Понимание России 3

Russia has not seen an expansion in potentially competitive sectors, either.3) One day soon the Moscow Automotive Works will have be blown up; one day soon the harvest of an individual Russian farmer, a fellow that must drink a full (8 oz.) glass of vodka just to get out of bed, will come in, and he would have an opportunity to compare his prices with the world prices. Who will then deal with people's anger and desperation? That burden would fall squarely on the democrats. Where would the jobs be then? With taxes the way they are today, there would be no jobs tomorrow, and yet, the Information Age industries of Russia would not be ready to hire. Who but the mafia would then be able to earn a decent living here?
The real privatization program would have developed envy-free laws, introduced an Honor Code (with stiff penalties) for public servants, kept taxes low, given tax holidays to the Information Age enterprises (and that includes service industries), would have fought the racket using all the means possible, and would have closed the outdated Industrial Age enterprises lest they bankrupt the state. Also, it would have been cheaper to retrain the workers or to pay them unemployment benefits than to allow them to go on wasting resources at their place of work.

MAFIA

And now, with all due respect, let us talk about the future owners of this country, the mafia. The Russian mafia was born in the Stalinist camps, which were then a mixture of criminals, common people who had been in a wrong place in a wrong time, and intellectuals. Though some of those imprisoned did commit crimes, even these people were not punished justly. They were put in prison by the system that was immeasurably more criminal than any of those it convicted. The
situation in the camps was such that now society accepts limitless cruelty as a natural part of itself. As a result, the language of criminals,
criminal ideology, and prison itself, is in the mainstream of Russian culture.
After Stalin, the economy could no longer be planned from the center, and it became an economy based on personal agreement, on
connections, exceptions, and bribes. There appeared a significant gray economy. Normal business was seen as criminal activity; thus, those who were involved in it saw themselves as criminals, to be a businessperson was simply one of many criminal specialties, something
that you would do when you are too old to be a pickpocket. Thus, the first Russian business schools were the penitentiaries, where the
inmates could in leasure compare notes, some on picking pockets, others on clandestine production of jeans and their subsequent distribution. And so, when private enterprise became possible, many of those who were good in business were good because they had graduated from the prison business school. But unfortunately this
school did not limit itself to discussion of competitive pricing: it also spent a great deal of time in what we might call ethical training. While practical application of the marketing skills that a student would learn had to wait until the doors of the prison swing open, the course of ethics was done by immersion method and lasted for years. Some students would get a "C" that stands for "Cannibal", others were eaten
alive. There were no other grades. Anyone who has done time in a Russian prison has no illusions at all and is ready for anything. Today, Russian business is multifaceted and incorporates people with many different backgrounds. But its original roots and its original laws bear an unmistakable imprint of a Russian prison -- one of the most
unhuman and unjust institutions that the world has ever known.
As camp inmates were not properly fed and clothed, there was the need to support them. This was done by collecting money from criminals on the outside. Note that this was a noble task as human beings were starving, and all of them were victims of a system that was much more criminal that they could ever be. Of course, criminals were not the only ones who were in prison. The best people of Russia were there also. They also had to support their loved ones. But those who were not criminals were not expecting to be in prison and were not
preparing the place for themselves within the camp system in case they end up in there, as the criminals knew they would. Thus, those who
were not criminals were not really a part of the permanent camp
support network, established to keep those inside the prison walls fed
and clothed. Only the real criminals were doing that from the start

