Organized Crime in Russia

I. Introduction:

Definition of the State

I would like to start out with adefinition of the state in order to analyse the problems of (re-) building the state in Russia and in order to find a answer to the question of how the Russian state could become so criminalized. I would like use a comprative perspective and turn back to the time when nation-states developed in Western Europe.

“Sociologically, the state cannot be defined in terms of it ends... one can define the modern state sociologically only in terms of the specific means peculiar to it, as to every political association, namely, the use of physical force.¹ Trotsky also once said in Brest-Litovsk: “Every state is founded on force.“ Of course, force is not the only means of the state, but since the emergence of the modern nation-state the “relation between the state and violence is an especially intimate one. Today, however, we have to say that a state is a human community that (successfully) claims the monopoly of the legitimate use of physical force within a given territory.“² It is further a set of organizations invested with the authority to make binding decisions for people who are juridically located in a particular territory and these decisions are implemented and for this end force is being used sometimes.³

Redefining Organzied Crime

In the following I want to define organized crime as a long-lasting structure which is able to hold on to the same group of members for some time and to motivate this group in order to commit several crimes together. Therefore the only factor that differentiates organized crime from unorganized crime is the one of time. If one thinks of organized crime, one probably first thinks of nongovernmental actors working in this sector and not of the state himself. One might more probably think of people who have made a societal contract wishing to be protected by somebody or some kind of structure, i.e. of “an open market in which operators of armies and states offer services to willing consumers“⁴ or of a society sharing certain norms and values.

The scope of organized crime ranges from protection rackets to certain kinds of making wars and ruling a state. Those actions might in some cases even be legitimized, but this does not mean that it is not (organized) crime. Therefore the state in reality (de facto) often resembles an ambivalence between serving as protector and threatening at the same time. This is especially the case when the state is in a priod of transition and the (formal) institutional structures of the state are being weak ones (as i.e. in post-socialist Russia). In Russia organized crime has actually become part of the (informal) institutional structure⁵. What is mainly understood under organized crime in Russia are the “kryshi“: a person or a group that is paid to protect a certain company. Each company is only protected by one “krysha“, but a “krysha“ can protect several companies.

II. Main Part:

Militarization and Criminalization of the State

Why is the issue of militarization and criminalization of the state of interest to me? I lately oberserve a militarization and criminalization of statehood and the consequences of war becoming further reaching (i.e. as arms are further developed and as the world seems to becoming a smaller place which has to be shared with more and more people). Maybe this is another effect of the overall tendency of globalization. Deals between big states and small ones are more often deals about arms. The destructiveness of “small hot spots“ and wars is increasing and the importance of military rule in countries of the third world is growing.⁶ Furthermore military organizations. such as the NATO, are becoming involved in more and more states.

What makes the analysis of the increasing criminalization of the (post-socialist or “Third- World“) state even harder is that not every state goes through the same stages that the states of the “West“ or “North“ have gone through, as modernization theory had assumed for so long. For some states certain stages of development are unique. Russia i.e. is such a unique one. There had never been a power like the Soviet Union before and considering the legacies having an impact on today’s Russia make clear that a state like the modern Russia has never existed before.

I want to argue that the criminalization of the Russian State is actually a Soviet legacy. By the crimonalization of the Russian state I mean i.e. the “administrative market“⁷, the shadow ecomomy⁸, and the system of “string-pullers“⁹ that had developed within the Soviet bureaucracy and economy, therefore all being legacies from Soviet times. The Russian mafia is rooted in Russian tradition and Soviet practice.¹⁰ All these phenomena can also be resumed by calling it “a long tradition of official misbehavior under Communist rule“.¹¹ Given these structures already in the 1930s within the Soviet Union a major criminal subculture emerged whose members were called “thieves-in-law“ (vory-v-sakone) in the underworld slang¹².

Actually the shadow economy and the “kryshi“ are interdependent structures. The “kryshi“ untill today organize the illegal production and distribution of legal and illegal products, exploitation of rent-seeking money, intrusion into “blat“ structures and into the administrative market for exploitation (see figure 1.1, down below).

illustration not visible in this excerpt¹³

The problem was that only a few wanted to take serious how deeply the Soviet state was criminalized and therefore the problem could not be overcome.¹⁴ As a consequence the “second Russian Revolution“ brought with it one of the “most ferocious and violent criminal organizations on earth“¹⁵.

I do not want to turn into a “dead end street“ here by using some kind of culturalist approach. I just want to warn of expecting exactly the same processes worldwide and “eliminate faulty implicit comparisons between today’s Third World and yesterdays Europe.“¹⁶ But actually looking at the case of coercive exploitation it played a large part in the creation of many European states¹⁷ and I also find it of significance for the erection of the modern Russian state.

