Hysteria, Complacency and Russian Organized Crime

Hysteria, Complacency and Russian Organized Crime

The Royal Institution of International Affairs

October 1996

Introduction

Assessments of Russian organized crime diverge remarkably. At one end of the spectrum --the worst-case estimate --are those who consider it a dangerous successor to the threat posed to the West by the Soviet Union. At the other end of the spectrum, providing the best-case analysis, are those who contend not only that this threat is usually exaggerated, but that, in the present circumstances, organized crime has positive functions in Russian society and the economy. They claim that it has attained considerable prominence only because of the particular set of economic and political conditions that exist throughout the Commonwealth of Independent States (CIS), and will diminish in importance as these conditions change. In effect, these contrasting assessments are the new variant of the Cold War debate between hawks and doves. Neither is wholly compelling. This paper attempts to crystallize the key elements in these two opposing positions. This is followed by an examination of the scope, the complexities and the limitations of Russian organized crime. The final section uses the empirical analysis to offer a critique of both the worst-case and the best-case positions, and to assess the challenge organized crime poses to Russia.

The worst-case assessment

The worst-case assessment of organized crime in Russia is the direct heir to the conservative assessment of the Soviet threat during the Cold War and emphasizes several features:

Its highly predatory nature, which is manifested in growing dominance over key sectors of the economy.

Its high level of cohesion and organization, which is explained in terms of the central role of past KGB operatives as well as some current members of the security services who have transferred their skills for personal profit while retaining their malevolence to the West, and thieves professing the code ₁ who are generally portrayed as the Russian equivalent of Mafia godfathers, giving direction and form to Russian criminal activities.

The ruthlessness, skill and efficiency of the organizations, which surpass Colombian drug cartels, Chinese triads or the Italian Mafia. These characteristics are attributed to long experience in circumventing a totalitarian political system.

The linkage with nuclear material trafficking, pariah states and terrorist organizations - a linkage that resonates in the public debate by combining familiar Cold War fears with the new red Mafia.

The close links with criminal organizations from other nations, especially the Italian Mafia and drug-trafficking in Colombia, links that have been facilitated through a series of summit meetings and that are creating global criminal conglomerates which threaten international security.

The growth of this phenomenon is likely to derail the democratization process and take over the Russian state, leading to the first criminal superpower.

While not all those who adhere to the worst-case analysis would necessarily accept every detail of this picture, they all emphasize the seriousness of the threat both domestically and, increasingly, internationally.

The best-case assessment

At the other end of the spectrum are those who, in effect, deny that Russian organized crime poses a real threat. In this view, promulgated by some economists and some criminologists, it is far from the negative phenomenon portrayed in the worst-case assessment. It is possible to identify several central themes:

Organized crime currently fulfills certain positive functions in Russian economic and social life and has become a substitute for government, particularly in the matter of contract enforcement, protection and debt collection, all of which are critical to the functioning of a market economy. Moreover, rather than organized crime infiltrating business, business often seeks out organized crime to fulfil these functions. This argument is given credence by the precedent of Sicily, where the Mafia developed in response to a weak state and the absence of a legitimate body to enforce business contracts and property rights. With an economy permeated by a basic lack of trust, protection becomes essential. The introduction of private property and private business in Russia has led to a demand for protection that the state has been unable to meet. Organized crime is filling the gap.

Organized crime simply represents the ultimate form of capitalism, a form that is unregulated by either law or morality, and that is, therefore, particularly efficient at capital accumulation. In this view, criminal organizations are among the most progressive forces in the former Soviet Union: they are the strongest supporters and are certainly one of the main beneficiaries of privatization; they reinvest criminal profits in the legitimate economy; and they provide considerable entrepreneurial initiative. Every transition is a rough one and what we are seeing is the Russian equivalent of the nineteenth-century robber barons who played such an important role in the industrialization of the United States.

The situation is likely to improve since organized crime is a transient phenomenon that is the product of particular conditions. As conditions change and reform continues, organized crime will dwindle in importance. As the government develops greater capacity to regulate private economic activity while relinquishing its own monopolies, organized crime will find fewer avenues for advancement. And, as the opportunities for organized crime contract, so will its power. Criminal organizations will gradually be assimilated into the legitimate economy and its leaders will become respectable legitimate businessmen, the source of whose wealth is less important than the wealth itself. The power of the market is such that the prevalence of organized crime will diminish as the market becomes free.

Again, while those who adhere to the best-case assessment may not agree with all the details of this summary, they do share the overall thrust of the analysis.

