The Kremlin juggles an imperative to maintain both popular and elite satisfaction. From 2000 to 2008, Russia experienced impressive growth – real GDP increased by 66% and real wages increased by 185%. Benefiting from windfall oil and gas revenues, the government balanced the provision of social services with self-enrichment at the top. The 2008 financial crisis launched Russia into a prolonged period of stagnation. Persistent corruption and a weak rule of law discourage investment and entrepreneurship. Russia’s kleptocracy went from a source of stability to an Achilles’ heel. The aim to keep oligarchs wealthy and happy comes at the cost of national development and welfare. International sanctions and the war in Ukraine in 2022 put greater pressure on the government to minimize the rampant looting of state assets.

Russia’s Kleptocracy

President Vladimir Putin used a recruitment base of KGB veterans (or the siloviki) to fill top posts in the executive branch and the economy. Some run law enforcement agencies – Ministry of Interior (MVD) and Federal Security Service (FSB). Others manage state-owned companies in the energy sector, banking and transportation. The silovarchs use coercive capacities and criminal connections to target businesses and extract corrupt rents.

Putin also dueled out advantages to close friends from childhood, the Ozero dacha cooperative and hobbies. These oligarchs own firms that benefit from state contracts and the public procurement system. Gennady Timchenko and the Rotenberg brothers obtained a fortune building pipelines for Gazprom.

Russia’s kleptocracy not only relies on elite control over state resources, but the lack of rule of law. The Kremlin keeps everyone in permanent legal jeopardy to maintain control. As the regime encourages bureaucrats and businessmen to engage in corrupt schemes, private eyes gather kompromat (evidence of legal wrongdoing) to hold over their heads.

Inequality and Social Policy

Even autocrats care about popular opinion. Social policy is an important tool to win elections. In the run-up to the 2012 presidential election, Putin promised to improve social well-being, build more schools and limit utility expenses, among other things. The Russian newspaper Vedomosti detailed areas the regime fell short. After five years, the number of people below poverty increased by several million, the number of schools declined by 7,000 and costs for heating and electricity rose by 50%.

Corruption adversely impacts economic growth and welfare provisions. The lucrative public procurement system, in which the government hands out state contracts on a non-competitive and personal basis, leads to lower quality of infrastructure and public services. Corruption can also distort the make-up of expenditures. It incentivizes bureaucrats to choose expenditures that provide the best opportunity for self-enrichment. It is easier to collect substantial bribes on large infrastructure projects than on textbooks or teacher salaries.

Anti-Government Protests

The mobilizing potential of inadequate social policy and fraud manifested in 2011 and 2012. The massive anti-government protests put pressure on the Kremlin to fight corruption. Putin launched an anti-corruption drive in 2012. The Kremlin targeted low-level officials and elites with punitive action. Some high profile prosecutions were carried out in the national and regional arenas. The government also attempted to clean up petty corruption in the public sector. They implemented a reduction in the discretion of service providers and harsher penalties for offenders. The performative nature of these measures limited any real impact on corruption.

Russia’s kleptocracy endures. Russia scored 22 on the Corruption Perceptions Index (CPI) in 2023, where 100 means a very clean public sector. The practice of reiderstvo (illegal business raids) grew by 135% in 2019 compared to the previous year. The number of malicious criminal prosecutions of entrepreneurs increased between 2014 and 2019, as well as mistrust in law enforcement and courts.

Positive Role of Civil Society

Opposition leaders and civil society do exist and function in Russia. Activist Alexey Navalny founded the nonprofit Anti-Corruption Foundation (FBK) in Russia to fight rampant kleptocracy. FBK produced powerful and evidence-based documentaries on YouTube. “A Palace for Putin” video generated millions of views.

When law enforcement did not investigate the attempted murder of Navalny in 2020, investigative journalists filled the accountability void. Reporters from Bellingcat and Russia’s The Insider stepped forward to expose government wrongdoing.

Transparency International Russia (TI-Russia) uses non-partisan and non-political activities to fight corruption. The movement believes a government crackdown on corruption is not a substitute for independent scrutiny. TI-Russia holds education workshops, designs artwork to teach citizens how to say no to bribes and works with students to find innovative solutions.

After the invasion of Ukraine in 2020, the crackdown on independent media and opposition actors tightened. The government declared more than 40 journalists and news outlets “foreign agents” in 2021.

Corruption can reduce economic growth and effective social spending, increasing poverty and income inequality. Even in a repressive environment, Russia’s determined civil society continues to fight kleptocracy. With a sustained grassroot effort, the momentum for a more equitable Russia can grow.

– Alessandra Lewis

Alessandra is based in Westport, CT, USA and focuses on Business and Politics for The Borgen Project.

Photo: Flickr