Seeing the state as a closed entity that is relatively centralized, its officials more or less successfully claim control over (legitimized) violence within a certain people on a defined territory¹⁸, I have to point out that if I talk about the criminalization of the state, the state that I have in mind, is either an authoritarian one or a de jure liberal state with some de facto authoritarian practices (i.e. the Russian Federation and many other states in transition), but certianly not a “Rechtsstaat“.

Setting war equal with organized crime. One can say that organized crime makes states or was at least crucial for the emergence of nation-states in Western Europe¹⁹ and also has been of importance in post-socialist countries. At least in Western Europe, Nation-states were created in order to hold a monopoly of violence and not simply because power holders wanted nation-states as centralized, differentiated, autonomous political organizations²⁰. And also “every modern nation has had to confront the cancer of organized crime - it would have been surprising if Russia managed to avoid the disease²¹.

How does the state become criminalized?

By acting like a racketeer he becomes criminalized. The state creates a threat or lets somebody else (i.e. external forces as other states) create a threat and then charges for its reduction.²² Surprisingly, over the past decades in Eastern Europe before the collapse of socialism one finds increased tendencies towards the use of force in internal governmental affairs.²³

“Since governments themselves commonly simulate, stimulate , or even fabricate threats of external war and since the repressive and extractive activities of governments often constitute the largest current threats to the livelihoods of their own citizens, many governments operate in essentially the same ways as racketeers.“²⁴

As racketeers states or better its governments are in the business of selling protection.²⁵ What Weber has put in a positive sense by saying that states have a legitimized monopoly of violence, Tilly puts in the following way by saying that “governments stand out from other organizations by the tendency to monopolize the concentrated means of violence.“ As the consequnce it actually makes no difference to the people whether the violence being used is legitimized or not. The violence touches their lives in the same way.²⁶

Organized Crime on Two Sides

In post-Soviet Russia the state was too weak to provide adequate protection to its citizens, a predatory society developed and bodyguards and protection companies started offering security that the state could not provide any longer.²⁷ The state de facto lost its monopoly on force or its “monopoly on organized crime“, viewing the violence of the state in a negative sense.

Why did in Russia organized crime within the society overtake the practices of the criminalized state?

Organized crime can be found within a given territory on the side of the state as well as on that of the society. But these two forms of organized crime have to be thoroughly separated from each other: In Russia i.e. we find that in the late years of the Soviet Union the state became more and more criminalized and then during post-socialist times the state turned out to be more liberal and was de-criminalized again.

The society on the other side was not very criminalized during Soviet times, but became more and more criminalized after the breakdown of the authoritarian regime. The relationship between those two “forms of organized crime“ seems to be a zero-sum game. This is simple to explain because those who had been employed by the state authorities during Soviet times lost their jobs after the collapse of the regime and so these people switched from organized crime in the state sphere to organized crime in the societal sphere.

“...post-Soviet mobsters took advantage of the vacuum of power to create the only working system of authority in many parts of Russia.²⁸ An Armenian shopkeeper once stated that the state used to protect its people from harm, but only by keeping it under controll (using authoritarian means). After the collapse of the Soviet Union the people had the “freedom to be insecure“ and following that a selection process got started allowing only the fittest to survive.²⁹

Due to the weakness of the Russian state and ist fragmentation Soviet and Russian gangs were able to exploit the institutions, the state structures and civil servants of the state had already been criminalized during Soviet times.³⁰ But this does not mean that the state in Russia i.e. nowadays does not offer any protection at all. It does. It is simply not able to hold on to this monopoly of protection and so the state is not the only institution on the free market offering protection (see figure 1.3).

Differences between structures in Russian organized crime and those in the West

Out of these conditions arises the difference of the Russian organized crime structures (or we can call it mafia) from those in Western Europe: In the West those groups mainly deal with drugs and other kinds of clearly as illegal practices defined acts, in Russia the mafia is involved in “legal“ businesses. The Russian mafia is furthermore a particularly distinctive, flexible and violent form of organized crime.³¹ But still even in Russia the mafia is not the poltical system itself nor is it an entirely separate entity, as it would be in most Western countries.³² Therefore during early post-Soviet times it was hard to get around mafia in Russia. Some scholars and even Russian officials saw organized crime as a necessary evil in a country’s economic transition towards market economy.³³

Tilly notes four different activities for the state:

1.) War making -eliminating and neutralizing external rivals
2.) State making -is actually the same as war making, only concerning rivals within the given territory (see figure 1.2)
3.) Protection -eliminating or neutralizing the enimies of their clients
4.) Extraction -acquiring the means of carrying out the first three activities³⁴

Figure 1.2:

illustration not visible in this excerpt

I think this categorization fits very well into the context because it shows once again the two-foldedness of the state (in authoritarian one or those being tranformed from authoritarian systemes into more liberal ones), employing means of coercion and violence against its own people and protecting its own people at the same time. This “vicious circle“ works so well because each of those activities, if carried out effectively, reinforce each other³⁵...the analogy between war making and state making, on the one hand, and organized crime, on the other, is becoming tragically apt.

