Travel Report: Russia March 2010

In my Insights of October 2007 and June 2008, I reported on the problem of corruption that is plaguing Russia. On this trip, I found out that it is not a secret at all. It is not even dangerous to speak about it in public. The government is well aware of it and is trying to deal with it. It is even reported in the newspapers.For example, from Moscow’s English-language newspaper, The Moscow Times, on Feb. 27, 2010: “Medvedev pushes to limit jail for executives.” According to the article, officials often add charges of money laundering against executives who have been accused of other illegal economic transgressions, such as tax evasion. Under Article 174 of the criminal code, any use of money earned illegally can be classified as money laundering.Money-laundering violations can be punished by up to fifteen years in prison, while the penalties for tax evasion are much milder. Obviously, the higher the trumped-up charges, the higher the bribe the accused must pay to make those charges disappear. If they do not pay, they risk remaining in prison for a long time just waiting for their case to come up. They might even die awaiting trial; the article reports the case of Sergei Magnitsky, a Hermitage Capital lawyer who was repeatedly denied medical attention during a year-long pretrial detention and died in prison.“First they throw [businessmen] in zidan [an underground prison] after a competitor squeals, then they let him out of there for cash,” the article says, quoting Dmitry Medvedev – the president of the Russian Federation! I found it revealing that Russia’s president would make such an accusation in public.In a corrupt system, businessmen must routinely budget funds for paying bribes as a cost of doing business, or else watch their backs, because if they are thrown in jail and do not have sufficient funds to free themselves, their businesses will be taken over by corrupt officials.Another article in the same newspaper reported: “Russia seeks 66,000 suspects abroad.” These “suspects” are businessmen who are being sought for some financial transgression, who have mostly escaped to Britain or Israel.But now I wonder how many of them are corrupt businessmen avoiding prosecution, and how many are actually innocent businessmen escaping corrupt authorities.And that’s not all. In the same newspaper, there are two related articles that made me think.In one article – “Weapons exports hit record high in 2009” – it is reported that in Russia “arms exports edged up from $150 million to a post-Soviet record of $8.5 billion last year.” It appears to me that this is a significant military-industrial complex with a growing appetite for growth. Another article, “NATO phobia,” supports this hypothesis.It says that on Feb. 5, Medvedev signed a new military doctrine calling NATO “the greatest external security danger to Russia” and it analyzes how great that danger really is. It notes that neither Georgia nor Ukraine is now going to be joining NATO. This used to be a threat that Russia could not accept.In addition, President Obama has abandoned a plan for NATO to locate missiles on Russia’s border. So, the article wonders, what remains of NATO’s threat to Russia? Tongue in cheek, it suggests that perhaps Medvedev is afraid of the Baltic states.Clearly, the president’s claim that NATO poses a threat to Russia is ridiculous. Is it possible, then, it asks, that Russia’s leaders are manufacturing enemies in order to frighten its citizens into approving a larger arms budget? The newspaper article concludes that this may be exactly what is going on: Russia’s military-industrial complex needs to upgrade and expand its production capacity, and may be manipulating the facts to get a bigger slice of the government budget dedicated to armaments.What I find revealing is that all this information is out in the open. In a newspaper. And freely distributed in the hotel lobby. I find it a very encouraging sign. Transparency is a prerequisite for fighting corruption.One thought has been bothering me as I write: Russia may not be the only country guilty of creating imaginary enemies that boost the size of its military-industrial complex. How about the United States making Russia a major threat? Is Russia really a threat? How ? And what about Israel and the Palestinians? Just thinking about this as a possibility makes me shudder …Sincerely,Dr. Ichak Kalderon Adizes

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Dr. Ichak Adizes