CORRUPTION AND THE RUSSIAN TRANSITION BELARUS: THE OPPOSITION AND THE PRESIDENCY UKRAINIAN CASE TO UKRAINIAN CAUSE WAS GEORGIA READY FOR INDEPENDENCE? RUSSIAN SOCIAL DEMOCRACY AFTER 1921 tti'C Pm lrupamreview Volume 12, Number 1 Fall 1999 Peter Rutland and Natasha Kogan CORRUPTION AND THE RUSSIAN TRANSITION 1 Uladzimir Padhol and David R. Marples BELARUS: THE OPPOSITION AND THE PRESIDENCY 2 2 Mykola Ryabchuk UKRAINIAN CASE TO UKRAINIAN CAUSE 2 9 Paul B. Henze WAS GEORGIA READY FOR INDEPENDENCE? 26 Frederick Corney Review of Andre Liebich, From the Other Shore. Russian Social Democracy after 1921 31 Cover: Vladimir Favorsky's illustration for Alexander Pushkin's 'The Miserly Knight" The Harriman Institute Bradley F. Abrams, Edward A. Allworth, Karen Barkey, Edward Beliaev, Robert L. Belknap, Thomas P. Bernstein, Richard Bulliet, Kathleen R. Burrill, Vitaly Chernetsky, Istvdn Detlk, Padma Desai, Richard E. Ericson, Richard Foltz, Anna Frajlich-Zajac, Boris Gasparov, David Goldfarb, Raroila Gorup, Richard E Gustafson, Leopold H. Haimson, Robert Jervis, Peter Juviler, Manouchehr Kasheff, Christina H. Kiaer, Mara Kashper, Peter Kussi, Valentina Lebedev, Marina Ledkovsky, Robert Legvold, Rado L. Lencek, Robert A. Maguire, Stephen Paul Marks, Rajan Menon, John S. Micgiel, Frank J. Miller, Catharine Theimer Nepomnyashchy, Marc Nichanian, Vratislav Pechota, Cathy Popkin, Irina Reyfman, Joseph Rothschild, Carol Rounds, Ivan Sanders, Peter J. Sinnott, Jack Snyder, Steven L. Solnick, Michael Stanislawski, David Stark, Lars Tragardh, Elizabeth Kridl Valkenier, Marie von Hagen (Director), Stanislaw Wellisz, Richard Wortman, Warren Zimmermann, Kimberly M. Zisk. THE HARRIMAN REVIEW, successor to The Harriman Instisuie Forum, is published quarterly by the Harriman Institute, Columbia University. Copyright © 1999 by the Trustees of Columbia University in the City of New' York. AH rights reserved. Reproduction of any kind without written permission is strictly forbidden. Annual subscription rates: U.S. and Canada: $35.00 (1 year), $60.00 (2 years); elsewhere: $45.00 (1 year), $85.00 (2 years). Back issues: $10.00. Check or money order should be made payable to Columbia University. U.S. funds only. Send all orders, changes of address, and subscription inquiries to: The Harriman Review, 1218 International Affairs Building, Columbia University, 420 West 118'" Street, New York, New York 10027. FAX: (212) 666-3481. The Harriman Review is indexed by PAIS (Public Affairs Information Service). CORRUPTION AND THE RUSSIAN TRANSITION Peter Rutland and Natasha Kogan Introduction in the transition economies (as in most of the develop- ing world) the issue of corruption had become impossi- ble to ignore. Corrupt practices were not merely para- his paper surveys the state of the debate over the causes, character and con-sequences of corrup- sitical on an otherwise healthy body politic and market economy: to a worrying degree, corruption had become tion in Russia. The main argument is that while a central, structural feature of the logic of political and Tthere is broad agreement over these questions, there are economic behavior. few credible suggestions to explain how Russia will escape from its current impasse. By 1997 authorities from the World Bank to Jeffrey Corruption has not traditionally been a subject that Sachs were for the first time acknowledging that a has attracted the attention of political scientists. The successful transition to capitalism required that more attention be directed towards promoting the rule of study of corruption has largely been the province of investigative reporters: from the very beginning, in the law.4 The initial operating assumption back in 1989-92 U.S., it was “muckraking” journalists who exposed the was that liberalization would create the incentives for phenomenon. In the literature on the politics of transi- profit-seeking behavior. This would lead to the emer- tion in socialist countries, it was journalists who first gence of new social actors (entrepreneurs, workers and drew attention to the prominent role of corruption.1 consumers) who would have a vested interest in the And among academic disciplines, it is anthropology, new market economy. These groups would realize that with its analysis of reciprocal gift-giving and patronage it is in their interest to help create the social institutions networks, that is most comfortable with the analysis of necessary to the smooth functioning of a market corruption.2 economy—clearly defined property rights, enforceable Political scientists and economists traditionally contracts, fair and transparent government regulation. tended to treat corruption as a marginal phenomenon, The introduction of democracy would give them the a regrettable example of deviant behavior