Institutionalist View on Organized Crime in Russia

Applying a neo-institutionalist and structural-functional view, one can say that organized crime in Russia has become part of the post-socialist institutional arrangements³⁶. It fulfills certain tasks, as selling protection, if this would not be needed anymore these kinds of institutional structures would disappear. Seeing organized crime within the Soviet bureaucracy as an institution, one can say that those institutions had themselves a significant impact on the emergence and formation of the new institutions after the breakdown of the Soviet Union³⁷. A significant influence of organized crime on the state-building process today is questionable, but it had definitely grown immensely after the collapse of the Soviet Union and after that in the early 1990s.

Where does this weakness of the state and the unorganized Russian polity come from? The structures of organized crime in Russia are weakening the central authority, diluting the state’s monopoly of coercion, discrediting the market economy and distorting the very functions of the state³⁸.

Prospects for the Future

As practicly every small and middle-size company is being protected by a “krysha“ I would predict that it is very hard to get rid of this institution in the nearest future. Actually in 1996 i.e. Russian law enforcement authorities stated that nearly three out of every commercial firms paid protection money to criminal organizations.³⁹ Other areas of activity for those “kryshi“ are: contract enforcement, dispute settlement, debt recovery and general information gathering⁴⁰. The more actors use an institution’s services, the harder it is to change this institution. Considering its legacy from Soviet times once again, those institutions of organized crime have a quite strong tradition and have become even more established after the Soviet Union’s breakdown. Furthermore to change these structures there would have to exist strong actors willing to change them. But I guess the only way to change these structures would be that the bandits themselves realized that it would be better for them to get involved with legal businesses. In order to make this happen, it would have to be more profitable for them to do legal business or maybe it would even be enough to count on some bandit’s argument of that their generation is getting to old and does not want to live a risky life anymore. Aleksandr Gurov, one of the first scholars working on mafia, once noted that mafia by now “from wild, barbaric methods moves to civilised ones, becomes part of the state machine and to a certain extent contributes to the country’s prosperity.“⁴¹ Looking towards the future in a economic way, it is possible that both “criminal structures and legal protection agencies are not only force-managing agencies, but also in the long run are subject to the logic of economic action“ undergoing a transformation into more civilized business enterprises with complex structures⁴².

Alternative structures would have to fulfill many claims: It would have to create trust, stability and measures of sanctioning. It would have to attract a lot of actors, it would have to reduce transaction costs in oder to create long-term sustainability in this area. A rational and equitable tax code and credible legal system would have to be created that could bridge the hitherto yawning gap between rulers and ruled, formal and informal institutions⁴³.

III. Conclusion:

I come to conclude that there are many different issues that lead and especially led to the criminalization especially of the Russian state. Being increasingly militarized and criminalized were also attributes of new-emerged states in Western Europe and considering the process of globalization, one can observe that there is simply an overall trend of criminal “networking“.

On the one hand these informal and mostly at the same time criminal structures developed during Soviet times and were “left-over“ from the Soviet Union handed over to the new Russian state. After the breakdown of the Soviet Union arose further socio-economic conditions (lack of the rule of law, weak institutional structures etc.) that added up to the current situation.

Literature:

Baeckman, Johan: The Inflation of Crime in Russia. The Social Danger of the Emerging Markets, Helsinki 1998

Galeotti Mark: The Mafiya and the New Russia, in: Australian Journal of Politics and History, Vol. 44, No.3, 1998

Gerth, H.H. & Mills, Wright, C.: From Max Weber. Essays in Sociology, London 1970

Giddens, Anthony: The nation-state and violence. Volume Two of a Contemporary Critique of Historical Materialism, Cambridge 1985

Handelman, Stephen: Comrade Criminal, London 1995

Quiring, Alexandra: Organisierte Kriminalitaet - Die informelle Institutionalisierung von Eigentumsrechten in Russland, in: Arbeitspapiere des Bereichs Politik und Gesellschaft am Osteuropa-Institut der Freien Universitaet Berlin, No. 28, Berlin 2000