In order to assess the persuasiveness of these competing assessments, it is necessary to explore the reasons for the emergence, as well as the structure and scope, of criminal organizations and their major activities.

The rise of Russian organized crime

The emergence of Russian criminal organizations resulted from the opportunities that arose with the collapse of the Soviet Union and the end of the Cold War, and the incentives and pressures that resulted from the massive social, political and economic upheaval accompanying the transition process. In addition, criminals in Russia had available certain resources and skills that allowed them to exploit both push and pull factors and to become major players in post-communist Russia.

Opportunities
Periods of transition and turmoil generally provide enormous opportunities for criminal activity, not least because of the difficulties of imposing order and enforcing restraint. This underlines one of the most important elements in the best-case assessment: the emphasis on the weakness of the state and, in particular, the inability of the state to provide contract enforcement.

This is only one form of weakness, however. As important as the inability of the state to fulfil certain positive functions necessary for the development of a flourishing market economy is its inability to prevent criminal behaviour. Whereas the first weakness is reflected in the failure to provide a legal and regulatory framework to facilitate the transition to, and management of, the new economic system, the second is manifest in the weaknesses in the legal system itself. Although there is an article in the Criminal Code covering banditry, this has not been used very much against criminal organizations and has generally been regarded as inadequate. Moreover, for a variety of complex reasons ranging from political considerations to genuine concerns about how to incorporate human rights considerations, no comprehensive legislation against organized crime is yet in place. Without this legislation and measures such as witness protection and rules for use of informants, the capacity of law enforcement to contain organized crime is seriously circumscribed. Moreover, as the Main Economic Crime Directorate of the MVD has noted, there are still no criminal penalties for phoney businesses, fictitious bankruptcies and other socially dangerous practices in a market economy.

The legislative vacuum is compounded by weaknesses in law enforcement. The consequences of the paucity of basic equipment, such as cars, telecommunications and computers are compounded by the low pay for law enforcement personnel, something that makes them highly vulnerable to the temptation of corruption. Equally significant, those entrusted with law enforcement lack familiarity with the new financial system and the operations of commercial banks. In short, the learning curve associated with capitalism has proved to be both very steep and very difficult for them to climb.

Incentives and pressures
Organized crime tends to develop amidst political chaos, economic dislocation and social upheaval. Russia has been subject to all three in the 1990s. Hyperinflation, the move away from a full employment economy, and the inapplicability of the old rules and the inadequacies of the new, all created an environment in which criminal organizations could prosper. The collapse of the command economy brought with it the collapse of social and economic safety nets that had distorted Soviet economic life but provided reassurance for the average citizen. Inflation and unemployment meant that new ways had to be found to make a living. Moreover, many high-status groups suddenly found themselves poorly paid and with little prospect of improvement. In such circumstances, organized crime provided an important source of revenue. For a society that had long been used to black markets and evasion of the ostensible norms of behaviour, the new conditions were highly propitious for the emergence of criminal organizations. Moreover, these organizations were able to find a steady stream of recruits as younger men facing unemployment or poor prospects sought to emulate those with Western cars, cellular telephones and considerable money, i.e. those already involved in criminal organizations.

Resources
Even with all the opportunities and the incentives and pressures, however, Russian organized crime would not have attained its current levels without certain skills and capabilities. In this connection, it is hard to disagree with worst-case analysts that it had a very good breeding-ground in the old Soviet system. Patterns of corruption were established, with links between members of the nomenklatura and the criminal entrepreneurs who operated the black markets in the Soviet Union providing a launching pad for much criminal activity in post-Soviet Russia. In addition, many people became adept at circumventing state authorities. While the shadow or black economy was much broader than organized crime, the flouting of laws and the accumulation of illegal capital provided a highly congenial environment for the development of criminal organizations.

The Soviet period was also one in which traditions of criminal governance were established and developed. The thieves professing the code were important figures in the Soviet criminal world, and their imprisonment helped to develop the bonding mechanisms that added to their authority both inside and outside prison. The thieves provided arbitration and guidance in the criminal world, offering governance and order in a milieu often thought of as totally disorderly. They subsequently brought their experience and traditions into the new economic and political system, posing a challenge that was all the more serious now that the traditional constraints had been removed. This constellation of circumstances favourable to criminal organizations was evident in the speed with which they developed, the extent of their development, and the scope of their activities.

