The sixth in our series of reports on pervasive corruption in the post-communist states focuses on the effects both petty and high-level fraud have had on the societies where it has taken hold. RFE/RL correspondent Askold Krushelnycky examines the problems involved.
Prague, 6 September 2000 (RFE/RL) -- Some of those who have made money corruptly in the former communist countries try to justify their actions by comparing their practices to what was called the U.S. "robber-baron" capitalism of the 19th century.
But Stanley Kober, a foreign-policy analyst at the U.S.'s Cato Institute, says there are strong differences that undermine any such comparison. Many of those who amassed great wealth and built powerful business corporations in 19th century America frequently did use unfair, dishonest and brutal means. But they also built railroads that opened up the country, founded new communities, created businesses, built factories, dug valuable mines, and provided a dynamic environment which encouraged new ideas and inventions.
"Robber barons were actually creating things. I mean, the problem there, as people point out, is that they were sort of like monopolies. But here [in Russia] what do you see is being created? Also, you don't see a lot of investment going in. You see a lot of capital flight."
In Russia and other post-communist societies, a well-connected few have created very little. They use their privileged positions to take control of former state property, or to loot their countries of natural resources or anything else that can be sold abroad.
What's more, the old-style, U.S. cavalier capitalist reinvested most of his profits in his country. Post-communist rich businessmen prefer to keep their money in foreign accounts and do little to stimulate the development of their countries' economies.
Corruption is a major inhibitor of democratic development when it is prevalent at the highest levels of government. Bribery is used to neutralize parliamentarians and other leading politicians who are elected to represent ordinary people and to act on their behalf. Intimidation, violence, and murder suppress many of those who want to act in an honorable way and raise their voices against corruption.
Such phenomena, common in many post-communist societies, not only rupture the democratic process. They actually destroy people's faith in democracy because they equate democracy and capitalism with the sort of ruthlessness and massive dishonesty that are the hallmarks of their corrupt leaders and businessmen.
Don Jensen, a former U.S. diplomat in Moscow who is now RFE/RL's associate broadcast director, says corruption has bred cynicism among ordinary people in the former Soviet bloc.
"There is a growing cynicism by the average person in one of these countries watching the corruption take place. There's growing cynicism about so-called democratic change. Across the board, we've seen in the past 10 years a universal decline in so-called democratic processes and institutions."
Jensen says that in many post-communist countries voters turn away from liberal and democratic politicians because they associate democracy with the corruption and impoverishment which has befallen them since the collapse of communism.
"Even in places like the Czech Republic, people say they still believe in communism of some sort -- about 20 to 25 percent -- and it's not because they really believe in communism, they're [simply] disenchanted with the outcome of some of the reforms we've seen in the past 10 years. This has been largely due to corruption."
In many of the post-communist states, branches of government, powerful business interests and organized crime groups -- which often resort to murder -- are often tightly intertwined. Sometimes, they are even indistinguishable from one another.
"There was always organized crime in these countries but the problem of course is what's crime and what's the state -- and the distinction is very blurred."
In these societies, criminals can become so strong that it is difficult to say who is the junior partner in the relationship between them and those heading a political power structure riddled by corruption. The forces at the state's disposal (the courts, police and intelligence system) work repressively to protect the interests of a corrupt state and stifle individuals who oppose it. They themselves become corrupt beneficiaries of the system. Those who try to be honest are fired from their jobs, or worse.
Because there is a widespread popular perception that those with money or in positions of power do not heed the law and can bribe their way out of trouble, confidence in the rule of law has eroded and been replaced by contempt for the justice system.
Viktor Gitin, a former member of the State Duma from the reformist Yabloko Party, says that an independent, honest court system is badly needed in Russia.
"It's because our court system doesn't work that many crimes and legal chaos are possible. In this situation, no one carries any responsibility [for their acts], and when people know that they won't have to assume that responsibility, bureaucrats, deputies, or ordinary citizens stop thinking that breaking the law can have undesirable results."
Corruption also hinders political and economic transparency, necessary in a democracy. Key decisions are taken secretly by a few people for their own benefit. The majority is excluded from the political mechanisms that govern their lives and they are subject to legislation they play little part in formulating -- the opposite of democracy.
Corruption also holds back economic reforms and the development of a true market economy from which the majority can benefit because the status quo is the one convenient to those reaping the profits of corruption. Jensen says:
"Corruption distorts the market, it corrodes the rule of law, it undermines the confidence in normal people in the ability of their leaders to deliver on promises of social welfare that leaders always talk about."
Although some Western companies have undoubtedly taken part in corrupt activities in the post-communist countries, most have been dismayed by the adverse business environment fostered by corruption. Many Western firms and investors have withdrawn or reduced their activities because they are fed up with becoming the targets of corrupt officials demanding bribes, of being cheated by corrupt businessmen, of being at the mercy of a corrupt legal system. They feel the competition is unfair when they are competing against rivals who pay bribes and receive favored treatment.
International lending institutions such as the International Monetary Fund have also become reluctant to throw good money after bad following revelations of how Russia and Ukraine deceived or misused funds totaling billions of dollars.
In sum, corruption corrodes a society. When nepotism replaces merit, when cunning and cheating replace trust and honesty, when force and murder triumph over the law and a sense of decency -- then the threads binding together a civil society are weakened and eventually destroyed.
(RFE/RL's Sophie Lambroschini contributed to this report)