Rueschemeyer, Dietrich & Evans, Peter B.: The State and Economic Transformation an Analysis of the Conditions Underlying Effective Intervention, in: Evans, Peter B., Rueschemeyer, Dietrich & Skocpol, Theda: Bringing the State Back in, Cambridge 1985

Tilly, Charles: War Making and State Making as Organized Crime, in: Evans, Peter B., Rueschemeyer, Dietrich & Skocpol, Theda: Bringing the State Back in, Cambridge 1985 Volkov, Vadim: Demystifying Organized Crime. In: St.Petersburrg Times, 03/13/2001

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¹ Gerth, H.H. & Mills, Wright, C.: From Max Weber. Essays in Sociology, page 77/78

² Gerth, H.H. & Mills, Wright, C.: From Max Weber. Essays in Sociology, page 78

³ Rueschemeyer, Dietrich & Evans, Peter B.: The State and Economic Transformation an Analysis of the Conditions Underlying Effective Intervention, page 46/47

⁴ Tilly, Charles: War Making and State Making as Organized Crime, page 169

⁵ Quiring, Alexandra: Organisierte Kriminalitaet - Die informelle Institutionalisierung von Eigentumsrechten in Russland, page 1

⁶ Tilly, Charles: War Making and State Making as Organized Crime, page 169

⁷ adminitrative market: the trade with permissions, references and so on to gain certain advantages

⁸ shadow economy: the term for those amounts of products which went beyond those amounts which the plan foresaw and which were traded on an extra market.

⁹ model created by Simon Kordonski: stringpullers were those with a lot of power within the Soviet economy and bureaucracy and they used illiegal/criminal practices to stay in that position

¹⁰ Galeotti Mark: The Mafiya and the New Russia, page 415

¹¹ Handelman, Stephen: Comrade Criminal, page 338

¹² Baeckman, Johan: The Inflation of Crime in Russia. The Social Danger of the Emerging Markets, page 20/21

¹³ Quiring, Alexandra: Organisierte Kriminalitaet - Die informelle Institutionalisierung von Eigentumsrechten in Russland, page 7

¹⁴ Handelman, Stephen: Comrade Criminal, page 340

¹⁵ Handelman, Stephen: Comrade Criminal, page 344

¹⁶ Tilly, Charles: War Making and State Making as Organized Crime, page 170

¹⁷ Tilly, Charles: War Making and State Making as Organized Crime, page 169

¹⁸ Tilly, Charles: War Making and State Making as Organized Crime, page 170

¹⁹ Tilly, Charles: War Making and State Making as Organized Crime, page 170

²⁰ Tilly, Charles: War Making and State Making as Organized Crime, page 172

²¹ Handelman, Stephen: Comrade Criminal, page VII

²² Tilly, Charles: War Making and State Making as Organized Crime, page 171

²³ Giddens, Anthony: The nation-state and violence. Volume Two of a Contemporary Critique of Historical Materialism, page 324/325

²⁴ Tilly, Charles: War Making and State Making as Organized Crime, page 171

²⁵ Tilly, Charles: War Making and State Making as Organized Crime, quoting the economic historian Frederic Lane, page 175

²⁶ Tilly, Charles: War Making and State Making as Organized Crime, page 171

²⁷ Handelman, Stephen: Comrade Criminal, page 334

²⁸ Handelman, Stephen: Comrade Criminal, page 334

²⁹ Handelman, Stephen: Comrade Criminal, page 334

³⁰ Handelman, Stephen: Comrade Criminal, page 335

³¹ Galeotti Mark: The Mafiya and the New Russia, page 415

³² The Mafiya and the New Russia, page 427

³³ Handelman, Stephen: Comrade Criminal, page 336

³⁴ Tilly, Charles: War Making and State Making as Organized Crime, page 181

³⁵ Tilly, Charles: War Making and State Making as Organized Crime, page 181

³⁶ In this context I understand institutions as regulating mechanisms, that set the “rules of the game“ and according to those the actors have to behave. They exist inedependent from the actors even though they had been involved in creating those institutions. Their main function is the reduction of risks.

³⁷ Quiring, Alexandra: Organisierte Kriminalitaet - Die informelle Institutionalisierung von Eigentumsrechten in Russland, page 2

³⁸ Galeotti Mark: The Mafiya and the New Russia, page 415

³⁹ Handelman, Stephen: Comrade Criminal, page VIII

⁴⁰ Volkov, Vadim: Demystifying Organized Crime

⁴¹ Galeotti Mark: The Mafiya and the New Russia, page 428

⁴² Volkov, Vadim: Demystifying Organized Crime

⁴³ Galeotti Mark: The Mafiya and the New Russia, page 427