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East: Corruption Flourishes In Former Communist Countries

Corruption of all kinds is pervasive in most of the former Soviet-bloc countries. The first part of our series looked at corruption in the West and in other countries. In Part 2, RFE/RL correspondent Askold Krushelnycky explores some of the reasons that corruption is so prevalent in countries that until recently were communist.

Prague, 30 August 2000 (RFE/RL) -- Russia, the biggest of the former communist countries, is also the one with the largest scope for corrupt activities.

There have been allegations that rich Russian businessmen with friends in government -- known as oligarchs -- have stolen and spirited out of the country the equivalent of hundreds of million, perhaps even billions of dollars. Swiss authorities have charged with corruption a top official of former President Boris Yeltsin. The official is said to have received huge bribes for awarding lucrative contracts to refurbish the Kremlin and other state property.

Russia's southwestern neighbor, Ukraine, also has developed a world class reputation for corruption. A former prime minister, Pavlo Lazarenko, is in a U.S. jail awaiting trial on charges that he looted more than $100 million from Ukraine and laundered the money. Lazarenko, in turn, has threatened to implicate President Leonid Kuchma in those illegal money transactions.

Formerly communist autocratic governments in Central Asia are similarly known for their extensive corruption. The names of top Kazakh officials, including the president, have been linked to huge bribes for the right to participate in the country's oil business.

Bulgaria has a reputation for rampant corruption, and charges of government fraud often dominate newspaper headlines. And when Poland recently began a nationwide advertising campaign to combat corruption, the campaign's organizer, Grazyna Kopinska, said that there is a widespread perception in her country that corruption is rampant at all levels of public service.

Mark Palmer, a U.S. ambassador to Hungary during the 1980s, did business for a time during the 1990s in Ukraine and the Czech Republic. He says communism seemed to institutionalize certain kinds of corrupt practices and laid the groundwork for corruption to grow and thrive after the system's formal demise.

According to Palmer, the communist nomenklatura was accustomed to working in a system that provided favors and privileges for ranking party members. People on the lower rungs of society had to trade favors or steal from their workplaces to get things done and to attain a tolerable standard of living.

Palmer says ordinary people had long before ceased to trust the communist system. Deception, he says, had become a way of life. As he put it:

"Under communism, people did not respect the law. They realized the system was corrupt by its very nature and so there was no tradition of respecting the law under communism."

Survival instincts, Palmer says, forced people to adopt a degree of moral dishonesty during communist times because speaking truthfully about the political system was not prudent. In addition, stealing from the state was not regarded as a crime, but rather as a way of retrieving something from a system that stole so much from its own people. Palmer says:

"When communism was ousted in the late [19]80s, I do not think you had a total change. And these countries have all had to build more or less from scratch a culture of respect for the law, judges that are politically independent, lawyers that are knowledgeable, businessmen who recognize the importance of contracts. All of this has had to be developed, and it's not surprising that it's taking quite a while."

British analyst Adrian Lithgow says that as the communist system disintegrated the people best placed to take advantage of events were members of the communist elite: politicians, bureaucrats, industry and farm bosses, plus the organization that had protected their rotting system, the KGB -- or its equivalents in other countries.

"These are the people who are used to having levers on power, and although the mechanics of the delivery of power -- if you like -- have shifted, that doesn't get away from the fact that someone who is used to a position of authority can translate that into a new context. After all, they have all the contacts, they know people they work with, they have a big network of support, and everybody who was involved in that particular system will translate simultaneously into the new one."

With communism's collapse, huge amounts of state funds and treasure were shipped out of Russia and other communist countries and deposited in safe havens. People who only weeks before had attacked the evils of capitalism and the free market threw themselves into private money-making schemes and businesses with unbridled enthusiasm. They used their contacts in the communist party to obtain funds and control of state property. They received permission to do business while it was refused to their rivals.

Some of the biggest profits were made as the system crumbled. The new communists-turned-entrepreneurs bought raw materials -- oil, gas, timber, minerals -- in the old communist currency that was quickly becoming worthless and transported it abroad to make large profits selling at international prices in hard currency. Some of the profits would be used to buy more raw materials to sell, and within a matter of a few transactions the person making them had acquired a considerable fortune.

The workers producing the materials for export received, if they were lucky, their ordinary paltry wages. Others, such as customs officials, made a good deal more by taking bribes for providing the documentation needed for export.

Victor Yasmann, a specialist on Russian affairs at the Washington-based American Foreign Policy Council, believes that the ex-communist world's current corruption is rooted in the corruption of the Soviet era -- but that it has gotten worse.

Yasmann says that at least half of Russia's economy is now controlled corruptly and that no Kremlin government has shown the will to fight corruption there because it is happening on such a massive and all-pervasive scale.

"We always faced corruption as a pocket of social-deviated behavior, ok? But when it became a norm, a norm rather than an exception, well, it's very difficult to fight."

The Russian example set the pattern for business in many of the former communist states where, typically, the bureaucracy was left unchanged and consisted of veteran communist officials. To a large extent, real political power also remained in the hands of the same people, although many of them had changed their political labels.

In the next part of our series, we'll look at what forms corruption has taken in the post-communist states.

(RFE/RL's Andrew Tully in Washington contributed to this report)