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because they knew where they would eventually end up. Helping
inmates was the cornerstone of the code of behavior developed by
criminals, known as a "thieves' law", and promulgated by hard core
criminal elders known as thieves-in-law.
Consider this situation in all its beauty: Stalinist Russia had no
law, the system was both cruel and arbitrary. But the criminals had an
iron-clad law, and it was based on an obviously humane premise of
helping those suffering in prisons, helping the starving inmates. Yet the
keepers of this criminal law were regular criminals: murderers, thieves,
and muggers. Soon enough, they realized that it was not they who
should contribute to well-being of inmates, but those who had money.
Not long after, the criminals also made clear that it is not the well-
being of inmates, but their own, the criminals' well-being, that those
who have money should be contributing to. Under the guise of the camp
support system, there now was the system of racket, geared to increase
the wealth of the elite of the criminal world. Note that this system was
exactly the same as the ruling Communist system. The Communists
were also supposedly serving the have-nots, while living in great luxury
outside of any law.
Thus was born the criminal extortion that now permeates all
facets of Russian life, the extortion that had such noble origins. The
system that was originally created to oppose the state, to help those
whom the state oppresed the most, developed into a mirror image of
the state, overthrew the establishment and came to power!
Consider the situation in all its beauty. In 1991, the Communist
regime was overthrown, the doors of prisons swung open, and soon the
dissidents were making speeches on the streets of Moscow. But this
lasted but several months. Now the criminals, those who are ready to
kill, and many of those who have killed and will kill again, ride the
streets of Moscow in flashy cars to reach the banks and enterprises they
own or control. It is not that just that the prisonners' slang is heard in
the Kremlin: the criminals' mentality and morality have completely
permeated the government and business elites.
If there is a business dispute, it is now being resolved by one or
several thieves-in-law. So today, if two major banks have a conflict they
both go to a barely literate old man who spent twenty five years of his
life behind bars for something as noble as armed robbery, and get their
dispute resolved according to the laws, such as ''You took my spoon -
you lose an eye.'' And the decision cannot be appealed. Big savings in
legal costs!
In many areas of Russia, notably in the Northern Caucasus,
unemployment is rampant, and joining the mafia is often the only way
to put food on the table. These mafias are heavily armed, professional,
well financed, extremely cruel, and consist of people who have nothing
to lose but their drugs. A typical ghetto story.
As the best excuse that the mafia has is based on the legend of
the noble intent of the obshchak, the main activity of the mafia is
racketeering. The assumption now is that every business pays, and it
seems to be close to the truth (if all the money collected by racket had
actually gone to inmates, the latter would have been among the
wealthiest people in Russia, but of course, in practice regular inmates
get very little.) Here, racketeers are helped by the fact that there are
no legal businesses in Russia as there could be no fully legal
businesses in a country with such high tax rates and with such a
rampant corruption. Racketeers employ former KGB agents to spy on
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businesses and blackmail reluctant ''clients''. Note again that in other
countries law enforcement was a genuinely moral pursuit, and not the
domain of the KGB as was the case in Russia. The democrats did not
bar the KGB men from law enforcement for life: the KGB is now the
"democratic" law enforcement: need we say more?
Assassinations are a common occurrence and are very
professionally done. As bank presidents get killed so often, every
business bigger than a mom and pop operation must have a security
department. Racketeers demand that their men be hired as security
guards, promising that no one else will touch the business then. Almost
always, they get hired, and at a major expense for the firm. Then, they
ask you to hire ''their'' accountant. Now you have to pay them a
significant percentage of your profit. Then, if they feel like it, they take
your business over.
This is what Yeltsin meant when he said that Russia is becoming
a criminal superpower. Indeed, mafia is present in matters big and
small. Before going into business every Russian probably feels like
embracing his loved ones and giving them a parting look. It's a jungle
out there.
As in any profitable business, the ''old'' guys want to keep out the
''new''. Similarly, thieves-in-law came into conflict with the new ''wild''
gangs. After a series of shoot-outs, the thieves-in-law appear to have
lost. And this is no cause for celebration. The organization headed by
thieves-in-law had its rules, poniatia, its strict code of honor, just like
the Cosa Nostra did. There was a way to deal with the criminal world in
a predictable fashion. Now, there is criminal bespredel (total
lawlessness), and absolutely everything goes.

Case Study 12. Here is an example of mafia in action. The head of a
small advertising agency came to a major bank to make a presentation.
After five minutes, the President of the bank wanted to buy the agency
outright, and not for peanuts: he offered $500,000 for what essentially
was a (not very good) one-man show. But the head of the Agency did
not sell. He knew that if the agency would not meet the President's
expectations (and meeting them was impossible for anyone), he would
have to return all the money with interest and give the President
everything else: his car, his house, his wife, or his life.
Once you enter into a business relationship with such a person,
you become his slave as the state is unable to protect you, and the
interpretation that the strongest party gives to the relationship, no
matter how arbitrary and self-serving, rules. Rules, that is, unless the
Criminals' Court protects you (the State Court never will). And in the
Criminals' Court, the President of the bank was likely to outperform the
poor adman.
No wonder the bank is so big - clients cannot afford to cause the
bank any losses. The bank also works fast: the President has never
seen a financial statement and does not know how to read one.
And such a President seems to be the rule rather than the
exception for most Russian banks. It often seems that if you had not
been convicted of grand larceny before, you cannot be a bank President.
Many new Russian businessmen are former inmates, convicted of
economic and/or violent crimes, and prison increasingly plays the role of
a club where one establishes relationships which later provide crucial
support in business, and learns the language and rituals of the selected

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group of business leaders who get a place on the bank board straight
from the prison bunk bed. And of course, the most important connection
that is made in prison, one that really opens the road to success in
Russian business, is finding a krysha and establishing a relationship
with it. In prison, you become part of the business-criminal hierarchy
that runs today's Russia, learn everything that you need to know, join
the club, and have job interviews. The most reputable companies in
Russia seem to have had their recruiters there. Veritable Harvard
Business School!

Another important feature is the great difficulty one has in telling
the Russian state from the criminal empire (especially in the area of
licensing, quotas, customs, and real estate), and the police from the
thugs. Whether all the bureaucrats steal and whether the police only
employ extortionists is open to question. What is not open to question,
however, is the style in which the state administration and the police
conduct their day-to-day business. It is a style that would make a
gangster blush. OK, the police may viciously beat up a person first and
ask questions later, but how about a Vice Premier who learns about his
dismissal because his phone lines are cut, the car is taken away, and
nobody greets him?
This is the scariest feature of Russia. Many people here, many
successful people, are so rude and unprincipled that the country is
genuinely ready for as bad a regime as one can imagine. A crime is
always a manifestation of bad taste, a consequence of a lack of style, a
result of a defect of upbringing. As the British would say, it is not a nice
thing to do. It is in the number of gentle people and in their influence
on social life that the situation in Russia is at its most pitiable: "the
upper class" (let us use this term broadly) has indeed been almost
exterminated, it is the "workers and peasants" state.