The dimensions of Russian organized crime

Size and structure
According to the published figures, there has been a constant, inexorable growth in the number of criminal organizations, from 3,000 in 1992 to 5,700 in 1994 and about 8,000 in late 1995/early 1996. At first glance, these figures seem to reveal an ever-increasing threat from an expanding criminal empire. It is equally plausible, however, that the increase reflects other factors: looser criteria for categorizing groups as criminal organizations and in particular the inclusion of small and unimportant street gangs; fissiparous tendencies in many Russian criminal organizations and hence a greater number of smaller groups; exaggeration of the threat on the part of Russian law enforcement authorities anxious for more Western assistance; or simply increased visibility of criminal organizations as a result of more efficient policing and better intelligence analysis. Moreover, the official figures do not reveal the process of consolidation among individual organizations that has led well-informed observers to claim that there are about 200 major criminal organizations with widespread geographical and sectoral influence. According to a detailed analysis by Guy Dunn of Control Risks, there are six large groups in Moscow --three Chechen groups (the Tstentralnaya, Ostankinskaya, and Avtomobilnaya) which have about 1,500 members between them, the Solntsevskaya and Podolskaya organizations, and the 21st Century Association; another four major groups in St Petersburg, two major gangs in Yekaterinburg (the Uralmashkaya and the Tsentralnaya); and nine major gangs in Vladivostok.

Even with the consolidation process, however, organized crime in Russia is highly diverse and fractured, with ethnic divisions, divisions based on territorial and sectoral control and on generational splits, and divisions between those who have established symbiotic links with officials and those who do not enjoy such access. There has been some role specialization, with particular groups dominating specific spheres of activity (e.g. Chechens dominate the petroleum trade, Azeri groups are particularly prominent in the drug business, and Georgians are heavily involved in burglaries and robberies).

This specialization has been helpful in limiting conflicts, at least at times, and has not precluded cooperative arrangements when there were obvious benefits from joint activity, including contributions to a common pool of resources, the obshak, which is used to support the families of those in prison, for bribery and corruption, and to generate new enterprises. But there has also been enormous competition among the groups resulting from ethnic divisions, rival territorial claims, and personal animosities among criminal leaders. A major split has emerged between thieves professing the code and the new generation of criminals who do not respect established traditions, are more entrepreneurial and, in some cases, have become authorities because of wealth, rather than status accrued through time in prison. As a result the thieves have suffered considerable attrition.

Overlapping this particular rift is a continuing struggle for dominance between the Russian or Slavic groups and those from the Caucasus. In part these conflicts reflect the powerful internal bonding mechanisms that provide the basis for trust in a milieu without formal laws and rules. These can be based on ethnicity, common experience in the military or security service, or the camaraderie of functionally based groups such as the karate or sportsmen organizations that are a feature of organized crime not only in Russia but elsewhere in the former Soviet bloc. From the perspective of Russian law enforcement this diversity is a weakness: competition is preferable to further consolidation. At the same time, the very diversity and complexity of Russian criminal organizations makes concerted action against them difficult. So does the fact that many of the groups have infiltrated licit business and established inroads in key sectors of the licit economy.

Infiltration of the banking industry
The Russian banking system faces many problems that have little or nothing to do with organized crime. In order to develop into a system appropriate for a market economy, its structure, procedures and underlying norms all have to change. Cosy relationships with state enterprises have to be broken and new practices based on accurate evaluations of credit risks have to be implemented. Yet, so long as criminal organizations exert significant influence in the banking sector, progress will be limited.

The disruptive effect of organized crime was manifest in December 1993, when Russia's major commercial banks closed for the funeral of the Chairman of Rosselkhoz bank, Nikolai Likhachev, whose death was one more in a long series of murders of bank officials. Bank chairmen expressed their alarm and frustration not only at the failure to apprehend the killers but also at the gap between government rhetoric and effective action.

These sentiments were validated by subsequent developments: from 1994 to July 1995 there were thirty assassination attempts against top banking officials, sixteen of whom were killed. These killings, along with the earlier ones, were an important indicator of the efforts by criminal organizations to infiltrate the Russian banking system and take control of particular banks. Criminal ownership of banks is not unprecedented. If the Russians cannot claim responsibility for innovation, however, they have turned this technique into an art form. In August 1995 the MVD All Russia Scientific Research Institute estimated that criminal groups control over 400 banks and 47 exchanges. An even more pessimistic assessment was made by Professor Lydia Krasfavina, head of the Institute for Banking and Financial Managers, who estimated that 70 to 80 per cent of private banks in Russia are controlled by organized crime. What control actually means is not entirely clear. In some cases criminals could have forced their way onto the board of bank officials and become full participants in all key decisions of the bank. Alternatively, they may remain in the background, exercising their power simply through intimidation.

