The Looking-Glass World of Russian Corruption

An interesting (fake?) discussion took place between top oligarch Boris Deripaska and Dmitry Medvedev on Wednesday.

According to veteran rogue journalist John Helmer, the exchange went as follows:

Deripaska told Medvedev that it is impossible to get a fair ruling from the law courts without paying bribes.

“The courts have become overgrown with the institutution of intermediaries and deciders (решалами),” Deripaska said, “without whom it is impossible to get a fair solution. Everybody knows you have to pay for it”.

“They should be put in prison,” Medvedev reportedly said with indignation…and assured Deripaska that to struggle against such corruption of the courts “is our common task with you.”

But, as is often the case in Russia, there is much more to this ‘common task’ between big business and the Kremlin than meets the eye.

On its face, an analysis of court actions against Deripaska’s company RUSAL “reveals either that Deripaska…is the biggest victim of the Russian courts, or the biggest perpetrator”, according to Helmer.

In fact, over the last six months alone, he has been sued 144 times (more than one case a day), with 92% of these, bizarrely, by the state railway company.

Helmer uncovers a potentially juicy relationship in which both debt ridden Rusal and the state bureaucrats acting against it actually benefit from these incessant trials. For one thing, “by waging an intensive, daily campaign of cases in the arbitrazh courts, Rusal management may be utilizing the court to protect itself from having to disclose voluntary bankruptcy”. The Chamber of Commerce, he reports, may also be involved in protecting RUSAL from state bankruptcy laws.  The state actors involved may allegedly be getting other rewards from Deripaska himself.

This case is all very Byzantine and difficult to follow, but its takeaway message was best encapsulated by the leftist theorist and dissident Boris Kagarlitsky, who recently wrote that “the state and the oligarchs, “as the saying goes, [are] ‘two boots are a pair,’ not only are they  ideally similar to each other, but they are unable to function without each other”.

He went on to explain, using as an example exactly the sort of thing Deripaska did with Medvedev:

The Russian businessmen and their liberal intellectuals adore complaining about the state and officials, and simultaneously about rackets, the  mafia and corruption, dumping the responsibility for these phenomena on this same state.

However, on a closer look, it is easy to understand that they have exactly the state they want. If you underpay taxes (which are rather low anyway), it is quite clear that the vacuum generated by the weakness of the government will be filled by corruption.

You complain about bribes, but – using those bribes – you receive contracts and public funds. And all time you ask for new privileges, grants, help and indulgences. Certainly, business would prefer to not pay either taxes to the state treasury or bribes to racketeers and officials. But if you would choose between taxes and bribes, between the strong state and systematic corruption, most likely, your business without hesitation would choose the latter. And anyway the choice has long since been made. Our state – as it exists today – entirely corresponds to that that choice of our domestic bourgeoisie.

Eduard Limonov long ago pointed out that Russian liberals like Nemtsov, so adored in the West, are not serious about opposing Putin because “the Putin regime is a liberal regime, and the Kremlin’s ideology is basically the same as that of Nemtsov’s and Khakamada’s, so of course it makes no sense to confront them as my organization does. They can only argue over the details of this liberalism, over who should own what and how it should be implemented.”

In just such a way, the Putin regime is also an oligarchic-capitalist regime, and Deripaska and his oligarch friends are are playing the same role in business that Nemtsov and his gang have done in politics.