CRIMINAL SUPERPOWER

As was already noted, the words ''Russia is a criminal superpower''
belong to none other than Yeltsin. Could there be, then, an unspoken
alliance between the government and the mafia? Surely, there are laws
and policies that make one very suspicious. If you pay eighty, ninety,
ninety three, or more percent of your profit in various taxes (of which
there are more and more every day) then nobody bothers you. But who
can afford to? Please remember that going into business is not just a
free choice: there is no welfare, medical care, housing subsidies,
pensions, or jobs to speak of. Many go into business because they have
to eat, and there are no real tax exemptions or deductions either. When
you are taxed, you are being robbed, and no notion of fairness is
applicable. If you choose not to pay, however, you would have to deal
with the mafia that would surely take its cut. Note that high tax rates
made the state very poor while the mafia grew very rich. To whose
benefit, then, were these high tax rates?
To fleece you, the mafia is very interested in getting access to
your bank records. Somehow, it always gets them. Are you indignant, do
you want to change your bank, or conduct your operations outside the
bank? But money operations outside of banks are illegal, and Western
banks, the ones that could have kept their records more secure, are not
welcome. Why do you think these laws are on the books?

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And now, to the worst part. The Tax Police now officially takes its
cut of the supposedly evaded taxes that it uncovers. The Tax Police
also rewards whistleblowers. Here is where it all comes together. You
thought that a citizen reports a criminal because it is the right thing to
do, because the law is just, being rewarded only for personal
inconvenience or danger. You thought that public servants are paid a
salary, and then do the job to the best of their ability. Not in the
Russian Tax Police. It is not just that the service is corrupt and
incompetent through and through, it is that the state, yet again, asks
the citizens to spy on one another and to profit from it. Just when you
thought that Stalin was dead, just when you thought that the Russians
would pay respects to his millions of victims, each denounced by his
neighbor next door! The regulations that govern the work of the Tax
Police are not only extremely inefficient, counterproductive, and ill-
advised, they are a sacrilege, and they belie any talk of the moral high
ground in which the Yeltsin's government attempts to engage.
There is one thing so basic that everyone forgets to make it the
very first sentence of any discussion of Russian reform. Everything that
the Russians are doing now was absolutely illegal and very dangerous
only a few years ago. Having more than thirty dollars, reading a book by
Solzhenitsyn, working for personal gain -- all were crimes as serious as
murder. Moreover, many people thought that this behavior was actually
immoral, egotistical, unpatriotic, and dishonest. Now we are
establishing a new morality in place of whatever there was before, a
process in comparison to which everything else fades into
insignificance. And so, this is how the democrats instill new morality.
There could be denunciations, lies, thievery -- this is what the Russians
are like, this is what the Communists turned them into. This is to be
expected. But when the democrats legalize denunciations, when they
tolerate thievery and lies, this is another matter. This is not the last
gasps of the dying Communist morality, but the first manifestations of
the new, 'democratic', morality. Will the new morality be even worse
than the old one?
One who earns his living by envy-based behavior loses the ability
to earn a living in any other way. Thus, the reform is impeded not so
much by the lack of skills and the backwardness of the economy, but by
the army of claimants and spies.
So when the acting Attorney General, whose admirable quote
about the rights of criminal suspects has already livened up our
discussion, recently asked, ''the question is whether the mafia will put
the state on its knees or whether it will be the other way around?'', he
has got it all wrong as there has been no conflict between the state
and the mafia. Rather, they are increasingly becoming two facets of the
same coin.

A FEW PARTING WORDS

This text had to be short, and so we have reached the end of it.
Before wishing you good luck and thanking you for bearing with me, I
want to tell you a joke.
Once two guys were fishing. Suddenly they see a lot of pliers
walking by. ''Hey, pliers, where are you off to?'' ''To Africa. Are we
walking in a right direction?'' ''Yes, you are.'' And so the pliers went
away, and the guys are sitting there, fishing. Then again, they see a lot
of pliers walking by. ''We are going to Africa. Are we walking in a right

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direction?'' ''No, you must turn to the right''. And the pliers turned right
and were off. And so one guy asks the other, ''Why did you send one
group of pliers to the left, and the other to the right?'' ''Why should
there be that many pliers in Africa?''
An attempt to impose order by evenly distributing walking pliers
does seem ridiculous, doesn't it? Would our attempt to impose some
order on a country as crazy as Russia look ridiculous, too? Some may
say so, but I prefer to look at it at a different angle. I think that Russia
is very generous as it allows us to see that human life does not have to
be the same everywhere, and does not necessarily have to be built on
criteria that seem rational and important to us. So here is the beauty of
your assignment in Russia: Paris might have been nicer, but it is here,
in Russia, that you would be able to see everything in a sharper focus,
to lose some of your convenient assumptions and gain more knowledge
about yourself.





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