Whatever the precise mechanism, infiltration of the banking system offers significant advantages for criminal organizations. It facilitates money laundering, by both Russian and foreign criminal organizations. While this is not vital in a system where questions about the origin of money are simply not asked, it is a long-term hedge in the event that serious regulations to counter money laundering are eventually imposed by the Russian government. It is not necessary to worry too much about suspicious transaction reports when one owns the bank. Another benefit is that the organization can use at least part of the capital resources of the bank for its own purposes or, at the very least, obtain preferential credit. Blackmail of business is also facilitated (see below). In cases where businessmen have been engaged in tax evasion, they often find it preferable to pay the criminals than to pay the government. Similarly, access to the banking industry provides resources that facilitate the corruption used by criminal organizations to reduce the risks from law enforcement. Not all the consequences of criminal activity in the banking sector are wholly negative. In the short term laundered money added a high degree of liquidity to an economy desperate for capital investment. Yet these positive effects cannot obscure the negative consequences. It is difficult for the government or the Central Bank to ration credit and control the money supply --two tasks that are essential for effective macroeconomic management --when the banks have their own agendas, in many cases motivated by the desire to facilitate or extend criminal activities.

Not surprisingly, therefore, there have been efforts to clean up the banking sector, with the detection of an increasing number of crimes, more charges being pressed against officials for criminal behaviour, especially in relation to the provision of credits, and a greater willingness to impose sanctions against banks that do not abide by the rules. The effort to impose greater regulation on the banking industry, however, has met considerable resistance. On 18 March 1996, for example, shots were fired into the home of the chairman of the Russian Central Bank, Sergei Dubinin, leading to speculation that this was because the Central Bank had aroused the anger of criminal organizations by revoking the licences of certain commercial banks.

Infiltration of industry
Infiltration of the banking sector has provided access to an excellent source of intelligence for criminal organizations, allowing them to identify targets for extortion, especially businesses that have evaded tax and would find it cheaper to pay a criminal tax than be reported to the authorities. Both domestic and foreign firms have been targets, with the criminals demanding about 10 per cent of the turnover. Although there have been reports that extortion methods have become increasingly sophisticated, with the criminal organizations offering to provide protection in return for a share of the profits, and actually placing their members in key positions in firms, the continued use of violence against businessmen suggests that the notion that businesses seek out criminal organizations for contract enforcement provides only one part of the picture. During 1995, for example, several high officials in the aluminium industry were killed as part of what was clearly an effort by organized crime groups to become major participants in what is a highly lucrative export industry. It followed a pattern whereby criminal organizations have joined with entrepreneurs and corrupt officials to export large segments of Russia's raw-material base.

Contract killings
Events in the aluminium industry have also been part of a wider pattern of criminal activity in Russia, characterized by the increased prevalence of contract killings. According to one estimate there were about 100 of these in 1992, rising to some 250 during 1993. In January 1996, Tass suggested that such killings had now reached around 500 a year. Earlier reports, however, indicated that in Moscow at least, there had been something of a decline from one a week to one a month. Even if the figure of 500 a year is correct, such killings are only a small proportion of the murders in Russia. In 1992, for example, there were 319 murders in Yekaterinburg, but only 20 of them had the characteristics that led law enforcement authorities to classify them as contract killings. Nevertheless, their importance is far greater than their number, largely because the victims of contract killers tend to be bosses of the criminal world who are killed as part of the struggle for power; businessmen or bankers who resist hostile takeovers by criminal organizations; and journalists, law enforcement officers, officials, and politicians who are serious about exposing and eliminating corruption. In effect, the use of contract killing has been extended from an instrument of intergroup warfare to an instrument used to punish or eliminate those who stand up to criminal organizations. The killings themselves are generally done by professionals, many of whom are Afghan veterans or former members of the security services.

