'Underground' Banking in Russia Ledeneva, Alena V
Journal of money laundering control,
04/2002, Volume:
5, Issue:
4
Journal Article
Peer reviewed
Just as the August 1998 financial crisis overturned the predictions of a Russian boom, the quick post-crisis recovery of the Russian economy came as a surprise too. It has almost become a commonplace ...that 'nothing is as strong or as weak in Russia as it seems' and the need to understand how the Russian economy really works is still of urgent priority.
The corruption “paradigm” prevalent in both scholarly and policy circles was consolidated in the 1990s. In an IMF Working Paper, Vito Tanzi (1997) distinguished a number of factors that contributed ...to the salience of corruption and linked them to the breakdown of communism and postcommunist transformations. The factors include the collapse of the centrally planned economies; an increase in the number of democracies with free media; increased contact between countries and individuals due to globalization; the heightened role of international organizations, such as the World Bank, the International Monetary Fund, and the Organization for European Cooperation and Development in national
Western researchers studying the former Soviet Union first paid attention to the phenomenon of blat - to do with the use of informal contacts and networks to obtain goods and services or to influence ...decision making - in the 1950s. Yet although the importance of blat has been pointed to, there have been no attempts - and in fact no possibility - to study it. This article is based on original data gathered in 56 in-depth interviews conducted during fieldwork in Russia in August 1994-April 1995. The window of opportunity for such research occurred after people ceased being inhibited talking about blat, while still having a fresh memory of the Soviet period. These materials are unique. They enabled the author, first, to develop an ethnography of blat - that is to present it as a distinctive form of social relationship or social exchange articulating private interests and human needs against rigid control of the state; second, to record the daily problems which represent the ex-Soviet system in a light not readily seen by an outsider; and third, to conceptualise the phenomenon of blat thus relating it to other informal practices. In this article focus will mostly be on the third angle of the research.
What is sistema? Ledeneva, Alena V.
Can Russia Modernise?,
02/2013
Book Chapter
Defining the contours of sistemaSistema is an elusive term. Among its many meanings featured in the glossary (pp. 277–8), I am most intrigued by the one meant to allude to common, yet not ...articulated, perceptions of power and the system of government in Russia. My research is based on collecting such perceptions and exploring sistema's open secrets (Ledeneva 2011a). The term is appropriately ambivalent to embrace sistema's strengths and weaknesses, opportunities and pressures, as well as to refer to their origins as systemic, pointing everywhere but nowhere in particular. Academic outsiders tend to avoid such levels of obscurity, abstraction and immeasurability. Insiders are not ordinarily bothered with definitions of sistema – they intuitively ‘know an elephant’ when they come across one. One of my respondents explains the unarticulated nature of sistema by the lack of distance of insiders from it:
This is not a system that you can choose to join or not – you fall into it from the moment you are born. There are of course also mechanisms to recruit, to discipline and to help reproduce it. In the Soviet Union, all people were corporate (korporativnye), nuts and bolts of the same machine, but some new features emerged in the post-Soviet period. In the Soviet Union there was more or less a consolidated state, whereas now it is impossible to disentangle the state from a network of private interests. Modern clans are complex. It is not always clear who is on the top. A kompromat attack leak of compromising information – AL can come from within the same clan. Perhaps this complexity is not a new quality after all. Perhaps it was also complex in the past, only we don't know it well so the Soviet sistema comes across as more consistent.
Informal leadershipResearch into how leaders rule and manage Russia is vast, but evidence of the informal ways of getting things done at the leadership level is fairly scarce. It is not that power ...networks, unwritten rules, double standards, multiple moralities and forms of self-deception, played out in the field of informal politics, are not applicable to the leadership level, but they are rather difficult to research. In this chapter, I explore the ways in which reliance on power networks and instruments of informal governance affects leadership style. In order to exercise leadership, the official has to become an experienced broker of sistema, to stay in control of power networks, monitor their dynamics and use the instruments of informal governance. Leadership implies a combination of methods applicable in official hierarchical contexts and those applicable to unofficial power networks, which often seamlessly transform into each other. The literature on informal governance is somewhat limited, whereas leadership theories tend to examine practices of informal management under the rubric of interpersonal skills, rather than associate them with the nature of the organisation.Similar to the daily use of networks for getting things done, the use of power networks in government jobs is taken for granted and often misrecognised. (Putin's use of power networks and reliance on informal governance is part of folklore.) The purpose of this chapter is to make informal governance an explicit part of the leadership story, to articulate and account for the instruments of informal management, so that they can be reflected upon by those who use them and those to whom they are applied. I argue that issues of informal governance deserve more systematic and in-depth analysis.
Technically, the term ‘Putin's sistema’ is a contradiction in terms. One should not personalise the logic of sistema, it is a collective outcome even if the President sets an example. The logic of ...sistema informs daily routines, exercised at all levels of leadership, and dictates the so-called ‘practical norms’ (Blundo and Le Meur 2009; de Sardan et al. 2006). According to one much-respected insider of sistema, the so-called ‘scissors’ between the strategic views and daily tactics of its protagonists is the ultimate obstacle to modernisation in Russia:
If you speak with a minister, with the PM, with the President, you are totally convinced you are on the same wavelength. They all say reasonable and sensible things. But when these strategic conversations turn to practical problems that have to be solved here and now…How do they solve them? By increasing state influence, by a telephone call to a judge or else…because…like…strategy is strategy; but we have to survive today and deal with these problems. There are many problems, important ones. In a big country, with huge responsibility…one has to solve them. We cannot wait until everything works automatically. Today we manually have to ‘help’ judges not to get lost ‘between three trees’…Not out of self-interest but for the common good (v interesakh dela): if you don't strengthen the anti-monopoly legislation you are then cornered to increase state influence. And so on. And of course you have to have an extraordinary political will to be able to monitor the strategy dimension on a daily basis, to be self-aware and reflect on your every move: whether it is in line with the strategy or goes sideways. For this you need not only political will but also an inner ‘compass’ – and that is catastrophically lacking. This is the problem. Say, for example, the President is convinced about the strategy of attracting some private capital, or private investment, into the defence industry but the next day at some meeting when discussing some concrete problem at a concrete defence enterprise, what kind of reflex does he have? To increase state influence! So what do we have here? Strategy is one thing, we understand how the modern world is organised and we want to adjust.
‘One searches in vain for a book that gets the story right’, sighs a senior Kremlin official:
In 2005 I went to Moscow's biggest bookshop to browse for books in the politics and history department. I ...looked at what was written about us. As an insider, I knew how the things were and wanted to see how they were interpreted. I was shocked! Books covered every angle: kind, evil, clever, silly. I looked through piles of them, but none of them had got it even close. What I saw was that people wrote categorically about things they could not possibly know about. For example: ‘Kasianov came to Putin and said:…Putin replied:…Kasianov objected.’ Was the author there? No. How did he know? Who told him that? Putin or Kasianov? Had he said something like ‘according to a source close to Putin’…But no. Not at all. Many facts were simply wrong and actors’ motivations were misrepresented. Since I knew most of the people depicted in that book well, I was pretty sure that this particular person could not have said what was attributed to him, especially since I knew what he did say. In some instances I was in the middle of the events and I knew that what was described in the book simply didn't happen…And then I thought, ‘If there is so little resemblance to reality in the books describing a fairly recent period, when the witnesses are still alive and can remember what happened, what about history books? How much of them is likely to be true?’ It's a scary thought. Perhaps the best we can hope for is a more or less smooth narrative. Who needs to know what really happened, apart from a narrow circle of academics? Is it even important?
