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nta Journal and Constitution reported an antidote about protectionism. There was a small store in Moscow selling groceries and other items, Vso Dlyah Vas or everything for you. It was one of the many new stores springing up in the new Russia. The stores front windows were smashed; yet, nothing was stolen. A few days later the store was closed; the owners left town (1B). They had failed to pay the appropriate people.
This is just one example of mobsters smashing private businesses for failure to comply with their protectionism mandates. Democracy in Russian has turned out to be a free-for-all of profiteering. For many, it brought increased poverty and despair. Krisha, in Russian, means protection money. It is surmised that seventy-five percent of the businesses in Moscow pay a percentage of its profits to its organized crime associations. Actually, the mafia has a higher collection rate than the Russian government (Washington Post C2).
This infiltration of the economy has had dire consequences. There is no way to determine how much money is involved. However, it is estimated that anywhere from 50-100 billion of state and communist currency and gold have been privately appropriated and transferred out of the country (C2). That is on top of the tremendous inflation due in part to protectionism. In 1992, the prices rose twenty-six percent. The inflation rate was eighteen percent a month in 1995.
Needless to say, any adjustment to salaries tarried far behind the constant escalation of prices. Things are beginning to change in Russia. Companies are building up their own security forces. They are obtaining security from the mob and their protection schemes for themselves. They are employing armed guards, which is reasonably inexpensive in Russia. Many companies are also introducing closed-circuit television and scrutinizing visitors even photocopying identification papers for future reference (Economist 60).
This is begining to put most creditable businesses beyond the grasp of the most primary variety of Russian gangster. Protectionism might be slowly coming to an end. The Russian press reports that fifty-two percent of the country believe that the mafia is running the country. The Majority also believed that Russias rich got wealthy through stealing, plundering, bribery, or some other form of corruption (Fifty-two Percent Believe 11). Yet the Russian Internal Affairs minister, Sergei Stepashin, stated that the Russian Mafia is but a myth during an address reporting on the Russian criminal world at a European Union meeting.
He said, “Fear of the Russian Mafia stems from a lack of understanding the processes that are occurring today in Russia” (Sukhova 20). He also reported that there is a myth of a Russian mafia that should be dispelled. Protectionism is not really occurring. The Russian mafia controls almost every aspect of the Russian market. They determine who can open a business, stay in business, and who must close their business.
The mafia makes these determinations, often times, on who is compensating them for their security services. Most Russians report that they are directly or indirectly intimidated or extorted by at least one of the organizations within the Russian mafia. The syndicates seem to arrange an organization for business that is not yet available from the government or professional arena. If one business has a problem with labor or another business, the business owner merely contacts his mafia link.
The matter is immediately, quietly, and efficiently resolved. (Crime in Russia14). The Russian mafia is involved in every aspect of Russian life. They provide a code of conduct for business not yet provided by the professional elite or the government.
The mafia has a detrimental effect on the Russian economy. It not only creates massive inflation, it deters companies from other countries from investing in the Russian economy. Foreign investors operating at the retail level where hard cash is a fundamental part of business are particularly susceptible. They are not excluded from the gangsters tactics of”offering” protectionism (Fifty-two Percent Believe 11).
In some cases, the mafia has succeeded in expelling the foreign owner. Specifically this has happened to a Canadian-owned wholesale electronic good franchise, and Italian merchant of leather goods, and an Estee Lauder shop (Washington Post C2). Russia has taken several steps to stop crime such as protectionism and the Russian mafia. Yeltsin has granted the police various powers to confront these dilemmas.
The decree Yeltsin issued permits police to detain organized crime suspects for thirty days without cause, search offices and homes without a warrant, and inspect the finances of suspects. Uncorroborated testimony is now permissible in court, and witnesses that decline to testify can be punished (Fifty-two Percent 11). Yet, these measures seem to have done little to stop organized crimes growth. Unfortunately, Russian organized crime has prospered in the new economic system, and has migrated well beyond the Russian boundaries.
Much of the private business activity lies in a gray region somewhere between legality and illegality. The law has yet to fully catch up with privatization. Academia, the United States Press, and the Russian press all paint a devastatingly bleak picture of the Russian economy; yet, there is hope for change. Many small companies do not have the luxury of making drastic changes; yet, efforts are being made to stop the mafia or at least cease the growth of it on the side of the government and larger businesses. Enterprise are creating their own company security and stopping protection payments.
Things will not change overnight, but Russia can and slowly is moving toward normalcy. Bibliography “Biz in Russia.” Puget Sound Business Journal. 7 March 1995: 18. “Comrade Godfather; In Russia, the Mafia Seizes the Commanding Heights of the Economy.” The Washington Post 12 Feb.
1995: C2. “Crime in Russia.” Current Digest of the Post-Soviet Press 15 Feb. 1995: 14. “Fifty-two Percent Believe Mafia is Running the Country.” Current Digest of the Post-Soviet Press 8 Oct. 1997: 11 Goldman, Minton. Russia, The Eurasian Republics, and Central/Eastern Europe.
Connecticut: McGraw-Hill, 1999. 58-60. Gustatfson, Thane, and Daniel Yergin. Russia 2010: And What It Means For the World.
New York: Random House, 1993. 105-106. Holmes, Charles. “In Russia, Repression Gives Way to Corruption.” The Atlanta Journal and Constitution 7 Sept. 1997: B1.
Lloyd, John. “The Russian Devolution.” New York Times 15 Aug 1999: A8. Remnick, David. Resurrection. New York: Random House, 1998.
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“Russias Notorious Mafia Spreads Tentacles of Crime Around the World.” Christian Science Monitor 11 Jan. 1995: C2. “The Russian Mafia Means Business.” Economist 4 July1998: 60.
