front line of executives that implement their decisions to be immediately considered by the police officers. In such cases, police departments become centralized and face the enhanced supervision and control. And although the extra money was spend to extend the police resources, the consequences are very harsh. The police manpower has been increased by 25% and is a subject to concern among the population.

It is clear that bureaucracy is ineffective and irrelevant in modern times. Numerous cases prove that political system mostly meets the purposes of government. Respectively, it can be effective for the country in terms of maintaining the general order. However, it still remains to be problematic when dealing with internal cases and minor burglaries as police officers frequently waste their time for bureaucratic purposes. American citizens face numerous problems when referring to the police departments and the person-to-person relations only complicate the entire process.

Conclusion

More than 20 years since its democratic breakthrough, Russian Federation is still characterized by rather a totalitarian regime. In any way, considering the concept of democracy, one should clearly understand that, in accordance with the ancient thinkers, this form of governance had much in common with the principle of manipulation. Evidently, modern democracy is quite popular due to offering freedom and liberty; all in all, apart from the attractive cover, the essence of modern democracy still incorporates the principles of manipulation of politicians preferring an unfair play in order to acquire wealth. The thing is that the identification of the odious politicians and political stakeholders is not an easy task and, consequently, this unlawfulness base is likely to enter government and other serious state institutions.

When taking a view of the modern democracy, one should be conscious that it is likely to be well-concealed form of totally different regime. Indisputably, modern democracy is not as pure as it might seem, since it has overgrown with a variety of electorate fraud; recently, it is possible to observe a number of different approaches to the encouragement of the voters before elections; all in all, the benevolence of many politicians proves just a good PR program.

Today, Russian democracy is not to be considered as solely the form of governance based on the principles of giving equal rights to all citizenship. The point is that in the last decades democracy has lost the signs of exceptional degree of concentration on improving life standards not oppressing particular categories of people; this concept of governance has also become notaries for causing economic instability and many other serious errors. As a result, it is worth reinterpreting the idea of democracy, so that its key principles, including corrupt schemes and bureaucratic norms that many consider erroneous can be replaced.

To conclude, it is worth taking into account the need to eradicate the signs of corruption, since this disease will obviously prevent the society from implementing high standards of living. It is clear that today’s Russian Federation is considered as predominantly corrupt and unwilling to drastic changes. However, a shift from the vendability to market relations is the only way to a better future. The thing is that the recent situation in Russian Federation will inevitably drive the foreign investors away; on the other hand, the policy of privatization has not led to some serious improvements, since the authorities were interested not in developing Russian industry, but just taking advantage from selling the state-owned assets.

Works Cited

Breslauer, George, Gorbachev and Yeltsin as Leaders, New York: Cambridge University Press, 2002.

Brown, Archie. The Rise and Fall of Communism, London: Bodley Head, 2009.

Cohen, Bernard. The press and foreign policy. New York: Harcourt. 1963.

Gradirovski, Sergei. and Neli Esipova. Corruption in Russia: Greasing the Wheels to Get By.

Gallup News Service, http://www.gallup.com/poll/25435/Corruption-Russia-Greasing-Wheels-Get.aspx (accessed November 14, 2006).

Mauro, Paolo, “Corruption and Growth,” Quarterly Journal of Economics, Vol. CX, No. 3 (August 1995).

Orttung, Robert. Causes and Consequences of Corruption in Putin’s Russia. PONARS Policy

Memo No. 430, Center for Strategic and International Studies, (Washington D.C.), December 2006.

Panfilova, Elena. Corruption Levels in the Russian Federation: Research Data for 2006. Center for Anti Corruption Research and Initiatives, Transparency International-Russia. November 2006.

Roaf, James.  Corruption in Russia. International Monetary Fund, European II Department, Conference on Post-Election Strategy, Moscow, April 5-7, 2000.