Drug-trafficking
Drug-trafficking in Russia has become a major activity, involving not only well-publicized links with Colombian cocaine-traffickers, but also the supply of opium, heroin and marijuana from Central Asia and the Golden Crescent. In addition, there have been several major cases involving large-scale trafficking in synthetic drugs. While much of the trafficking is carried out by individuals or small groups, a great deal of activity is structured and controlled by larger criminal networks. The networks in Russia itself are linked with those in Central Asia and have become adept at both marketing and ensuring a regular supply of narcotics. In 1993/4, 126.74 kilograms of all kinds of drugs were seized in 418 separate incidents; during 1995/6, 457.3 kilograms were seized in 767 incidents. Although the increase can be accounted for in part by greater efficiency in interdiction and continued improvements in law-enforcement techniques, it also reflects what appears to be an expanding market in Russia as well as the growing use of Russian territory for the transshipment of drugs to western Europe. While the problem has been exacerbated by the fact that Nigerian drug-traffickers have also been very active in their effort to exploit what they see as an important new market, the indigenous organized crime groups have found drug-trafficking to be a highly lucrative activity. Whereas some organizations specialize, others combine drug-trafficking with activities such as car theft, prostitution, extortion and fraud. Indeed, one of the strengths of organized crime in Russian is that it has so many different dimensions and engages in such a wide range of activity.

Nuclear material trafficking
The issue that has aroused the greatest trepidation is that of smuggling of nuclear material. Lack of security at some nuclear facilities, and poor inventory management, have provided opportunities for disgruntled workers in the nuclear industry. The possibility that, through either economic need or intimidation, they could offer weapons-grade material to criminal organizations provides the basis for nightmare scenarios ranging from large-scale environmental damage to nuclear terrorism or nuclear extortion. What remains uncertain, however, is the extent to which such trafficking is a core activity of Russian criminal organizations. For the most part it has been the preserve of amateur smugglers. Yet there is some evidence that criminal organizations have been involved on a limited basis. One arrest seems to have involved twelve members of the Solntsevskaya in possession of radioactive material, while in another case, a group of criminals from Yekaterinburg was involved in the smuggling of large amounts of zirconium to the United States and Cyprus. Nuclear material trafficking is not yet a core activity of Russian organized crime, not least because the risks are high and the profits uncertain, but it could become much more important. For groups engaged in trafficking drugs or exporting strategic materials it is not difficult simply to change the product line.

Corruption
Corruption in Russia is extensive; moreover, much of it is self-generated by those in authority and has little to do with organized crime. Yet this contributes to an atmosphere in which principles are less important than profits and which is open to exploitation by criminal groups. Indeed, corruption is used by these organizations to minimize the likelihood of real law-enforcement efforts against them, to obtain counter-intelligence that neutralizes genuine enforcement efforts, or to ensure that enforcement does not result in prosecution or conviction. In a sense, corruption is a way of keeping the state weak and acquiescent. It could be argued, of course, that there is nothing new in all this, and that the old patterns which existed in the Soviet Union are simply being revised to fit the new circumstances. Yet there is a crucial difference: it is increasingly the criminal organizations that determine the rules of the game. In the old Soviet system many government officials used the black market as a safety valve, tacitly acknowledging the role of those who operated in this market. In the new system, much corruption is designed not to overcome the inefficiencies of state control of economic life, but to protect criminal organizations from law enforcement. As some members of the political elite have willingly or unwillingly accommodated those who have the power to hurt and the wealth to purchase support, a new type of symbiotic relationship with sectors of the state apparatus has emerged in which organized crime is the dominant force. Indeed, systemic corruption as an instrument of organized crime has helped to maintain a safe home base within which criminal organizations can function unhindered and from which they can increasingly engage in transnational activities.

The transnational dimension
Although many Russian criminal organizations are local in character, other groups are heavily engaged in transnational activities and, in some cases, have significant links with criminal organizations elsewhere. Russian criminal organizations are active in Germany, the United States and Israel, as well as in Holland and Belgium. In addition, Cyprus has become a major recipient of the profits of Russian criminal activity, while there is considerable concern in London about money laundering through British financial institutions. In the United States, Russian criminals have been involved in fuel tax evasion schemes, health care and insurance fraud, extortion, car theft, and contract murders. Although Brighton Beach is the main centre of Russian organized crime in the United States, Russian criminal networks are active in Florida, California and the Pacific Northwest. They also have a significant presence in Germany, which has become a source of luxury cars for the Russian market, a major battleground for intergroup rivalries, and an important market both for illicit products and for licit products that have been obtained through illegal means.

