MK is in general a crap newspaper. (Russian newspapers love doing interviews, which I rather like.)
Chris Doss The Russia Journal
Moskovsky Komsomolets No. 137 July 2002 [translation from RIA Novosti for personal use only] CAN WE OVERCOME CORRUPTION IN RUSSIA? Georgy SATAROV, a well-known Russian politician, dwells on this issue below.
Georgy Satarov is erroneously believed to be a typical representative of a team of idealist intellectuals drawn into top echelons of power on the wave of reforms and then dismissed because he was no longer needed. This isn't true. A centre of applied political studies "Informatics for Democracy" (INDEM) set up by Satarov in 1990 became in fact the country's first PR agency which managed to win the 1996 presidential elections in a hopeless situation. Pure idealism wouldn't help to reverse such a situation.
Many political steps of the present Kremlin authorities often coincide with Satarov's conclusions (sometimes, to a T). Back in 1995, he made an attempt to form a moderate bloc at the Duma the Kremlin could rely on; today, the pro-Kremlin Unity bloc prevails in the parliament. Two years ago Satarov predicted a surge in extremism; today everyone knows what is going on in the streets and on the markets. Last April INDEM publicly presented its voluminous study entitled "Diagnostics of Russian Corruption," which was followed by Putin's declarative statements on the state's priority tasks in this sphere.
Such coincidences make one give at least more thought to Satarov's role in present-day politics, especially against the background of wide-spread rumours that the Yeltsin "Old Guard" (i.e., Gaidar, Baturin and Livshits) are coming back to the Kremlin.
Question: You are studying domestic corruption today. In what way does it differ from world corruption?
Answer: First of all, I want to dispel a universal delusion with respect to Russia: bureaucrats steal everywhere, and in this country they steal as elsewhere in the world, with corruption having all its specific features which are not something unique.
Let us discuss this problem proceeding from this assumption. We may single out two main constituent parts in Russian corruption. The first one is the so-called everyday corruption. It is understandable to everyone since any Russian is confronted with it sooner or later. The second one requires some explanation. There is a worldwide notion - the seizure of the state by corruptionists, when big business is trying to put pressure on the government from behind the scenes. In this country, the process has gone even further: what we are witnessing today is the seizure of business by the state. Here is a simple example. A combined team made up of officials from the interior ministry, the Federal Security Service, the prosecutor's office, a tax inspectorate, a fire brigade, as well as auditors, pay a visit to a company. They shake it up for a couple of weeks, and then someone tells the company's owner: you know, you have big problems but they can be easily settled if you sell a 40 percent stake in your company to this or that firm for so much money. This is what is called the seizure of business, i.e., the situation in which bureaucrats establish their control over business.
Question: I had no intention to speak about politics right away, but since you've started, let's go on. The thing is that the signal for this has been given by some of Putin's programme statements. For instance, about the need to fight against the oligarchs or "regulate the spheres of big business." Answer: This type of corruption emerged under Yeltsin, though the process has been picking up speed of late. I think the Kremlin is well aware of the situation. However, there are two things which they don't notice there. First, the real scale of this phenomenon, as well as the real scale of corruption. Second, they don't see the possible consequences of such actions.
The powers-that-be are restricted in their actions by the open nature of society and its integration into the world economy. Free business will exist and develop in Russia in any case. Businessmen will adapt to the situation: there are strategies of doing business when businessmen are trying to minimise their contacts with the state. However, the negative attitude to the authorities will accumulate and it may play its role at some critical moment. This, however, does not mean that the situation is hopeless. Constant strenuous efforts are necessary to overcome corruption, and a whole set of measures is needed - not even to reduce it, but to maintain it at a low level.
At the same time, we cannot say that nothing is being done in this country for this purpose. For instance, the procedure for registering enterprises has been simplified. This is, no doubt, an anti-corruption measure. However, according to our data, the registration procedure is last on the list of corruption problems which are regarded by businesses as an obstacle to their development.
Question: Which is the first problem on the list?
Answer: The first problem is poor protection of private ownership rights. It is closely related to the problem of the seizure of business. True, something is being done here, but this is a drop in the ocean, just sporadic efforts which are often mutually exclusive. The registration procedure has been simplified, but immediately after that a law on bankruptcy has emerged, which creates even greater obstacles to business.
All this is caused by a lack of an integral, well-grounded state policy.
Question: Let us stop talking politics. Do you have any concrete data as regards the parameters of Russian corruption?
