Publication: Monitor Volume: 4 Issue: 178

Several speakers at a September 19 conference on economic crime in Cambridge, England, argued that, while economic crime is a major problem for Russia’s fledgling market economy. the extent of the phenomenon has been inflated by the mass media. The conference was attended by a Monitor correspondent (for an earlier report, see the Monitor, September 21).

Vadim Radaev of the Institute of Economics in Moscow reported that, whereas 87 percent of the businessmen he had interviewed identified economic crime as a serious problem, only 65 percent said they had had personal experience of it. Similarly, 80 percent of interviewees said the use or threat of violence was common, but less than 50 percent had themselves been threatened. Radaev said protection rackets flourish where the state is too weak to protect the citizens and racketeers step in to fill the vacuum. In Russia, this protection is often provided by moonlighting members of the state security services, who hire themselves out in a “private” capacity to paying customers. He said the state agencies tend to be cheaper and more effective than professional racketeers, and the “krysha” (“roof”–meaning protection) they provide is regarded as more prestigious. State agencies are therefore being commercialized, and acquiring a form of “customary rights” to exercise violence in the marketplace.

Radaev foresees no reduction in economic violence in Russia in the near term. He did, though, identify what he called the “routinization” of violence. By this, he meant not that the role of violence has become less, but that its physical use is gradually declining, while more emphasis is being placed on the threat of violence. Protection rackets no longer need to prove how tough they are: Their reputations are now enough. This means, Radaev said, that the situation is becoming more predictable. Violence is no longer being used arbitrarily, but is increasingly conforming to an evolving set of rules.

Moreover, Radaev said, Russia’s gangs are looking for areas of the economy in which to invest their newly won capital. In the long term, he predicted, this will mean that the gangs will have to adjust their mode of operation to fit the rules of the marketplace, however distorted.

Addressing the same conference, Vadim Volkov of the European University at St. Petersburg agreed that the state security agencies are better at the protection business than the racketeers. Looking to the future, Volkov suggested that one possible outcome would be the gradual reassertion of state control over “privatized” sections of the security agencies that originally broke away from the state. Volkov stressed that economic crime is flourishing in today’s Russia because the state is weak. The struggle against organized crime stands no chance of success until it tackles this fundamental problem.