Appraisal and analysis

Although this brief survey is far from exhaustive, it allows us to identify the weaknesses of both the worst-case and the best-case assessments. In several areas the worst-case assessment exaggerates by oversimplifying. There is, for example, a real threat from nuclear material trafficking, but to portray it as a major activity of Russian organized crime is to misrepresent what is first and foremost an opportunist activity engaged in by a variety of participants. Similarly, while former KGB operatives are among the more important players in Russian organized crime, especially regarding contract killing, neither they nor the thieves professing the code control what is a complex, sprawling, multi-dimensional phenomenon that is not subject to simple characterization, let alone central direction. The corollary is that the idea of summit meetings and cooperation between Russian and Italian criminal organizations per se also has to be scaled back: it is important to recognize that though some of this does go on, this is far from the establishment of global criminal conglomerates.

For its part, the best-case assessment, fixated on both the virtues and the power of the licit market, ignores the symbiotic links between criminal organizations and members of the political and economic elite, and the resulting capacity of organized crime to perpetuate the weakness and acquiescence of the state even when market conditions change. In other countries organized crime has displayed a remarkable capacity to prosper through economic diversification even when some of the market conditions that contributed so much to its emergence have disappeared. In the United States, for example, it survived the change in market conditions brought about by the end of prohibition. And whereas organized crime in the United States traditionally revolved around the supply of illicit goods and services, in Russia it runs far deeper, partly because, in the transition process, there is no clear demarcation between what is legal and what is not. This has allowed criminal organizations to move beyond the supply of illicit goods and services and extend their activities into what in the West is often characterized as white-collar crime. As a result, organized crime has become a very powerful force in the social, political and economic fabric of post-communist Russia. In such circumstances, respect for the law is likely to be minimal. The symbols of wealth and power displayed by organized crime are very attractive and encourage emulation. Recruitment is easy as illicit routes for advancement promise far greater and more immediate rewards than legitimate avenues.

In short, the problem is unlikely to go away and could get worse. In the meantime, there are several ways in which organized crime can hinder the reform process. Simply because organized crime groups are entrepreneurial capitalists, this does not necessarily mean that they facilitate the transition to a market economy. Far from being a positive force, organized crime threatens the integrity of political and economic institutions and emerging social and commercial norms. Violence against businessmen and bankers can deter at least some foreign investment, while organized crime hampers economic competition and stifles legitimate entrepreneurial activity at the domestic level. It is difficult for legitimate entrepreneurs to compete with those who have ready access to large financial resources obtained through illicit means. Moreover, when organized crime takes over particular sectors of the economy, it proves very difficult to dislodge. In the United States, for example, it still has considerable influence over the construction industry, especially in New York, and over waste disposal. In sum, penetration of the economic system has serious long-term consequences, and is not easily eradicated.

Against this, it is possible to argue, as best-case analysts would, that the licit market will prove irresistible and that there will be a gradual legitimization of criminal capitalists. Although the first generation of capitalists are more concerned with capital accumulation than with the means of achieving it, they will want their sons and daughters to be legitimate, with the result that there will be a gradual transition from illicit to licit business. Support for this thesis can be found in the phenomenon of ethnic succession in organized crime in the United States and the way in which the traditional mafia has declined in importance. Such a process could be assisted by the development of effective rules and regulations to govern the economy. The theory here is that unregulated capitalism in which illicit business looms largest will give way to a more regulated form of capitalism that is dominated by licit business: in short, there will be a gradual cleansing process.
The more gloomy alternative, of course, is one in which the process moves in the opposite direction, with corruption becoming an all-pervasive phenomenon leading ultimately to a collusive relationship between the state and organized crime.

In the final analysis, it may well be the Russian government itself that is the determining factor. The elevation of Lebed during the 1996 election campaign was a promising sign but also suggests that increasingly the major divide in Russian politics is not between reformers and conservatives, but between the corrupt and the non-corrupt. Avoiding the more pessimistic outcome, however, depends not only on the ability and willingness of the political establishment to cleanse itself but also on its capacity to impose a legal framework that allows law enforcement officials to attack organized crime more effectively and that establishes and implements effective regulation for crucial sectors of the economy such as banking. In addition to preventive and control measures, it is also crucial to eliminate incentives such as high levels of taxation for forms of behaviour that allow Russia's nascent capitalists and legitimate entrepreneurs to become easy targets for criminal organizations. The overall task is not impossible, but it is formidable, and requires a far more comprehensive, systematic, and sustained effort than the Russian government has yet developed.

Notes

Note 1: Thieves professing the code were high-status criminals (sometimes called thieves in law) whose status came from strict adherence to the conventions of the criminal world in Russia, including non-cooperation with the authorities of the state, even when they were imprisoned. Back.