Answer: There are different ways to assess corruption. We have measured its cost to our citizens, that is, we've estimated the size of bribes. Everyday corruption in Russia costs about 3 billion dollars a year. Its cost for business is more than 30 billion dollars a year. Actually, this is another taxation system.
It's much more difficult to calculate losses from corruption. However, we can give an approximate figure. We'll deal here with economic consequences of corruption ignoring all others. They, in turn, could be divided into direct and indirect losses. Direct losses from corruption are the funds undercollected by the budget. According to our estimates, they are approximately equal to annual state revenues. However, indirect losses, i.e., those which are manifest in inefficient economy, a poor investment climate and capital flight abroad, are much greater. It is surprising: we have some sort of political stability in Russia, everything seems fine, but the volume of investments is falling. The reason is here, on the surface. Business doesn't feel comfortable in Russia. What's the use of talking about foreign investments? The thing is that the market is functioning efficiently only when the laws of competition are at work. Corruption is, above all, a distortion of the laws of competition.
Question: What is your estimate of indirect losses? Do they amount to billions, trillions of dollars?
Answer: We have just started this work, we are trying to learn to measure such things, therefore I cannot give you an exact figure now. However, they exceed direct losses by far, there's no doubt of it. According to the government's data, capital flight from Russia over the past ten years amounts to no less than 300 billion dollars. - /Ed./
However, corruption has social consequences as well. Corruption means poverty, stratification of society in terms of property, hatred for the state.
Question: Alright, we know the cost of corruption now. And what is the cost of implementing anti-corruption policy? And another related question: can we afford such expenses now? Or has Russia found itself in a vicious circle?
Answer: There's no vicious circle here. Let us look at some positive results we have attained. For instance, our customs houses have been working better in the past two to three years. Do you know the numerical consequences of this? The collected customs dues and fees have increased by 500 million dollars a month! And this is despite the fact that the work of customs houses could hardly be called ideal. Understandably, a portion of these funds could be channelled into anti-corruption policy.
Question: This is fine, but what will be the first step in this direction?
Answer: We must do something which gives a quick return. That is, we must understand which hole is to be patched first so as to get some additional resource and direct it where necessary.
Question: Surely, the power structures (i.e., the army, police and law-enforcement agencies - Ed.) should be given priority, shouldn't they?
Answer: Including customs houses, tax agencies, and the state control system as a whole.
Question: Could we say that the "Old Guard" /i.e., the Yeltsin team) is still on the march? Does the country's present leadership attract the former president's team to its work?
Answer: I cannot say anything like that about myself. It seems to me, Satarov is not too popular in the present-day Kremlin. This is understandable since I cannot be properly controlled. As for Gaidar, he is actively working with the government now. Many of his institute's studies are used by it.
Question: What about your studies?
Answer: They are not quite wasted, so to speak. Some ideas are "springing up." However, we have no direct interaction with the government.
Question: What is your opinion of the work of the Audit Chamber and the Duma anti-corruption commission?
Answer: I cannot say anything about the Duma commission, I haven't heard anything about it. As for Stepashin (chief of the Audit Chamber - Ed.), he has done one good thing at least: he has made everyone take the Audit Chamber into consideration. This is very important, because before him the Audit Chamber was totally ignored. It doesn't matter what urged him to do this, the main thing is that it worked. The Audit Chamber must have authority with people because those who steal budget funds should not go unpunished. Stepashin has managed to achieve his goal.
Question: Let us sum up the results now. Shall we combat corruption? Is there a future for our business and Russia as a whole? What is your forecast?
Answer: Of course, there is a future for Russia. I believe Russia has a tremendous energy potential, and our people has an amazing capability to adapt to the situation. Our entire population has found itself in absolutely dreadful conditions. The authorities are doing absolutely nothing to help people. As for business, it is developing at an amazing pace. It is developing psychologically, intellectually and professionally. This is no longer a speculator's image which used to be imprinted in people's minds. Our businessmen are being formed and survive in a terribly aggressive environment - a pool of sulphuric acid, so to speak. I can imagine what they will do if the state helps them a bit.
* Georgy Satarov was born in Moscow in 1947. Graduated from the mathematics faculty of the Moscow State Pedagogical Institute (MGPI). Cand.Sc. (Technical Sciences). Member of the presidential council from February 1993. Aide to the Russian Federation's president from February 8, 1994. Was in charge of the president's contacts with the Federal Assembly (the Russian parliament) and political structures. In March 1996, set up an expert group under the service of the president's aides to draft Yeltsin's election programme. Resigned in 1997. President of the Informatics for Democracy (INDEM) Foundation. (Georgy SATAROV was interviewed by Marat KHAIRULLIN.)