that did not chance to translate their demand for market institutions seriously affect one’s analysis of the political/economic into public policy. The main political threat to market system.3 However, it has become increasingly clear that transition was seen as lying in the desire of bureaucrats and some groups of workers to try to turn the clock back to central planning. Even as late as 1996 Boris 1 For journalists writing on Russian corruption, see Stephen Yeltsin ran an election campaign by painting commu- Handleman, Comrade Criminal: Russia’s New Mafiya (New nism, and not corruption, as the main threat to social Haven, CT: Yale University Press, 1995); David Kotz and Fred progress in Russia—and he received the unanimous Weir, Revolution From Above (London: Routledge, 1997). support of Western governments and international 2 The leading investigator of the scandal surrounding the USAID- agencies. funded work in Moscow of the Harvard Institute for International Development is anthropologist Janine R. Wedel. See her Janine Wedel, “Cliques and Clans and Aid to Russia,” Transitions, July 1997. 1997); Robin Theobald, Corruption, Development and 3 For samples of serious work on the issue, see Arnold Underdevelopment (Durham, NC: Duke University Press, 1990). Heidenheimer et al (eds.), Political Corruption: A Handbook 4 Jeffrey D. Sachs and Katarina Pistor (eds.), The Rule of Law and (New Brunswick, NJ: Transaction, 1989); John Girling, Economic Reform in Russia (Boulder, Col: Westview Press, Corruption, Capitalism and Democracy (New York: Routledge, 1997); World Bank 1997 World Development Report. 1 THE HARRIMAN REVIEW Alas, something went wrong in Russia and most of private is not clear-cut, and must be explained and the other Soviet successor states. Liberalization led to analyzed, not assumed. short-run' profiteering rather than long-run profit Hence we will proceed by describing the behavior seeking. Few social actors emerged with a commitment we wish to investigate as “rule evasion” rather than to institution-building. As of August 1998, the official corruption. “Rule evasion” is a less pejorative term position of the IMF, World Bank and U.S. government than corruption, and is open to the interpretation that is that the market reform pursued (fitfully) by Russia such behavior can be individually rational and even since 1991 was and still is the only feasible alternative socially functional. It is also a broader term than for Russia. They now concede, however, that market corruption, encompassing all behavior involving liberalization should have been accompanied by more deviation from laws and formal procedures. determined efforts at institution-building to promote the Second, using the term “corruption” implies that the rule of law. behavior is confined to a small deviant section of Political scientists were perhaps even slower to society: parasites on an otherwise healthy social adapt to the souring of the Russian transition than were organism. Rule-evasion may be more pervasive than is economists. Corruption still tends to be seen as some- implied by the term corruption. Indeed, it may be thing that should be studied by legal scholars, a blot on endemic to the core functions of the political organism the body politic that belongs in the category of “crime and not merely a feature of its “parasitic” and dysfunc- and social problems.” Despite a growing recognition tional elements. that corruption has deeply penetrated Russian political The difference between corruption and rule evasion and economic elites, few political scientists have tried is more than mere semantics. Officials and business- to systematically analyze the phenomena of organized men may be behaving rationally and often responsibly crime, “clan politics” and their implications for the by engaging in rule evasion in an situation far removed Russian political system. from a mature market economy, characterized by legal The purpose of this paper is therefore twofold. nihilism; inadequate liberalization; intense First, to alert political scientists to the dimensions of politicization of economic decision-making; deficient the corruption issue in Russia and the challenge it institutional infrastructure; prevalence of barter trade; poses to our conventional understanding of the demo- widespread arrears in meeting contractual and tax cratic transition. Second, the goal is to question the obligations, and so forth. assumptions behind the way that economists are conceptualizing the problem of corruption and to argue that political science has a specific role to play. How Bad Is Corruption? Some commentators are prepared to argue that corruption is not necessarily a barrier to social prog- ress. They note that corruption to a degree is present in What