Russian Corruption

Edward S. Herman


the discovery of the massive laundering of Russian money– some of it

compliments of the IMF, and U.S. taxpayers–through the Bank of New York, the

issue of Russian corruption is now "in." But it presents the

establishment with a problem. After all, didn’t we help put into power and

encourage people who were the alleged "reformers," the good guys as

opposed to the threatening communists? It is awkward that a rapidly enlarging

number of the reformers and their allies have been charged with or are under

investigation for stealing and laundering money.


Schmemann in the New York Times, raising the question "What Makes Nations

Turn Corrupt?" (Aug. 28), runs through the usual litany of rationales, such

as "the deep scars of Communism, or…an innate proclivity for corruption

in certain cultures." But he never mentions the curious fact of steadfast

Western support for the thieves in many egregious corruption cases. He cites

World Bank opinion, assuring us that the Bank "has made control of

corruption in client nations a top priority." He also cites economists,

who, like World Bank officials, contend that corruption is "a symptom of a

sick state, and therefore curable through reforms of incentives, institutions

and monitoring mechanisms."


does not mention that the World Bank gave massive loans to Indonesia for decades

although perfectly aware of very extensive corruption, and that the Bank only

began to question that corruption with the collapse of the Suharto dictatorship.

This long-standing support of a seriously corrupt system, which actually

involved considerable looting of World Bank monies, suggests that looting may

not be intolerable to the Bank (and to the West), if associated with other

considerations deemed more important, such as ready access to resources by

international oil companies and similar largesse to other transnational

corporate interests.


in turn suggests that a model explaining systemic corruption might be developed

based on the western need to find joint venture partners in Third World (and

more recently, Second World) states who will serve the West, as Suharto did by

exterminating a left opposition and providing an open door to foreign investors.

During the Vietnam war, spokespersons for the National Liberation Front coined

the phrase "country-selling governments," to describe the series of

governments headed by former French mercenary officers like Marshal Ky and

General Thieu, put in place by the United States, who were willing to

participate in the destruction of their country on behalf of the United States

in order to "save it" from communist control.


the case of Vietnam and other Southeast Asian and Latin American countries, and

in the Philippines and Zaire, the United States had to settle for not only

ruthless but also venal scoundrels in its search for people who meet its

standard for service. Thus, in describing the pattern of selection of leaders in

Vietnam, Malcolm Browne stated back in 1965 that "Unfortunately, most of

the really intelligent, dedicated and patriotic men and women who formed the

stuff of sound leadership stayed with the Vietminh." In short, the endemic

corruption of "our" Vietnamese was linked to the fact that our

requirements caused us to select from within a narrow set of denationalized and

mercenary elites. As this selection process occurred widely, we don’t need a

model resting on "Asian nature," or any other kind of nature to

explain systematic corruption.


Chomsky and I explained it with our mini-model of the "shakedown

state" in The Washington Connection and Third World Fascism (pp. 61-66),

where we reviewed a number of important cases and concluded that, with the U.S.

system of client states "the support base of privilege and the entire

network of arrangements, including the selection of leaders qualified to do the

work to be done, makes corruption integral to the system."


model applies well to the case of Russia. If Serge Schmemann failed to mention

it or anything similar, perhaps this is because the model implies that

corruption flows from Western choices, which conflicts with the ideological

premise that the West is good and would by definition oppose corruption. In the

case of Russia, the West helped bring into power and gave unstinting support to

"reformers" who were clearly corrupt or linked to corrupt groups. With

U.S. and other Western backing and pressure, the reformers pressed a massive

privatization operation in an extremely unpropitious environment, lacking the

minimal market institutions, knowledge, and political structures that would make

such a radical restructuring honest, equitable, and socially useful.


West’s preferred reformers were in fact the most opportunistic and

denationalized of the old communist nomenklatura, who helped engineer the

revolution from above in order to allow themselves to seize opportunities for

gain precluded in the older order (a main theme of David Kotz’s and Fred Weir’s,

Revolution from Above). And the abuses and corruption that they brought to the

privatization process were evident very quickly. But it did not cause the

slightest decline in Western support for the reformers or for rapid

privatization. The 50 percent decline in Russian GDP, the immense capital

flight, and the beggaring of a large majority of Russians also did not alter the

Western commitment. World Bank and IMF aid kept flowing, as in the Suharto case,

in the face of evident massive corruption as well as economic failure.


short, the reformers were doing what the West wanted done. In her recent

analysis of Russia, Katrina Vanden Heuvel claims that that "the Clinton

administration’s Russia policy has failed…None of the administration’s short-

or long-term goals have been achieved." (Nation, Sept. 6/13, 1999). This

conclusion is based on Vanden Heuvel’s taking at face value the administration’s

claim of an interest in consolidating "democracy" in Russia. It is

certainly true that democracy was not enhanced by administration policy, but

rather than assuming that this resulted from error, we should recognize that

democracy was no more the objective in Russia than it is in Saudi Arabia or that

it was in Suharto’s Indonesia.


think it is pretty clear that the primary Western policy objectives in Russia

were to make the death of socialism irreversible, to reduce Russia’s economic

and political power, to facilitate western economic penetration, and even to

transform that country into a Western client state. These objectives were

advanced by very rapid privatization that built up a strong indigenous

capitalist base, an openness to foreign investment, and by the degeneration of

the Russian economy. As with Suharto’s regime, the corruption and negative

effects on the political order were acceptable spin-offs, and the decline of the

economy, increased financial dependency on the West, and the ending of any

Russian military threat, also point to the main Western objectives having been

successfully accomplished.


the Russian people have suffered greatly from these policies, and the long-term

destabilizing effects of helping Yeltsin and company destroy Russia in order to

save it may be very costly. But the western leadership thinks short-term, and in

that frame of reference their policies have been strikingly successful. And

while the chickens of corruption coming home to roost may create a puzzle for

Serge Schmemann and others, they are familiar chickens that have a simple

explanation: they are the acceptable costs of a shakedown state that has done

its job well.

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